The Making of a Global World Notes

 The Making of a Global world 

Globalisation is generally associated with economy as the free movement of capital, goods, technology, ideas and people across the globe. Globalisation in a broader sense also includes cultural exchanges between different countries of the world.

 Ancient times :-

Travellers, traders, priests and pilgrims travelled vast distances for knowledge, opportunity and spiritual fulfilment, or to escape persecution. 

They carried goods, money, values, skills, ideas,  inventions, and even germs and diseases. 

As early as 3000 BCE an active coastal trade linked the Indus valley civilisations with present-day West Asia. 

Silk route linked China with West. 

Food travels from America to Europe to Asia. 

Noodles travels from China to Itly and became Spaghetti. 

European conquerors carried germs of smallpox in America. Once introduced, it spread deep into the continent.

 Silk routes :-

 The Silk Route was a historic trade route that dated from the second century B.C. The ‘silk routes’ points to the importance of West-bound Chinese silk cargoes along this route. until the 14th century A.D. 

 It stretched from Asia to the Mediterranean, traversing China, India, Persia, Arabia, Greece, and Italy .It was dubbed the Silk Route because of the heavy silk trading that took place during that period.

 Food Travels: Spaghetti and Potato :-

 Traders and travellers introduced new crops to the lands that they travelled.

 Spaghetti :- noodles travelled west from China to become spaghetti. Or, perhaps Arab traders took pasta to fifth-century Sicily, an island now in italy

 Food Many of our common foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies, sweet potatoes, and so on were not known to our ancestors until about five centuries ago.

 Potato :- Europe’s poor began better and live longer with introduction the humble Potato. 

 Ireland’s poorest peasants became so dependent on potatoes that when disease destroyed the potato crop in the mid-1840s, hundreds of thousands died of starvation.

 Conquest, Disease and Trade :-

 America’s Discover and Precious Metals :-

 European sailors found a sea route to Asia and also successfully crossed the western ocean to America.

 Before its ‘discovery’, America had been cut off from regular contact with the rest of the world for millions of years.

 Precious metals, particularly silver, from mines located in present day Peru and Mexico also enhanced Europe’s wealth and financed its trade with Asia. 
Use of smallpox germs by conquerors (for victory)

 The Portuguese and Spanish conquest and Colonisation of America was decisively underway by the mid- sixteenth century.

 The most powerful weapon of the Spanish conquerors was the germs such as those of smallpox that they carried on their person. 

 Due to their long isolation, America’s original inhabitants had no immunity against these diseases that came from Europe. Smallpox, in particular proved to be fatal. 

  Problems in europe :-

 Until the 19th century, poverty and hunger were common in Europe. Cities were crowded and deadly diseases were widespread. 

 India and China till the eighteenth century :-

 In the 18th century, China and India were among the world’s richest countries. They were also pre-eminent in Asian trade.

 However, from the 15th century, China is said to have restricted overseas contacts and retreated into isolation. 

 China’s reduced role and the rising importance of the America gradually moved the centre of world trade Westwards. 

 Europe now emerged as the centre of world trade.

The Nineteenth Century (1815-1914) 

 The Nineteenth Century :-

 Economic, political, social, cultural and technological factors interacted in complex ways to transform societies and reshape external relations. 

 Economists identify three types of movement or ‘flows’ within International Economic Exchanges. 

The flow of Trade :- Trade in goods such as grain and cloth.

The flow of Labour :- Migration of people to new areas in search of work.

The Movement of capital :- Investment of capital for a short and long period in far off areas.

 Let’s look at the UK economy to understand all three.

  A World Economy Takes Shape :-

Due to increase in population from the late 18th century, the demand for food grains in Britain had increased. 

Since, there was pressure from landed groups, the government also restricted the import of corn. 

The laws allowing the government to do this were commonly known as the ‘Corn Laws’. 

Railways were needed to link the agricultural regions to the ports. 

New harbours had to be built and people had to settle on the lands which meant building homes and settlements.

All these activities in turn required capital and labour. Capital flowed from financial centres such as London. 

The demand for labour in places where labour was in short supply-as in America and Australia, led to more migration. 

By 1890, Global Agricultural Economy had taken shape.

 Corn Law :-

 The laws allowing the government (U.K.) to restrict the import of corn were commonly known as the Corn Laws.

Role of Technology :-

 The railways, steamships, the telegraph were important inventions without which we cannot imagine the transformed nineteenth-century world.

 Colonisation stimulated new investments and improvements in transport.

 The trade in meat offers a good example of this connected process. Till the 1870s, animals were shipped live from America to Europe and then slaughtered when they arrived there. 

 Better living conditions promoted social peace within the country and support for imperialism abroad. 

 Trade flourished and markets expanded in the late nineteenth century.

 Late nineteenth-century Colonialism :-

 Britain and France made vast additions to their overseas territories in the late nineteenth century. Belgium and Germany became new Colonial Powers.

 The US also became a colonial power in the late 1890s by taking over some colonies earlier held by Spain.

 Rinderpest Plague :-

 Rinderpest is a fast spreading cattle plague which hit Africa in the late 1880s.

 Rinderpest, or the Cattle Plague :-

 In the 1880s, a fast-spreading disease of Cattle Plague or Rinderpest had a terrifying impact on the African local economy. It was carried by infected cattle imported from British Asia to feed the Italian soldiers invading Eritrea in East Africa. 

 Entering Africa in the East, Rinderpest moved west ‘like forest fire’. The loss of cattle destroyed African livelihoods.

 Indentured labour :-

 A bonded labourer under contract to work for an employer for a specific amount of time, to pay off his passage to a new country home.

Indentured Labour Migration from India :-

 In the 19th century, hundreds of thousands of Indian and Chinese labourers went to work on plantations, in mines, and in road and railway construction projects around the world.

 In India, indentured labourers were bonded labourers who were transferable to any country on contract for a specific amount of wage and time. Most of the labourers were from Uttar Pradesh, Bihar, Central India and certain districts of Tamil Nadu.

 The 19th century indenture has been described as a ‘New System of Slavery’. 

 From the 1900s, India’s nationalist leaders began opposing the system of Indentured Labour Migration as abusive and cruel. It was abolished in 1921.

 New slave system in 19th century :-

Agents provided false information to misguide the labourers. 

Labourers were also kidnapped by the agents. 

The living and working conditions of new place were very hard. 

Wages were very low. The wages were deducted in terms of work was not done properly. 

There were no legal rights for labourers.

 Indian Entrepreneurs Abroad :-

 Shikaripuri Shrott and Nattukottai Chettiyars were amongst the many groups of bankers and traders who Financed Export Agriculture in Central and South-east Asia. 

 Indian Traders and Moneylenders also followed European colonisers into Africa. From the 1860s they established flourishing emporia at busy ports worldwide, selling local and imported curios to tourists whose numbers were beginning to swell, thanks to the development of safe and comfortable passenger vessels.
Indian Trade, Colonialism and the Global System :-

 With the advent of industrialisation, British cotton manufacture began to expand and industrialists pressurised the government to restrict cotton imports and protect local industries.

 Tariffs were imposed on cloth imports into Britain. Consequently, the inflow of fine Indian cotton began to decline.

 Indigo used for dyeing cloth was another important export for many decades. British manufactures flooded the Indian Market.

 The value of British Exports to India was much higher than the value of British imports from India. Thus, Britain had a “Trade Surplus’ with India. 

 Britain used this surplus to balance its trade deficits with other countries that is, with countries from which Britain was importing more than it was selling to.

 The Inter-War and Post-War Economy 

 The Inter War Economy :-

 The First World War (1914-18) was mainly fought in Europe but its impact was felt around the world due to widespread economic and political instability. 

 Wartime Transformations :-

 The First World War was fought between two power blocs. On the one side were the Allies Britain, France and Russia (later joined by the US); and on the opposite side were the Central Powers – Germany, Austria-Hungary and Ottoman Turkey. 

 This war was thus, the First Modern Industrial War. It saw the use of machine guns, tanks, aircraft, chemical weapons, etc., on a massive scale. 

 Most of the killed and maimed were men of working age and these deaths and injuries reduced the able-bodied workforce in Europe. 

 Britain borrowed large sums of money from the US Banks as well as the US public which transformed the US from being an “International Debtor to an International Creditor”.

the impact of first world war on the economy of Britain :-

Hard to maintain the top position of Britain in Indian market. 

After first world war Britain had to compete with Japan. 

Debt taken by America during First world war. 

Fall in demand of goods due to the end of war caused fall in production and increase in unemployment. 

The heavy taxes imposed by the government to fulfill the losses of war which causes great fall in employment.

 Post-war Recovery :-

 After the war, Britain found it difficult to recapture its earlier position of dominance in the Indian Market and to compete with Japan internationally. 

 The war had led to an economic boom, that is, to a large increase in demand, production and employment. 

 Before the war, Eastern Europe was a major supplier of wheat in the world market but during the war its supply disrupted and wheat production in Canada, America and Australia expanded immensely.

 But after the war, production in Eastern Europe revived and created a glut in wheat output. Grain prices fell, rural incomes declined and Farmers fell deeper into debt.

 Rise of Mass Production and Consumption :-

 One important feature of the US economy of the 1920s was Mass Production. A well-known pioneer of mass production was the Car Manufacturer, Henry Ford. 

 The T-Model Ford was the world’s first mass-produced car. 

 Mass production lowered costs and prices of engineered goods and there was an increase in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of ‘hire purchase’. 

 Large investments in housing and household goods seemed to create a cycle of higher employment and incomes, rising consumption demand, more investment and yet, more employment and incomes.

The Great Depression :-

 By 1929 the world plunged into a depression called -The Great Depression of 1929. 

 During this period most parts of the world experienced catastrophic declines in production, employment, incomes and trade. 

 The depression was caused by a combination of several facts of agricultural overproduction. 

 Many countries financed their investments through loans from the US. The withdrawal of the US loans affected much of the rest of the world. 

 With the fall in prices and the prospect of a depression the US Banks had also slashed domestic lending and called back loans. 

 The Great Depression’s wider effects on society, politics and international relations, and on peoples’ minds, proved more enduring. 

 Causes of Great Depression :-

 Post-World War, economy of the world was fragile. Agricultural over production was a problem. As prices slumped, farm produce rotted. 

 Many countries financed loans from the US. 

 US overseas lenders panicked at the sign of financial crisis.

 Thus, banks were bankrupt and were forced to close down in Europe and in the US because they were unable to recover investments, collect loans and repay depositors. 

 American capitalists stopped all loans.

 India and the Great Depression :-

 Since Colonial India had become an exporter of agricultural goods and importer of manufactures, the depression immediately affected Indian trade. 

 Peasants and farmers suffered more than urban dwellers though agricultural prices fell sharply, the Colonial Government refused to reduce revenue demands.

 This resulted in the increase of indebtedness of the Indian peasants who used up their savings, mortgaged lands, and sold whatever jewellery and precious metals they had to meet their expenses. 

 The famous economist John Maynard Keynes thought that Indian gold exports promoted global economic recovery.

Rebuilding a World Economy: The Post-war Era 

 The Post War Era :-

 The Second World War broke out merely after two decades of the First World War and brought enormous death and destruction.

 It was fought between the Axis powers (mainly Nazi Germany, Japan and Italy) and the Allies (Britain, France, the Soviet Union and the US). 

 The war caused an immense amount of economic devastation and social disruption.

 There were two impacts that influenced post-war reconstruction. The first was the US’s Emergence as the dominant economic, political and military power in the Western world and the second was the dominance of the Soviet Union.

  The Bretton Woods institutions :- 

 The International Monetary Fund (IMF), and the World Bank were created to bring about orderly development of the world economy in the post-World War Il era. 

 Bretton Woods agreement :-

 Bretton Woods :-

 Bretton Woods is the name of Hotel in USA where the National Monetary and Financial conference held in 1944 to ensure the stable economy. 

Establishment of IMF and World Bank. 

Bretton Woods system was based on fixed exchange rate.

 Decolonisation and Independence :-

 Most developing countries did not benefit from the fast growth that the Western economies experienced in 1950s and 1960s therefore, they organized themselves as a group-the Group of 77 (or G-77)-to demand a New International Economic Order (NIEO).

 By the NIEO they meant a system that would give them real control over their natural resources, more development assistance, fairer prices for raw materials and better access for their manufactured goods in developed countries’ markets.

End of Bretton Woods and the Beginning of “Globalisation’ :-

 The Industrial World was hit by unemployment that began rising from the mid-1970s and remained high until the early 1990s. 

 From the late 1970s., MNCS also began to shift production operations to low-wage Asian countries, China being one of them.

 China became an attractive destination for investment by foreign MNCS, competing to capture world markets. 

 The relocation of industries to low-wage countries stimulated world trade and capital flows.

 Exchange Rates :-

 They link national currencies for the purposes of International trade. There are broadly two kinds of exchange rates, namely, fixed exchange rate and floating exchange rate. 

 Fixed Exchange Rates :-

 The rates which are officially fixed by the government and do not vary with change in demand and supply of Foreign Currency.

 Flexible or Floating Exchange Rates :-

 These rates fluctuate depending on demand and supply of Foreign Currencies in Foreign Exchanges Markets, in principle without interference by governments. 

 Tariff :-

 Tax imposed on a country’s imports from the rest of the world. Tariffs are levied at the point of entry, i.e., at the Border or at the Airport. 

Hosay :-

 A riotous carnival in Trinidad (for Imam Hussain) where workers of all races and religions joined to celebrate.

 Plantation :-

 Estate for cultivation of cash crops such as tea, coffee, cotton, tobacco, sugarcane, etc. 

 MNCS :- 

 Multinational Corporations (MNCS) are large companies that operate in several countries at the same time.

 IMF :-

 It is also termed as International Monetary Fund, The Bretton Woods Institution. It was established to deal with external surpluses and deficits of its member nations. 

 IBRD :-

 It is abbreviated as the International Bank for Reconstruction and Development (popularly known as the World Bank). It was set up to finance Post-war reconstruction. 

 G-77 :-

 G-77 or Group of 77 refers to the seventy seven developing countries that did not benefit from the fast growth western economies experienced in 1950s and 1960s.

 Veto :-

 A constitutional right to reject a decision or proposal made by a law making body.