Roles of the International Economic Institutions
Economic liberalism has been supported by the establishment and expansion of the Bretton Woods institutions, the World Bank, the International Monetary Fund (IMF), and to a lesser extend the General Agreement on Tariffs and Trade (GATT)—now the World Trade Organization (WTO).
The World Bank—Stimulating Economies
The World Bank was designed initially to facilitate reconstruction in the post-World War II Europe.
In the 1950s the bank shifted its emphasis from reconstruction to development. It generates capital funds from member-states contributions and from borrowing in financial markets.
A high proportion of the World Bank funding has been used for infrastructure development
The International Monetary Fund—Stabilizing Economies
The task of the International Monetary Fund (IMF) was to stabilize exchange rates.
Originally the fund established a system of fixed exchange rates
In 1972 this system collapsed when the United States announced that it would no longer guarantee the system.
In 1976 the fund formalized the system of floating exchange rates currently in use.
GATT and the WTO—Managing Trade
The General Agreement on Tariffs and Trade (GATT) enshrined important liberal principles:
Support of trade liberalization
Nondiscrimination in trade
Exclusive use of tariffs for protecting home markets
Preferential access in developed markets to products from the South
Support concept of “nation al treatment” of foreign enterprises.
The GATT established a continual process of multilateral negotiations among those countries sharing major interests in the issue at hand; the agreements reached were then expanded to all GATT participants.
Most of the work was carried out over the course of eight negotiating rounds—each round progressively cutting tariffs and addressing new problems, such as intellectual property rights.