3.4 Post-World War II globalization

After World War II, global institutions reshaped the world. The Bretton Woods system set up economic rules, while the UN aimed for peace. These changes kickstarted a new era of international cooperation and global governance.

The Cold War split the world into two camps, but decolonization created new nations. Meanwhile, multinational corporations and economic liberalization drove globalization forward, changing how countries interacted and economies functioned.

International Institutions and Order

Bretton Woods System Established Post-WWII Economic Framework

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• Bretton Woods Conference in 1944 established new global economic order after World War II
• Created International Monetary Fund (IMF) to provide financial assistance and promote international monetary cooperation
• Established World Bank to provide loans for economic development projects in member countries
• Set up system of fixed exchange rates tied to the U.S. dollar, which was convertible to gold at $35 per ounce
• Aimed to promote global economic stability and prevent competitive devaluations that contributed to the Great Depression

United Nations Formed as Intergovernmental Organization

• United Nations (UN) established in 1945 to maintain international peace and security, develop friendly relations among nations, and promote social progress
• Consists of 193 member states and various organs, including the General Assembly, Security Council, and International Court of Justice
• Plays a key role in addressing global issues such as human rights, humanitarian crises, and environmental challenges
• Peacekeeping operations deploy military and police personnel to help maintain peace in conflict-affected areas (Cyprus, Democratic Republic of the Congo)

Global Governance Mechanisms Emerge

• Global governance refers to the management of global affairs through a complex web of international organizations, agreements, and norms
• Includes formal institutions like the World Trade Organization (WTO) and informal arrangements like the G7 and G20 summits
• Aims to address transnational challenges that require collective action, such as climate change, pandemics, and terrorism
• Criticisms include lack of democratic accountability, dominance by powerful states, and limited effectiveness in solving global problems

Geopolitical Developments

Cold War Shapes Global Power Dynamics

• Cold War era (1947-1991) characterized by ideological and geopolitical rivalry between the United States and the Soviet Union
• Divided world into two main blocs: Western capitalist democracies led by the U.S. and Eastern communist states led by the USSR
• Led to arms race, proxy wars (Vietnam, Afghanistan), and competition for global influence through alliances and foreign aid
• Ended with the collapse of the Soviet Union in 1991, leaving the U.S. as the sole superpower

Decolonization Transforms Global Political Landscape

• Decolonization process saw many former colonies in Asia, Africa, and the Caribbean gain independence from European powers (India, Ghana)
• Driven by nationalist movements, anti-colonial struggles, and changing international norms
• Created new nation-states and transformed the composition of the United Nations
• Newly independent countries faced challenges of nation-building, economic development, and navigating Cold War tensions
• Non-Aligned Movement emerged as a group of states seeking to avoid alignment with either the U.S. or Soviet blocs (Indonesia, Egypt)

Economic Globalization

Multinational Corporations Expand Global Reach

• Multinational corporations (MNCs) are companies that operate in multiple countries and have a significant global presence (Coca-Cola, Toyota)
• MNCs played a key role in driving economic globalization by investing in foreign markets, outsourcing production, and creating global supply chains
• Enabled by advances in transportation, communication, and information technologies
• Critics argue that MNCs can exploit workers, damage the environment, and undermine local economies and cultures

Economic Liberalization Promotes Free Trade and Open Markets

• Economic liberalization refers to policies that reduce government intervention in the economy and promote free trade, privatization, and deregulation
• Spread through international institutions like the IMF, World Bank, and WTO, which encouraged countries to adopt market-oriented reforms (structural adjustment programs)
• Proponents argue that liberalization promotes economic growth, efficiency, and consumer choice
• Critics contend that it can exacerbate inequality, undermine social safety nets, and lead to financial instability (Asian Financial Crisis of 1997)