Evan Soltas on the Great Factor-Price Equalization
By Arnold Kling
The basic idea here is that the maintenance of Bretton Woods’ fixed exchange rates required a system of financial controls which so severely limited capital flows, global investment and trade that economies were effectively closed. When Bretton Woods ended in 1971, currencies floated, capital controls began to come down, global trade and investment increased — and nations developed open economies.
Read the whole thing, which has charts showing the impact of growing trade on specific industries, such as apparel.