The Making of a Global World

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05 The Making of a Global World

The Pre-modern World

‘Globalisation’ is often referred to as an economic system that has emerged since the last 50 years or so. The making of the global world has a long history of trade, migration of people in search of work, the movement of capital, etc.



Silk Routes Link the World:

  • The silk routes linked together vast regions of Asia, Asia with Europe and northern Africa.
  • They are known to have existed since before the Christian era and thrived almost till the fifteenth century.


Food Travels: Spaghetti and Potato

  • Europe’s poor began to eat better and live longer with the introduction of potato.
  • The poor peasants of Ireland were 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

  • But from the sixteenth century, America’s vast lands and abundant crops and minerals began to transform trade and lives everywhere.
  • The Portuguese and Spanish conquest and colonisation of America was decisively under way by the mid-sixteenth century.
  • The most powerful weapon of the Spanish conquerors was the germs such as those of smallpox that they carried.
  • Once introduced, smallpox spread deep into the continent, ahead even of any Europeans reaching there.
  • Until the nineteenth century, poverty and hunger were common in Europe.
  • Religious conflicts were common, and religious dissenters were persecuted.

The Nineteenth Century (1815-1914)

  • In the nineteenth century, economic, political, social, cultural and technological factors transformed societies and reshaped external relations.


A World Economy Takes Shape

  • In nineteenth-century Britain, self-sufficiency in food meant lower living standards and social conflict.
  • In Eastern Europe, Russia, America and Australia lands were cleared and food production expanded to meet the British demand.
  • By 1890, a global agricultural economy had taken shape, accompanied by complex changes in labour movement patterns, capital flows, ecologies and technology.


Role of Technology

  • Technological advances like the railways, steamships, the telegraph, were the result of larger social, political and economic factors.
  • Colonisation stimulated new investments and improvements in transport resulting in faster railways, lighter wagons and larger ships.


Late nineteenth-century Colonialism

  • Trade flourished and markets expanded in the late nineteenth century.
  • The expansion of trade and increased prosperity had many negative repercussions.


Rinderpest or the Cattle Plague:

  • In the late 1880s Africa was hit by rinderpest, a devastating cattle disease.
  • As rinderpest spread, it killed 90 per cent of the cattle which in turn destroyed African livelihoods.
  • Whatever little cattle resources remained, were monopolised by planters, mine owners and colonial governments.


Indentured Labour Migration from India

  • In India, indentured labourers were hired under contracts which promised return travel after they had worked five years on their employer’s plantation.
  • The main destinations of Indian indentured migrants were the Caribbean islands, Mauritius and Fiji.
  • Recruitment was done by agents engaged by employers and paid a small commission.
  • On arrival at the plantations, labourers found living and working conditions were harsh, and there were few legal rights.
  • Most indentured workers stayed on after their contracts ended, or returned to their new homes after a short spell in India.


Indian Entrepreneurs Abroad

  • Many groups of bankers and traders had a sophisticated system to transfer money over large distances, and even developed indigenous forms of corporate organisation.
  • Indian traders and moneylenders also followed European colonisers into Africa.


Indian Trade, Colonialism and the Global System

  • With industrialisation, British cotton manufacture began to expand.
  • Tariffs were imposed on cloth imports into Britain.
  • From the early nineteenth century, British manufacturers also began to seek overseas markets for their cloth.
  • While exports of manufactures declined rapidly, export of raw materials increased equally fast.
  • Over the nineteenth century, British manufactures flooded the Indian market.
  • But the value of British exports to India was much higher than the value of British imports from India.
  • Thus Britain used the surplus to balance its trade deficits with other countries.

The Inter-war Economy

  • During the First World War the world experienced widespread economic and political instability, and another catastrophic war.


Wartime Transformations

  • The First World War involved the world’s leading industrial nations which harnessed the powers of modern industry to inflict the greatest possible destruction on their enemies.
  • Millions of soldiers had to be recruited from around the world and moved to the frontlines on large ships and trains.
  • The scale of death and destruction was unthinkable without the use of industrial arms.
  • The war led to the snapping of economic links between some of the world’s largest economic powers.
  • Britain borrowed large sums of money from US banks as well as the US public.
  • Thus the war transformed the US from being an international debtor to an international creditor.


Post-war Recovery

  • Britain, which was the world’s leading economy in the pre-war period, faced a prolonged crisis.
  • After the war Britain found it difficult to recapture its earlier position of dominance in the Indian market, and to compete with Japan internationally.
  • When the war boom ended, production contracted and unemployment increased.


Rise of Mass Production and Consumption

  • After a short period of economic trouble in the years after the war, the US economy resumed its strong growth in the early 1920s.
  • Mass production became a characteristic feature of industrial production in the US.
  • The housing and consumer boom of the 1920s created the basis of prosperity in the US.
  • In 1923, the US resumed exporting capital to the rest of the world and became the largest overseas lender.


The Great Depression:

  • The Great Depression began around 1929 and lasted till the mid1930s.
  • Most parts of the world experienced major declines in production, employment, incomes and trade.
  • Agricultural regions and communities were the worst affected.


Causes of the depression:

  • Agricultural overproduction:
  • Indebtedness:
  • The withdrawal of US loans affected much of the rest of the world.
  • The US was also the industrial country most severely affected by the depression.


India and the Great Depression:

  • Due to the depression India’s exports and imports went down to half between 1928 and 1934.
  • Peasants and farmers suffered more than urban dwellers.
  • The depression proved less grim for urban India.

Rebuilding a World Economy: The Post-war Era:

  • The Second World War was fought between the Axis powers and the Allies.
  • Two crucial influences shaped post-war reconstruction.
  • The first was the US’s emergence as the dominant economic, political and military power in the Western world.
  • The second was the dominance of the Soviet Union.


Post-war Settlement and the Bretton Woods Institutions:

  • The main aim of the post-war international economic system was to preserve economic stability and full employment in the industrial world.
  • Its framework was agreed upon at the United Nations Monetary and Financial Conference held in July 1944 at Bretton Woods in New Hampshire, USA.
  • The IMF and the World Bank are referred to as the Bretton Woods institutions or the Bretton Woods twins.


The Early Post-war Years:

  • With the Bretton Woods system came an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan.
  • Developing countries tried to catch up with the advanced industrial countries.


Decolonisation and Independence:

  • Over the next two decades after the Second World War, most colonies in Asia and Africa emerged as free, independent nations.
  • The IMF and the World Bank were designed to meet the financial needs of the industrial countries.
  • From the late 1950s the Bretton Woods institutions began to shift their attention more towards developing countries.


End of Bretton Woods and the Beginning of ‘Globalisation’:

  • From the 1960s the US’ overseas involvements weakened its finances and competitive strength.
  • The industrial world was also hit by unemployment that began rising from the mid-1970s and remained high until the early 1990s.
  • The relocation of industry to low-wage countries stimulated world trade and capital flows.
  • In the last two decades the world’s economic geography has been transformed as countries such as India, China and Brazil have undergone rapid economic transformation.

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