R&R 1990s Flashcards
Reasons for the R&R
A. Stabilising ER system
B. End of Cold War
C. Rejuvenation of US leadership
D. Shifts in Economic strategy of LDCs
E. Rise of China and Asia.
F. Tech Advances (minor)
How did the ER system stabilise
US currency still retaining status as stable anchor, remained the preferred currency in GE
Plaza (1985) and Louvre (1987) Accord helped to re-harmonise exchange rate; revalued ER system with the US (USD devalued by 50% whilst UK, France and Japan appreciated 50%)
Dollarisation in the 90s; countries pegging currency to USD, avoiding currency crises and assured stability
How did End of CW impact GE
End of proxy wars and security concerns led to significant decrease in burden of military expenditure.
All LDC embarked on market oriented reforms after collapse of USSR; privatisation and liberalisation.
US rejuvenation in GE leadership
US now sole superpower
Formed WTO in 1995 and NAFTA in 1994
Finalised Uruguay round under GATT (reduced tariffs by up to 12%)
Brokered China entry into WTO
LDCs shifting strategies
Shifts from ISI to aggressive EOI
Led to substantially reduced tariffs and liberalisation of financial sectors
