World Economy while Second Bretton Woods Declines and Evaluation on Developing Countries

Abstract

This work is aiming primarily at discussing the thesis that the search for new currency systems in World Economy is not the reason but the result of production crisis. The approach initiated with the three works of Michael Dooley, David Folkerts-Landau and Peter Garber which are carried out since 2003, i.e. the development of “2nd Bretton Woods” monetary system, and proposals of Eichengreen, Goldstein, Kamin, McKinnon, Obstfeld, Roubini, Truman and Stiglitz, who participated in this development with their works, will be examined within the thesis in question. Mainly, the effects of these discussions to the developing countries and Economy of Turkey will be focused on. Considering that the world trade volume and movements of currency determines the type of industrialization in developing countries, labor markets and the relation between sectoral structures in developing countries and foreign capital will be discussed by proceeding from the studies which are carried out by transnational foundations such as IMF, World Bank, Unido, OECD and UNCTAD. For instance, we have to opportunity to explain, why in spite of its current accounts deficit China does not want to reduce U.S. dollars/Yuan parity to its real value and why in spite of extraordinary current accounts deficit the U.S. dollars/YTL parity in Turkey does not rise to its real value, in terms of trade and capital flows. It is not possible to say that the factors increasing and maintaining capital flows are different from the production types and industrialization periods. Therefore, we think that we can understand world monetary system or unsystematicness of it better by looking to real indicators behind interest rate parameter….