After decolonization, the host countries were left in more or less a poor state as their resources were exhausted, there was widespread ecological degradation, and their labor systems had been altered in a way that only benefitted the colonizers. The host countries had to develop their economy, and at the same time be independent sovereign states. They needed to establish accessible markets and generate revenue sources to fuel their economy. However, instead of following their own development model, they were forced to adopt the development project, which was produced by Colonial powers in order to manage economic growth. The development project provided a basic national framework for economic growth and agro-industrialization. The developed countries established the concept of Foreign aid, grants to have continued access to natural and human resources of the independent states.
Economic growth depended on international relations because a lot of support material such as foreign aid, technology transfer, stable currency exchange, and international trade was attainable only by international economic arrangements. A lot of colonizers established aid and trade relationships with their colonies for example the UK established bilateral trading with Jamaica for bananas. The definite international dimensions introduced by the United States were bilateral Marshall plan and multilateral Bretton woods program. Construction of Bretton woods system shaped national development strategies and reshaped the international division of labor. Marshall plan was bilateral transfer of billions of dollars to Europe and Japan, which the US used to achieve their geopolitical goals in the cold war. It restored development because it restored trade, price stability and expanded production. The bilateral aid was used to facilitate trading and investments in European national economies which was really good for the Europeans and the US because Europeans actually wanted to achieve social peace and full employment through whereas the US wanted an open world economy.
The demand for European manufactured goods increased due to US investments in colonial and postcolonial territories once again reinforcing the trade imbalance and favoring the colonial powers directly and indirectly. The Bretton wood system is "a complex multilateral arrangement whereby infusions of American dollars would stimulate the world economy" (page, McMicheal). The other major change and impact was the creation of multilateral institutions such as World Bank and IMF to reconstruct the world economy. World Bank and IMF's goal was to restore trade in regions devastated by war, which would be done through the redistribution of funds in these regions to stimulate new production. The World Bank's job was to borrow money in international markets to raises money for development whereas; IMF's job was to give money in order to stabilize national currency exchanges. The third world countries aimed to achieve development by importing technology from the first world countries, which helped them in increasing their production and boosting their manufacturing sector. Their cost of production and total number of final goods and services increased. The first world benefitted as they received resources that they lacked and at the same time the third world countries provided the consumer markets for the obsolete technology and products. The book, development and social change mentions that the World Bank made large-scale loans to the states for national infrastructural projects such as dams, highways, and power plants as these basic utilities were essential for growth. Furthermore, two thirds of the World Bank's loans were enough to purchase goods to build new transportation and electric power systems. The bank invested in large-scale cash crops for example rubber and cacao, which resulted in the international division of labor, which was good for the first worlds that specialized in agriculture as it resulted in comparative advantage. The Bretton woods institutions moved funds to regions that needed purchasing power and they also trained third world officials in the theory and practice of development as understood in the first world. Hence, the Marshall plan and The Bretton woods helped promote/ reform development.
Sociology on International Development
Bryn Mawr College, Pennsylvania, USA