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| The Making of the Global world |
Movement of people, goods and services across the nations has been termed as globalisation.
Silk routes
These were the routes which knitted together vast regions of Asia and linked Asia with Europe and northern Africa. These routes are known to have existed since before the Christian Era and thrived almost till the 15th century.
(i) The silk routes are a good example of vibrant pre-modern trade and cultural links between the distant parts of the world.
(ii) The silk route was used by the Chinese traders to export silk to other countries.
(iii) These routes were used by traders to trade goods from one country to another.
People fled Europe for America in the 19th century
(i) Until the 19th century, poverty and hunger
(ii) Until the were common in Europe.
(iii) Cities were crowded and deadly diseases were widespread.
(iv) Religious conflicts were common and religious dissenters were persecuted. So people migrated from Europe to America.
The Nineteenth Century (1815-1914)
Three types of flow
- Flow of goods
- The flow of capital investment
- Flow of labour
The Corn Laws
Corn laws
(i) The scrapping of Corn Laws led to free trade of food grains.
(ii) After the abolition of Corn Laws, food could be imported into Britain more cheaply than it could be produced within the country.
(iii) British farmers were unable to compete with imports. Vast areas of land were now left uncultivated, and thousands of men and women were thrown out of work. They flocked to the cities or migrated overseas.
Role of technology
(i) Transformation of the world economy: Railways, steam shipping, telegraph, etc., were important inventions without which it was not possible to imagine the transformation of nineteenth-century world.
(ii) Linking the markets: New investments and improvements in transport; faster railways, lighter wagons and larger ships helped move food more cheaply and quickly from far away farms to final markets.
(iii) Impact on the meat trade: The invention of refrigerated ships made it possible to transport meat from one region to another leading to drastic reduction in prices.
(iv) Social peace and imperialism: The refrigerated ships reduced shipping cost and lowered meat prices in Europe. The poor in Europe could now consume a more varied diet. Better living conditions promoted social peace within the country and support for imperialism abroad.
(v) Colonialism: Technology played very important role in linking the world markets which promoted the spirit of colonialism.
Rinderpest in Africa in the 1890's.
(i) Arrival of rinderpest:
Rinderpest arrived in Africa in the late 1880s. Within two years, it spread in the whole continent reaching Cape Town (Africa's southernmost tip) within five years.
(ii) Loss of Cattle:
The germs of the disease were carried by infected cattle imported from British Asia to feed the Italian soldiers invading ill Eritrea in Eastern Africa. The rinderpest killed about 90 per cent of the cattle.
(iii) Loss of livelihood:
As cattle was the main wealth of the people so the loss of now cattle destroyed the African livelihoods.
(iv) African into labour market:
Planters, mine owners and colonial governments now successfully monopolized what scarce cattle resources remained, to strengthen their power, and to force the Africans into the labour market.
Indentured labour migration from India.
(i) Most Indian indentured workers came from quo the present day regions of eastern Uttar Pradesh, Bihar, Central India and the dry districts of Tamil Nadu. In the mid nineteenth century these regions experienced many changes - cottage industries declined, land rents rose, lands were cleared for mines and plantations. All this affected the lives of the poor, they failed to pay their rents, became deeply indebted.
(ii) On the other hand workers were required in other countries for plantations, mines, road and railway construction projects.
(iii) In hope for better future in other countries many workers from India started migrated 901 in other countries.
The post First World War period
(i) Weak British economy:
The post-war economic recovery proved difficult as the heavy expenditure on the World War I weakened the British economy.
(ii) Competition from India and Japan :
While Britain was preoccupied with War, industries of India and Japan got an opportunity to grow. After the war both these nations provided a tough competition to the industries of Britain.
(iii) External debts :
To finance war expenditure, Britain had borrowed liberally from the United States. So it was burdened with huge external debts.
(iv) End of economic boom:
The war had led to an economic boom. But when the war boom ended production contracted, employment and unemployment increased.
(v) Unrest in colonies:
The economic hardship of the war period forced the people of British colonies against them. For example, Non
production in the US(Assembly Line System)
(i) Henry Ford adopted the assembly line of a Chicago slaughterhouse to his new car plant in Detroit.
(ii) The assembly line allowed a faster and cheaper way of producing vehicles. It forced workers to repeat a single task mechanically and continuously.
(iii) This increased their efficiency in the single task and the speed of production too.
(iv) Standing in front of the conveyer belt, no worker could delay the motion or take a break.
(v) In the beginning many workers quit, since they could not cope up with the stress of work.
(vi) Henry Ford doubled their wages and against that he not only increased the speed of the conveyer belt but also banned trade unions.
Causes of Economic Depression
(1) Conditions created by the War:
There was an immense industrial expansion in view of the increased demands of goods related to army during the period of the First World War. Even pace after the war, the industries continued producing at the same instead of a drastic fall in demand.
(ii) Overproduction in agriculture:
There was a huge demand for agricultural product till 1920's. So farmers continued producing at the same pace. But a sudden fall in the demand led to a drastic fall in price of agricultural products.
(iii) Shortage of loans:
In the mid-1920s, many countries financed their investments through loans from USA. While it was often very easy to raise loans in US during the boom period, but the US overseas lenders panicked at the first sign of trouble.
(iv) Multiple effect:
The withdrawal of lenders from the market had a multiple effect. In Europe, it led to the failure of some major banks, and the collapse of currencies such as the British pound and the sterling.
(v) Import duties:
The US and many other industrial nations attempted to protect their economies by increasing import duties. This gave a severe blow to the world trade
Impact of the Great Depression on Indian farmers
(1) Impact on trade:
The depression immediately affected Indian trade. India's exports and imports nearly halved between 1928 and 1934. As international prices crashed, prices in India plunged. Between 1928 and 1934, wheat prices in India fell by about 50 per cent.
(ii) Impact on farmers:
The fall in prices had a deep impact on the poor farmers. Though agricultural prices fell sharply, but the colonial government refused to give any relief to the farmers in taxes. Peasants producing for the world market were the worst hit.
(iii) Impact on Urban India:
The depression proved less grim for urban India. Because of falling prices those with fixed income say town-dwelling landowners, who received rents and middle-class salaried employees now found themselves better off. Everything cost less.
(iv) High Industrial investment:
Industrial investment also grew as the government extended tariff protection to industries, under the pressure of nationalist opinion.
(v) Political Impact:
The Great Depression paved way for Gandhiji to launch the Civil Disobedience movement.
Second World war
(i) Death and Destruction:
More than 60 million people, or about 3 per cent of the world's population, are believed to have been killed, directly or indirectly, as a result of the war. Millions of people were injured. Many big cities were reduced to ashes.
(ii) Economic loss:
The World War II caused a great damage to agriculture, trade and commerce. The terrible battles fought in different countries, made large tracts of land infertile. Lakhs of industries were destroyed or closed down which caused a severe damage to the industrial production.
(iii) Increase in Soviet Russia's Power and Prestige:
The Second World War boosted up the power and prestige of the Soviet Union. Russian influence started increasing in the international field, and many countries got attracted towards communism.
(iv) USA becomes a Super Power:
The World War II made USA the supreme power of the world. Undoubtedly, the USA played an important role in the victory of the Allies. After the war, no European country was either as powerful or as prosperous as the United States of America (USA).
(v) New Economic system:
The main aim of the post-war international economic system was to preserve economic stability and full employment in the industrial world. The Bretton Woods conference established the International Monetary fund (IMF) to deal with external surpluses and deficits of its member nations. The International Bank for Reconstruction
Bretton Woods Agreement
Economists and politicians drew some lesson from the Depression of 1929 and inter war period, i.e., economic stability could be ensured only through the government intervention.
So to preserve economic stability and full employment a conference was held in 1944 at Bretton Woods in New Hampshire, USA.
The conference led to creation of International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD).
IMF was created to monitor exchange rates and lend currencies to nations with trade deficits.
IBRD (World Bank) was created to provide needed capital for development.
Impacts of the Bretton
(i) Bretton Woods system inaugurated an era of unprecedented growth of trade and income for the Western industrial nations IOS and Japan.
(ii) It provided a big boost to the world trade which grew annually at over 8 per cent between 1950 and 1970, and incomes at nearly 5 per cent.
(iii) The growth was also mostly stable, without large fluctuations.
(iv) The system also controlled the unemployment which averaged less than 5 per cent in most industrial countries.
(v) These decades also saw the worldwide spread of technology and enterprise. Developing countries were in a hurry to catch up with the advanced industrial countries.
G-77
The G-77 is a loose coalition of developing nations, designed to promote its member's collective economic interests and create an enhanced joint negotiating capacity of the United Nations.
The Bretton Woods Twins the IMF and the World Bank were dominated by the former colonial powers. As a result, most developing countries did not benefit from the fast growth that the western economies experienced in the 1950s and 1960s. So, they organised themselves as a group the group of 77 of G-77 to demand a new international economic order.
Former colonial powers exploited the natural resources for developing nations through the IMF and the World Bank.
The developing nations organised themselves into G-77 so as to gain real control over their natural resources.
They wanted to get more development assistance and fairer prices for raw materials.
They also wanted a better opportunity for their manufactured goods in the markets of developed nations.
Fixed Exchange Rate
(1) W rate of a currency is fixed by the government it is known as fixed by exchange rate.
(ii) Under this government intervenes to prevent fluctuations in the exchange rate of the currency.
(iii)This system was followed under the Bretton Woods system.
Flexible or Floating Exchange Rate
(i) When exchange rate of a currency depends on its demand and supply or is decided by the market it is known as floating exchange rate.
(ii) Under this the government does not intervene and allow the currency to fluctuate.
(iii) This system is followed now a Days