Microeconomics Essay Example | Topics and Well Written Essays - 1750 words

Microeconomics - Essay Example In fact although not recognized back then the effects of globalization in its nascent stages was also leading to uncomfortably unprecedented changes in the economy in nations that were within the reach of integration and these effects also led to the need being felt for some sort of control (Salvatore, 2001). All these culminated to the creation of the system at the Mount Washington Hotel in Bretton Woods, New Hampshire where 730 delegates from all 44 allied nations had come to participate in the United Nations Monetary and Financial Conference and they debated upon and signed the Bretton Woods agreement during the course of the initial three weeks in the month of July, 1944. The objective of the present endeavour is to bring out the rationale behind the creation of the system and to look at its various performances and then to finally examine the causes behind its breaking down as a system. In what follows, we first look at economic and political conditions the prevalence of which c reated the need for such a system to explore the rationale. We then look at the significant contributions and failures of the system and finally concluding with pointing out the main causes that led to a break down in the Bretton woods system. In the post First World War period most of the affected economies sought the security and the stability provided by the previous system referred to as the Gold standard and by 1926, most of them returned to it. However sub-optimal valuations of a significant number of currencies coupled with a seriously hurt and still recovering England having to assume leadership as well as certain other flaws in adoption of the system led to degradations in global economic relations and financial interactions. This drop hit its trough with the great depression that spread through open channels of trade from its origin of Great Britain to all the major economies of the World. As a direct consequence economies the world over saw