Topics
- Introduction
- The pre-modern World
- Silk routes link the world
- Food travels : spaghetti and potato
- Conquest, disease and trade
- The Nineteenth century ( 1815-1914 )
- A World economy takes shape
- Role of technology
- Late Nineteenth century colonialism
- Rinderpest or the cattle plague
- Indentured labour migration from India
- Indians Entrepreneurs abroad
- Indian trade, colonialism and the global system
- The Inter-war economy
- Wartime transformations
- Post war recovery
- Rise of mass production and consumption
- The great depression
- India and the great depression
- Rebuilding a world economy : The post-war era
- Post war settlement and the Bretton Woods Institutions
- The early post war years
- Decolonisation and independence
- End of Bretton Wood and the beginning of globalisation
0. Introduction
- Globalisation refers to all such business activities of the world that can be carried out freely from one place to another.
1.1 Silk Routes link the world
- Silk routes was a network of trade routes connecting East and West to the economic, cultural, political and religious interactions.
- Connects Asia to Europe
- Silk cargoes used to travel through these routes.
1.2 Food travels : spaghetti and potato
- Noodles travel West from China and become spaghetti.
- Arab traders took pasta to Sicily in the 15th century, an Island now known as Italy and became famous.
- Common foods such as potatoes, soya, groundnuts, maize tomatoes, chillies, sweet potatoes were only introduced in Europe and Asia after Christopher Columbus discovered America.
1.3 conquest , disease and trade
- In the 16th century European sailors discovered a new sea route to Asia.
- This route was much shorter
- Travelling become easier
- Until its discovery there was no regular contact between America and the rest of the world.
- In the 19th century European attracted towards South America fabled wealth and in search of El Dorado (city of gold).
- The Spanish conquerors used the germs of smallpox in the conquest of America.
2. The nineteenth century ( 1815 - 1914 )
- There are three types of flaws in the 19th century , identified by thee economist :
- First is flow of trade.
- Second is flow of labour.
- Third is movement of capital.
- All three flows help us in understanding the world economy.
2.1 A world economy takes shape
- In the late 18th century, growth in the population, which increased the demand for food grains in Britain.
- Imported food is much cheaper than producing grains in Britain.
- Industrialisation brings population to cities , resulting in more food imports.
- Food is only an example , products such as cotton, rubber, coal, had the same condition.
2.2 Role of technology
- The railways, steamships, telegraph played a very significant role in transforming the Nineteenth century world.
- With the development of new technology, for example refrigerated ships, the transport of perishable food over long distances becomes easier and safer.
- Perishable items = slaughtered animals, vegetables, fruits.
2.3 Late Nineteenth century colonialism
- In the late 19th century, European powers conquered Asia and Africa as colonies.
- Britain and France especially made vast additions to their overseas territories.
- Belgium and Germany became new colonial powers.
- The US also became a colonial power in the late 1890's by taking over some colonies earlier held by Spain.
2.4 Rinderpest or cattle plague
- Rinderpest is a fast - spreading disease of cattle plague which hit Africa in the late 1880's.
- In the late 19th century, European powers were attracted to Africa due to its vast resources of land and minerals.
- They wanted to establish a plantation and mines.
- There was an acute shortage of Labour to work for wages.
- So, they imported infected cattle and destroyed 90% of the livestock.
2.5 Indentured labour migration from India
- Indentured labour was a bounded labourer under contract to work for an employer for a specific amount of time , to pay off his passage to a new country or home.
- In the 19th century, hundreds of thousands of Indian and Chinese labourers went to work on plantations, in mines, and in road and railways construction projects around the world.
- Labours were recruited by agents by providing false information about final destinations, modes of travel, the nature of the work, and living and working conditions .
- Living and working conditions were harsh.
- It was abolished in 1921.
2.6 Indian Entrepreneurs Abroad
- Indian Entrepreneurs , bankers like Nattukottai and Chettiars finance for export agriculture in Central and South-East Asia.
- They used either their own funds or borrowed from European banks.
2.7 Indian trade , colonialism and the global system
- Fine cottons produced in India were exported to European countries.
- Leads to increase in demand.
- British industrialists pressured the government to protect local industries .
- Tariffs were imposed , and the inflow of fine Indian cotton began to decline.
- In the early 19th century , there was a sharp decline in the export of cotton textiles from India.
- 1800 - 30% export
- 1815 - 15% export
- Between 1812 and 1871 the share of raw cotton exports dramatically rose from 5% to 35%.
- Indigo , used for dying clothes ; demands increased.
- Opium shipments to China grew rapidly from the 1820's.
- Britain's trade surplus in India also helped pay the so-called 'home charges' which includes private remittances home by British officials and traders, interest payments on India's external debt , and pensions of British officials in India.
3. The Inter war economy
- The first world war ( 1914 - 1918 ) was mainly fought in Europe , its impact was left by the entire world.
3.1 Wartime transformations
- The first world war continued for more than four years . Created a huge impact globally.
- Industries were restructured to produce war - related goods. Men went to battle while women stepped out of their homes to undertake jobs.
- This war resulted in the snapping (broken suddenly) of economic links between some of the world's largest economic powers.
- Britain borrowed huge sums from US banks as well as the US public.
- The US became international creditors.
3.2 Post-war recovery
- The first world war proved devastating for the economy of the world as its recovery proved very difficult.
- Britain, which was the world's leading economy in the pre-war period , faced a prolonged crisis.
- Meanwhile, India and Japan developed their industries.
- After war, it became very difficult for Britain to get it's earlier dominance over its colonies.
- In this time many Asian countries got freedom and became republics.
- After the war was over, the production reduced and unemployment increased.
3.3 Rise of mass production and consumption
- In the US, war recovery was quicks.
- Mass production became a characteristic feature of industrial production in the US.
- 'Assembly line' method introduced by Henry Ford makes production much faster than that achieved by previous methods.
- This method was widely copied in Europe in the 1920's.
- T-model Ford was the world's first mass produced car.
- The housing and consumer boom of the 1920's , became the basis of prosperity that did not last longer and by 1929 the world faced the Great Depression of 1929.
3.4 The Great Depression
- The Great Depression started around 1929 and lasted till the mid 1930's
- 24 October 1929 also known as Black Thursday.
- Market crashed in 1929 and led to the failure of banks and the crisis affected other countrie .
- By 1933 , over 4000 banks closed and between 1929-1932 about 1,10,000 companies collapsed.
- Factors caused the depression -
- Agricultural overproduction.
- Investment through loans from the US.
- Investing in the stock market , hoping to get higher returns.
3.5 India and the Great Depression
- India was also affected by the Great Depression.
- Indian export and imports declined extensively, price fell.
- Exports and imports reduced to half between 1928 and 1934.
- Prices of wheat in India fell by 50% between 1928 and 1934.
- Bengal jute growers suffered the most.
- Prices of raw jute crashed more than 60%.
- Large scale migration took place from village to town and cities.
4. Rebuilding a world economy : The post war era
- The second World war broke out merely two decades after the end of the first world war.
- 60 million people or 3% of the world's 1939 population died in WW2.
- War caused an immense amount of economic devastation and social disruption .
- After the war , the USA and the USSR emerged as superpowers.
4.1 Post war settlement and the Bretton Woods Institutions
- To ensure a stable economy a framework was agreed upon at the United Nations Monetary and Financial conference held in July 1944 at Bretton Woods in New Hampshire , USA.
- It established the International Monetary Fund ( IMF ) and the World Bank.
- The IMF deals with external surpluses and deficits of its member nations.
- The International Bank for reconstruction and development ( popularly known as the World Bank ) was set up to finance post-war reconstruction.
- The IMF and World Bank began financial operations in 1947.
- Bretton Woods' system was based on a fixed exchange rate.
- All currencies around the globe were attached to the Dollar at a fixed exchange rate.
- Dollar itself was attached to gold at a fixed price of $35 per ounce of gold.
4.2 The early post war years
- The bretton woods system inaugurated an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan.
- These decades also saw global expansion technology and enterprise.
4.3 Decolonisation and independence
- Many countries in Asia and Africa became independent nations , supported by UNO and NAM.
- Group of 77 or G-77 was organised by developing countries to demand a new international economic order ( NIEO ) which would give them real Control over their natural resources, manufactured goods in their markets.
4.4 End of Bretton Wood and the beginning of globalisation
- The US Dollar is now no longer the world's principal currency.
- Fixed exchange rates were changed to floating exchange rates.
- The industrial world was also hit by unemployment.
- In the last two decades the world's economic geography has been shifted to countries like India , China and Brazil.
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