Globalization And Role Of Central Bank

globalisation

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Actually the pace of privatization, liberalization and globalization began from 1960s when remuneration crisis of UK and USA took their toll. Payment deficit was further more dismay and stagflation swallowed the humanness economies in 1970s leading to the failure of the Okuns Law, on the one hand, and the death of the Phillips Curve for all practical purposes for new(a) Classicists, on the other. The increasing demand for and supply of world liquid state finally contributed to the collapse of the Bretton Woods System in 1971 and this take to emerge a new liberalized economic fix up to shed light on the problem of world liquidity. The effects of new economic order were found in the trade, exchange pasture and capital exchange regimes and in the management of national economies. In exchange rate front, floating formation against fixed exchange rate system was adopted. In trade front, the practice was made to open the world economies as national economies without any barrier and restrictions and the climax in this direction was reached with the establishment of World Trade Organization (WTO), the renewal of third pillar of Bretton Woods System- the GATT.




The decades of the 80s vehemently contributed for the nation-state to move in favor of semiprivate economies when the IMF and IBRD implemented stabilization and adjustment programs in order to increase supply capacities of developing countries and thereby abate the balance of payment problems. These transformations in the world economy afford reduced the fictitious character of state and have increased the role of private sector in the areas like trade and investment. The exhibit of privatization, liberalization and globalization stressed for the reduction of grants in official aid and attempted to accelerate the pace of foreign private capital flows for the development of the backward economy on the ground that these flows are more efficient, productive and growth promoting than official flows.

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