ECONOMIC NATIONALISM (PROTECTIONISM) -
1920’s and 1930’s
ECONOMIC NATIONALISM (“BEGGAR THY
NEIGHBOR” POLICIES) - aka “protectionism”
CONTRIBUTION TO POLITICAL INSTABILITY
(Collapse of Democracy & Rise of Hitler in Germany)
WORLD WAR II - Recognition that some system had to be put
BRETTON WOODS - (1944)
- GOLD STANDARD / U.S. DOMINANCE
INTERNATIONAL MONETARY FUND (IMF) - (1945)
WORLD BANK - (1945)
MARSHALL PLAN - (1947)
1. U.S. created monetary system it financed - tremendous advantage.
2. U.S. created market for its goods in Europe.
3. U.S. World’s Banker - huge advantage.
4. U.S. had tremendous political muscle vis-a-vis other countries.
5. Keep Soviets out of the system - preserved US dominance.
International Monetary Fund (IMF) -
stabilize exchange rates - (provide rules)
alleviate balance of payments problems - (provide
World Bank -
designed to help regulate monetary system.
provide technical & economic assistance for
economic development to needy countries.
Monetary System as a whole was designed to work by ensuring
stable exchange rates & an adequate flow of funds in the
international marketplace so countries could continue to do
business with one another.
Problems for Bretton Woods System:
1. IMF/World Bank didn’t have funds necessary to help all
countries rebuild - put strain on US economy.
2. European economies needed cash reserves to do business -
US had to float loans.
3. Late 1960s, US Economic Problems brought collapse of
system - (Vietnam, budget deficits, domestic spending
4. Nixon takes US off “gold standard” and devalues US
INTERNATIONAL TRADE ORGANIZATION - (never
was adopted after WWII)
GENERAL AGREEMENT ON TARIFFS AND TRADE
(GATT) - (1947)
“MOST FAVORED NATION” (MFN)
WORLD TRADE ORGANIZATION (WTO) - (1994)
REGIONALISM - European Union (EU), NAFTA, Asia-Pacific
Economic Cooperation (APEC) Forum = 3 Main Trading Blocks.
NONTARIFF BARRIERS - Import & Export Quotas;
“informal obstacles” (health & safety standards, etc.), “Pontiers
STRATEGIC TRADE - (Protecting Domestic Industry by
Subsidy and Import Quotas) - economic nationalism
ECONOMIC POLITICS - Example of US (Helms/Burton law)
placing sanctions on Cuba and other states that trade with her. EU
reaction & potential role of WTO.
FREE TRADE VS. FAIR TRADE - (see North/South debate)
Cost of Protectionism - Trade barriers cost U.S. consumers
between $100-$200 billion a year; Elimination of Japanese
trade barriers would increase U.S. merchandise exports by
more than $50 billion/year and create 1.5 million jobs.