In recent years the world economy has suffered major shocks and undergone rapid change. The fixed exchange rates built into the international monetary system designed at Bretton Woods in 1944 have given way to flexible rates. Trading relations that were for many years disturbed only by changes in the tariffs and quotas imposed by importing nations have been disrupted by embargoes and other controls imposed by exporters. Long-standing bilateral aid relations between donors and recipients have been substantially altered. Overseas direct investment has become of major significance, and it is no longer dominated by American corporations.
These economic changes stem in part from political factors, such as the shift in power relations that followed the erosion of U.S. economic predominance and the ebbing of the cold war. They have also been influenced by the emergence of new actors on the international economic stage, such as multinational enterprises. Change has often followed crises, some of which have arisen from the politicizing of international economic issues, which in turn reflects the politics of domestic economic affairs and the blurring of traditional distinctions between domestic and international concerns.
All these developments have added to the complexity of current international economic relations, and it is the purpose of those who contributed to this book to sort them out and analyze them. The task requires interdisciplinary expertise, especially that of economists who understand politics and of political scientists familiar with economics. The research that went into this book was designed to extract the lessons of the past, to make sense of the present, and to formulate recommendations for improving international economic relations with particular emphasis on the role of international organizations.
The papers presented here set forth an analytical framework and alternative models of future international economic arrangements. They analyze the four main functional areas of international economics-money, trade, investment, and aid; describe interactions among groups of variously situated countries; and consider alternative future roles for international institutions.
This book was first published as the Winter 1975 special issue of the journal International Organization, which is sponsored by the World Peace Foundation, edited at Stanford University, and published by the University of Wisconsin Press. The journal's board of editors asked C. Fred Bergsten and Lawrence B. Krause, both members of the board and Brookings senior fellows in Foreign Policy Studies and Economic Studies, respectively, to serve as editors and to organize and supervise the research effort. In order to focus the requisite analytical skills, the editors