Describe any five factors that led to the end of the Bretton Woods System and the beginning of globalisation.



End of Bretton Wood Institutes - Teachoo.jpg

Points to Remember 

The  factors that led to the end of  the Bretton Woods System and the beginning of  globalisation.

  1. USA's economic power was declining .
  2. The international financial system was modified.
  3. Unemployment rises in industrialized nations.
  4. Migration of production Companies .
  5. Chinese Revolution attracted foreign companies to invest.

Answer to be written in the exam

Reasons behind the end of  Bretton Wood Institutes were:

1. Decline in the economic power of the USA

    • It was no longer the dominant currency in the world, the US dollar lost its credibility.
    • The US dollar's value in relation to gold could not be maintained .
    • Fixed Exchange rates were collapsed and the implementation of a floating exchange rate system.


2. Modification in the international financial system:

  • To help industrialized nations with their financial needs, the World Bank and the International Monetary Fund were established .
  • Because of changes in the global financial system, developing nations were compelled to borrow money from Western Commercial Bank .
  • As a result, there were recurrent debt crises in developing nations, which intensified poverty in Latin America and Africa.


3. Unemployment in Industrialized countries:

  • The industrial world was affected by unemployment.
  • As the unemployment rate increased, people traveled far distances in search of employment.


4. Migration of production Companies :

  • Because of the cheap labor and low pay in Asian nations, MNCs moved their production units there.


5. Chinese Revolution 

  • China became a desirable location for investment by foreign MNCs.
  • Since its revolution in 1949, China has been cut off from the post-war global economy. however , it has recently reintegrated.
  • Chinese products have flooded the global market due to low-cost structure of the Chinese economy and its cheap wages.


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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.