What positive and negative consequences did the modified gold standard, credit lines and the amendments to the International Monetary Fund system? Analysis from the perspective of Costa Rica

Abstract

The adoption of the Gold Standard, and its subsequent replacement by the Bretton Woods system, are two key points to understand when one wants to study and analyse Costa Rica’s Economic Policy. Both events were by-products of an international situation strongly influenced by the emergence of the globalization phenomenon and, from Costa Rica’s point of view, by its strong dependency on international trade. The fact that our economy was open and small placed us in a position where external decisions determined how things were to be handled internally, having to assume its consequences, both positive and negative, because of such decision, and that sometimes –we must admit- were not always endorsed at the right time. Inexperience and lack of control took a toll on us in the form of economic, credit and financial crisis, some of which came to be repeated. When analysing the particulars that these events forced upon us, it allows us to better understand the current economic situation, and it should aid us to make better choices in the future.