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Growth of the Global Economy (1945-2000)
Quick questions on The Bretton Woods system and postwar order explained: H2 History
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the structure of the system?Show answer
Bretton Woods established a system of fixed but adjustable exchange rates. Currencies were tied to the United States dollar at agreed rates, and the dollar in turn was convertible to gold at a fixed price, making the dollar the anchor of the whole system and the principal reserve currency. This arrangement provided exchange-rate stability and predictability for trade and investment while allowing occasional adjustment in cases of fundamental imbalance. To support and manage the system, new international institutions were created: one to oversee the monetary system and provide short-term support to countries in balance-of-payments difficulty, and another to provide longer-term finance for reconstruction and development.
What is the role in the long boom?Show answer
The decades after 1945 saw an exceptional period of sustained economic growth in the industrial world, often called the long boom or the golden age. Bretton Woods contributed to this in important ways. The monetary stability it provided gave businesses and investors the confidence to trade and invest across borders, and the steady reduction of tariffs allowed world trade to expand far faster than output, driving growth through specialisation and larger markets. By preventing a return to 1930s-style instability and protectionism, the system created an environment in which the other engines of growth could operate.
What is the wider drivers of growth?Show answer
But Bretton Woods was not the only cause of the long boom, and a strong answer recognises the other drivers. There was enormous pent-up demand and a need for reconstruction after the war, supported by reconstruction aid. Energy, especially oil, was cheap and abundant, fuelling industry and transport. There was rapid technological progress and the catching-up of economies that adopted existing best practice.
What is q1?Show answer
Explain why the Bretton Woods system was designed with the 1930s in mind. [4 marks]
What is q2?Show answer
Explain how Bretton Woods contributed to the long postwar boom. [12 marks]
What is q3?Show answer
"The postwar economic order served American interests more than the common good." How far do you agree? [20 marks]
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