Lecture 7 - Jan. 21st, 2019
Which Path To Development? cont.
Lecture Notes
, International Financial Institutions (IFIs)
- Founded by the U.S and Europe in 1944
- Primarily by the U.S. but with some input from some European countries.
- World Bank and International Monetary Fund (also known as Bretton-Woods
institutions)
- The Bretton Woods Conference was held in 1944 in New Hampshire;
attended by over 30 nations
- In 1944, WWII was still raging. However, the Allied powers had reason to
believe that they would prevail over the Axis powers, which they ultimately
did.
- They were anticipating a new global configuration in which the U.S. would
emerge as the main super power, but it would be countered by the power of
the Soviet Union.
- Intended for the post-war reconstruction of Europe
- Helped Europe rebuild from the ashes of WWII.
- Envisioned as a tool that would be used to interface economically with
countries in the global south as they would be gaining their independence in
the coming decades.
- Began lending to Third World in 1960s
IFIs and the Global South
- World Bank, IMF lending to southern countries took off after 1973 oil crisis.
- The oil crisis was set off by an oil embargo imposed by Arab oil-producing
states in the latter stage of the 1973 Arab-Israeli war.
- In 1980’s, lower global prices for primary commodities triggered “Lost Decade”
for global South.
- Having a very wealthy period after independence in the 1960’s, but then
experiencing severe economic doldrum in the 1970’s. This is broadly
characteristic of developing countries in Africa and Latin America
especially.
- ^one of the results of the decline in raw/natural resource prices on the
global market.
- These countries main source of revenue were these primary resources, thus
the price decline hit their economies very hard.
- Pushed many of these countries towards the IFIs, who would help manage
their debts.
Which Path To Development? cont.
Lecture Notes
, International Financial Institutions (IFIs)
- Founded by the U.S and Europe in 1944
- Primarily by the U.S. but with some input from some European countries.
- World Bank and International Monetary Fund (also known as Bretton-Woods
institutions)
- The Bretton Woods Conference was held in 1944 in New Hampshire;
attended by over 30 nations
- In 1944, WWII was still raging. However, the Allied powers had reason to
believe that they would prevail over the Axis powers, which they ultimately
did.
- They were anticipating a new global configuration in which the U.S. would
emerge as the main super power, but it would be countered by the power of
the Soviet Union.
- Intended for the post-war reconstruction of Europe
- Helped Europe rebuild from the ashes of WWII.
- Envisioned as a tool that would be used to interface economically with
countries in the global south as they would be gaining their independence in
the coming decades.
- Began lending to Third World in 1960s
IFIs and the Global South
- World Bank, IMF lending to southern countries took off after 1973 oil crisis.
- The oil crisis was set off by an oil embargo imposed by Arab oil-producing
states in the latter stage of the 1973 Arab-Israeli war.
- In 1980’s, lower global prices for primary commodities triggered “Lost Decade”
for global South.
- Having a very wealthy period after independence in the 1960’s, but then
experiencing severe economic doldrum in the 1970’s. This is broadly
characteristic of developing countries in Africa and Latin America
especially.
- ^one of the results of the decline in raw/natural resource prices on the
global market.
- These countries main source of revenue were these primary resources, thus
the price decline hit their economies very hard.
- Pushed many of these countries towards the IFIs, who would help manage
their debts.
