P15_The_G20_must_look_beyond_Bretton_Woods

P15_The_G20_must_look_beyond_Bretton_Woods - The G20 must...

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The G20 must look beyond Bretton Woods By Robert Zoellick With talk of currency wars and disagreements over the US Federal Reserve’s policy of quantitative easing, the summit of the Group of 20 leading economies in Seoul this week is shaping up as the latest test of international co-operation. So we should ask: co-operation to what end? When the G7 experimented with economic co-ordination in the 1980s, the Plaza and Louvre Accords focused attention on exchange rates. Yet the policy underpinnings ran deeper. The Reagan administration, guided by James Baker, the then Treasury secretary, wanted to resist a protectionist upsurge from Congress, like the one we see today. It therefore combined currency co-ordination with the launch of the Uruguay Round that created the World Trade Organization and a push for free trade that led to agreements with Canada and Mexico. International leadership worked with domestic policies to boost competitiveness. As part of this “package approach”, G7 countries were supposed to address the fundamentals of growth – today’s structural reform agenda. For example, the 1986 Tax Reform Act broadened the revenue base while slashing marginal income tax rates. Mr Baker worked with his G7 colleagues and central bankers to orchestrate international co-operation to build private-sector confidence. History moved on after the huge changes of 1989 and the experience of the
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This note was uploaded on 05/02/2011 for the course FINANCE 9924603 taught by Professor Ssgdbfb during the Spring '11 term at Kyung Hee.

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P15_The_G20_must_look_beyond_Bretton_Woods - The G20 must...

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