Following World War I, each
of the major nation-states of the world, following the example set by the
leading economic power, the United States, adopted policies designed to
put their particular economic interests above those of other states. This
involves insistence upon payment of debts and reparations, protective tariffs,
and unilateral currency devaluations. These policies contributed to the
worsening of the Great Depression as world trade was cut in half in the
early years of the 1930's.
After World War II, there was a recognition of the mistakes made and an effort to avoid them. At an economics conference at Bretton Woods, New Hampshire, in 1944, the International Monetary Fund and the World Bank were founded. An international currency based upon the $U.S. was created. The IMF , funded by investments from the leading economic powers, was given the responsibility to assist nation-states which faced economic crises which they were unable to deal with themselves. In return, the recipient states were required to institute economic reforms designed to restore their self-sufficiency. The World Bank was charge with giving low-interest loans to poor nations in order to finance development projects. Poor nations have continued to fall behind rich nations in economic growth, debts have accumulated to overwhelming levels, and proposals have been made to forgive debts in order encourage economic growth.
The General Agreements on Tariff and Trade (GATT) provided for tariff and currency issues to be the subject of continuing negotiations for the purpose of ensuring that unfair practices were avoided. In the last decade of the 20th century, a permanent international committee, the World Trade Organization (WTO) was created to deal with the issues. Controversy has arisen at the turn of the century concerning the degree of power given an organization which represents states, but not people.
The effectiveness of these international economic institutions is threatened by the resistance of national legislatures, particularly in the United States, to provide the necessary support and funding.