Corpus Corpus 1
Global economic governance since 1944
Governance is an English word that appeared in the 12th century. It reappeared in 1989, used by the World Bank. It refers to all processes of governing, between institutions and various stakeholders*. How does the management of the world economy shift from government to governance?
1 1944-1971: an American economic government
A Bretton Woods institutions
► By early 1942, Harry Dexter White, assistant to the US Secretary of the Treasury, and John Maynard Keynes, advisor to the British Treasury, began preparing drafts that would foster* economic stability and prosperity in the postwar world.
► In July 1944, an agreement was reached at the Bretton Woods conference, creating a new international monetary system (IMS) based on the US dollar, the only currency convertible into gold(>card7).
► The IMF (International Monetary Fund), located in Washington DC, oversaw* the IMS and provided short-term loans* to countries.
► The IBRD (the International Bank for Reconstruction and Development, commonly known as the World Bank) was responsible for financial reconstruction of war-ravaged nations.
B An American preeminence
The Bretton Woods system was not a true global economic governance because only the US allies were part of it. In 1946, the USSR gave up the whole Bretton Woods system. The Third World countries claimed for a new International Order in the 1960s.
2 1971-1991: the emergence of global collaboration
A The falling apart of the Bretton Woods system
► The USA experienced inflationary pressures, and large amounts of dollars gathered in Europe and Japan. In 1971, President Nixon announced that the US dollar was no longer convertible into gold.
► In 1976, the IMF members met in Jamaica to formalize a new international monetary system in which currencies floated freely on the foreign exchange market.
B Neoliberal policies in international institutions
► Neoliberalism (free market and no state action) dominated global financial institutions in the 1970s, mainly because of the powerful influence of the USA in forging what is known as the Washington Consensus.
► The IMF introduced structural adjustment loans tied to neoliberal policy reforms. In 1982-1983, Mexico was the first nation to participate, undertaking aggressive privatization and reducing tariffs to 10%.
C The emergence of governance
► Neoliberal policies faced many criticisms. In 1989, the World Bank shifted its emphasis from structural adjustment to “governance”. Political reforms with the support of the public sector were required.
► A new club, the G7, was created in 1976 by the wealthiest developed countries: Canada, France, Germany, Italy, Japan, the UK and the USA.
3 Since 1995: the triumph of governance
► The WTO (World Trade Organization) replaced the GATT (General Agreements on Tariffs and Trade) in 1995. Its goal is to ensure that trade flows as freely as possible. It is able to settle commercial disputes between member states.
► Created by the US Treasury in 1999, the G20 was designed to get the collaboration of major “emerging market” states – BRICS (Brazil, Russia, India, China, South Africa), Argentina, Mexico, Indonesia, Saudi Arabia and Turkey. They oversee, alongside the G7 and developed countries (Australia, South Korea, EU), a “new international financial architecture”.
- stakeholders = les parties intéressées
- a loan = un prêt
- to foster = promouvoir, encourager
- to oversee = superviser