CHAPTER 4: ECONOMIC DIMENSION OF GLOBALIZATION

GLOBAL ECONOMIC ORDER IN THE EARLY YEARS

The global economic order has been evolving since 1945,
reflecting changes both in the larger setting of global politics
and economics and in national interests as perceived by
decision-makers of nation-states.
The global economic order in the early years refers to the
structure and dynamics of the global economy during the early
stages of economic development and globalization. It can be
traced back to the period following World War II, particularly
between the 1940s and 1970s.
At the end of World War II, the international community sought
to establish institutions and mechanism to promote economic
stability and international cooperation. One of the key
developments during this period was the creation of the
Bretton Woods system in 1944. Under this system, the
international monetary fund (IMF) and the world bank were
established to help stabilize countries, provide financial
assistance to countries, and promote economic development.

The global economic order in the early years was

characterized by a few distinct features:
1. Dominance of the United states: the united states emerged as
the leading global economic power after world war II. It played
a dominant role in shaping the global economic order, both
politically and economically. The U.S dollar became the main
 reserves currency, and the U.S enjoyed significant influence in
international organizations.
2. Fixed exchange rates: under the Bretton woods system, most
countries fixed their exchange rates to the U.S dollar, which was
pegged to gold. This system aimed to promote stability and
facilitate international trade and investment.
3. Import substitution industrialization: many developing
countries in the early years adopted import substitution
industrialization (ISI) strategies. They focus on developing
domestic industries to reduce reliance on imports and stimulate
economic growth. Protective trade policies, such as tariffs and
quotas, were common during this period.
4. Post-colonial economic relations : the early years of the global
economic order were marked by decolonization, with many
countries gaining independence from colonial powers. The
economic relations between former colonies and their former
colonizers became a significant aspect of the global economic
order.
5. Limited global trade: global trade flows were relatively limited
compared to later years. Tariff and non-tariff trade barriers
were prevalent, limiting the volume and diversity of
international trade.

As the global economic order evolved over time, several factors,

including the breakdown of the Bretton woods system, a shift
towards market based economies, and advancements in
technology and communication, have contributed to significant
changes in the global economy. However, the early years
shaped the foundations and institutions that still play a role in
today’s global economic system.