Ch4 The Making of a Global World (NOTES)

 

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.