Globalisation is an economic system associated with the free movement of goods, technology, ideas and people across the globe.
Pre Modern World
Silk Routes in the World
- Silk routes are significant examples of pre-modern trade and cultural connections across the globe.
- The term 'silk routes' highlights the importance of Chinese exports heading west.
- Historians have identified multiple silk routes, both overland and sea, connecting vast Asian regions, and linking Asia with Europe and North Africa.
- These routes were operational before the Christian Era and flourished until the 15th century.
- Alongside silk, Chinese pottery, Indian and Southeast Asian textiles and spices also traveled these routes.
- In return, gold and silver flowed from Europe to Asia.
- Trade routes were often accompanied by cultural exchanges, with Christian and Muslim missionaries traveling these routes to Asia.
- Buddhism, which originated in eastern India, also spread in multiple directions through the silk routes.
Question for Chapter Notes: The Making of a Global World
Try yourself: What is the significance of the Silk Routes in pre-modern trade?
- The Silk Routes were significant in pre-modern trade as they connected vast Asian regions and linked Asia with Europe and North Africa.
- These routes allowed for the exchange of various goods such as silk, Chinese pottery, Indian and Southeast Asian textiles, and spices.
- Additionally, the Silk Routes facilitated cultural exchanges, with Christian and Muslim missionaries traveling along these routes to Asia.
- Buddhism, which originated in eastern India, also spread in multiple directions through the Silk Routes.
- Furthermore, the flow of gold and silver from Europe to Asia was another aspect of trade along these routes.
- Overall, the Silk Routes played a crucial role in trade and cultural connections across the globe during pre-modern times.
Food Travels: Spaghetti and Potato
- Food shows examples of long-distance cultural exchange.
- Traders and travelers introduced new crops to different lands.
- Noodles may have traveled from China to become spaghetti, or pasta may have been brought to Sicily by Arab traders.
- Similar foods were known in India and Japan, suggesting cultural contact/
- Common foods like potatoes, soy, maize, tomatoes, etc. were introduced to Europe and Asia after Columbus discovered the Americas.
- Many common foods originated from the American Indians.
- New crops like the potato improved the diet of Europe's poor, but when the potato crop was destroyed, many died of starvation in Ireland.
Conquest, Disease, and Trade
- The discovery of sea routes to Asia and America in the 16th century greatly shrank the pre-modern world.
- The Indian Ocean was a bustling trade route with goods, people, knowledge, and customs.
- The entry of Europeans expanded and redirected trade flows towards Europe.
- America was cut off from regular contact with the rest of the world until its discovery.
- Precious metals from Peru and Mexico enhanced Europe's wealth and financed trade with Asia.
- Many expeditions were launched in search of South America's fabled city of gold, El Dorado.
- The conquest and colonization of America by the Portuguese and Spanish was underway in the mid-16th century.
- European conquerors introduced diseases like smallpox to which the original inhabitants of America had no immunity, causing devastation.
- Poverty, hunger, and diseases were common in Europe until the 19th century, leading many to flee to America.
- China and India were once wealthy and important in trade, but China retreated into isolation while the Americas gained importance, making Europe the center of world trade.
The Nineteenth Century (1815-1914)
In the nineteenth century, economic, political, social, cultural and technological factors interacted in complex ways to transform societies and reshape external relations. Three flows or movements were identified by economists.
- The first is the flow of trade referred largely to trade in goods (e.g., cloth or wheat).
- The second is the flow of labour – the migration of people in search of employment.
- The third is the movement of capital for short-term or long-term investments over long distances.
The Nineteenth Century
Question for Chapter Notes: The Making of a Global World
Try yourself: What factors contributed to the transformation of societies and reshaping of external relations in the 19th century?
- The 19th century was a period of significant transformation in societies and external relations, driven by various factors.
- The flow of trade played a crucial role as goods were exchanged between different regions and countries.
- This trade flow involved the exchange of commodities such as cloth or wheat.
- Additionally, the movement of labor was another important factor. People migrated in search of employment opportunities, often seeking better living conditions or escaping poverty.
- Lastly, the movement of capital, both short-term and long-term investments, also played a role in the transformation of societies. Capital was invested across long distances, supporting economic growth and development.
- These three flows—trade, labor, and capital—interacted and influenced each other, contributing to the reshaping of societies and external relations during the 19th century.
A World Economy takes Shape
- Food production and consumption patterns changed in industrial Europe.
- In the 19th century, self-sufficiency in food meant lower living standards and social conflict in Britain.
- Population growth increased the demand for food grains in Britain.
- The government restricted the import of corn, known as the 'Corn Laws'.
- The Corn Laws were abolished due to pressure from industrialists and urban dwellers.
- After the Corn Laws were scrapped, food could be imported more cheaply than produced within Britain.
- British agriculture could not compete with imports, leading to uncultivated land and unemployment.
- Consumption in Britain rose as food prices fell.
- Industrialization in Britain led to higher incomes and more food imports.
- Lands in Eastern Europe, Russia, America, and Australia expanded food production to meet British demand.
- Capital and labor flowed from financial centers like London.
- Labor demand in places with labor shortages, such as America and Australia, led to migration.
- Around 50 million people emigrated from Europe to America and Australia in the 19th century.
- Food came from thousands of miles away and was grown by agricultural workers.
- Changes also occurred in west Punjab with the construction of irrigation canals.
- Peasants from other parts of Punjab settled in the Canal Colonies.
- Commodities like cotton and rubber also saw rapid expansion in production.
- World trade multiplied 25 to 40 times between 1820 and 1914, with 60% of trade being agricultural products and coal.
Role of Technology
- Role of technology in the 19th century transformation.
- Important inventions: railways, steamships, telegraph.
- Technological advances influenced by social, political, and economic factors.
- Colonization stimulated new investments and improvements in transport.
- Faster railways, lighter wagons, and larger ships helped transport food more cheaply.
- Trade in meat as an example of this connected process.
- Previously, live animals were shipped from America to Europe and then slaughtered.
- This was expensive and limited meat availability to the European poor.
- Development of refrigerated ships allowed for the transport of perishable foods over long distances.
- Animals were now slaughtered at the starting point and transported as frozen meat.
- This reduced shipping costs and lowered meat prices in Europe.
- Improved living conditions and access to a varied diet promoted peace and support for imperialism.
Late nineteenth-century Colonialism
- Late nineteenth century saw flourishing trade and expanding markets.
- Expansion of trade and closer relationship with world economy had a darker side.
- Many parts of the world experienced loss of freedoms and livelihoods.
- European conquests in late nineteenth century led to painful economic, social, and ecological changes.
- European powers met in Berlin in 1885 to divide up Africa- Britain, France, Belgium, and Germany became new colonial powers.
- US also became a colonial power by taking over colonies previously held by Spain.
- One example of destructive impact of colonialism on economy and livelihoods of colonized people.
Rinderpest, or the Cattle Plague
- In the late 1890s, Africa was affected by a fast-spreading cattle disease called rinderpest.
- This disease had a significant impact on the local economy and people's lives.
- It exemplifies the widespread impact of European imperialism on colonized societies.
- Africa had abundant land and a small population, and people relied on land and livestock for their livelihoods.
- Europeans were attracted to Africa for its resources and aimed to establish plantations and mines.
- However, they faced a shortage of laborers willing to work for wages.
- Employers used various methods to recruit and retain labor, such as heavy taxes and changing inheritance laws.
- Rinderpest arrived in Africa in the late 1880s and spread rapidly from east to west, decimating 90% of the cattle along the way.
- The loss of cattle destroyed African livelihoods and allowed European colonizers to strengthen their power and force Africans into the labor market.
- Similar impacts can be seen in other parts of the world during the Western conquest of the 19th century.
Indentured Labour Migration from India
- Indentured labor migration from India occurred in the 19th century.
- Indian and Chinese laborers went to work on plantations, mines, and construction projects.
- Indian indentured laborers were hired under contracts and promised return travel to India after five years.
- Indian indentured workers mainly came from eastern Uttar Pradesh, Bihar, central India, and Tamil Nadu.
- The main destinations for Indian indentured migrants were the Caribbean islands, Mauritius, and Ceylon.
- Agents recruited workers and provided false information about destinations and working conditions.
- Conditions on the plantations were harsh and workers faced legal rights issues.
- Some workers developed new forms of self-expression and cultural fusion.
- Many workers stayed on after their contracts ended or returned to India briefly before settling in the new country.
- India's nationalist leaders opposed indentured labor migration and it was abolished in 1921.
- Descendants of Indian indentured workers faced a sense of loss and alienation in the Caribbean islands.
Question for Chapter Notes: The Making of a Global World
Try yourself: What technological advances played a role in the transformation of the world economy in the 19th century?
- The invention of railways, steamships, and telegraph played crucial roles in the transformation of the world economy in the 19th century.
- Railways revolutionized transportation, making it faster and more efficient, which facilitated the movement of goods and people over long distances.
- Steamships made it possible to transport perishable foods, such as meat, over long distances by utilizing refrigeration technology.
- The development of the telegraph enabled faster communication, allowing for better coordination of trade and business activities across different regions.
- These technological advances greatly improved transportation, communication, and trade, leading to the expansion of markets and the growth of the world economy.
Indian Entrepreneurs Abroad
- Indian entrepreneurs, some bankers like Nattukottai and Chettiars financed the export of agriculture to Central and South-East Asia.
- They even followed the Europeans to Africa.
- Industrial Revolution in England changed the balance of trade between England and India.
- Indian handicraft and agriculture were destroyed and Britain enjoyed a trade surplus with India.
- Their exports increased and imports decreased.
Indian Trade, Colonisation and Globalisation System
- Cottons from India were exported to Europe. In Britain, tariffs were imposed on cloth imports. Consequently, the inflow of fine Indian cotton began to decline.
- Over the nineteenth century, British manufacturers flooded the Indian market. By helping Britain balance its deficits, India played a crucial role in the late-nineteenth-century world economy.
- Britain’s trade surplus in India also helped pay the so-called ‘home charges’ that included private remittances home by British officials and traders, interest payments on India’s external debt, and pensions of British officials in India.
The Inter-war Economy
The First World War (1914-18) was fought in Europe, but its impact was felt around the world. During this period the world experienced widespread economic and political instability and another catastrophic war.
War Time Transformation
- The First World War was fought between the Allies (Britain, France, Russia) and the Central Powers (Germany, Austria-Hungary, Ottoman Empire).
- The first modern industrial war involved machine guns, tanks, aircraft, and chemical weapons.
- Millions of soldiers were recruited and transported to the frontlines.
- Unprecedented scale of death and destruction, with 9 million dead and 20 million injured.
- Reduction in able-bodied workforce and decline in household incomes.
- Industries were restructured to produce war-related goods, and societies were reorganized for war efforts.
- The war led to an economic disconnection between significant powers, with Britain borrowing large sums from US.
- The US transformed from an international debtor to an international creditor at the war's end.
- After the war was over, the production reduced and unemployment increased.
- In the US, war recovery was quicker.
- ‘Assembly line’ method introduced by Henry Ford soon spread to the US and were also widely copied in Europe in the 1920s.
- Mass production lowered the costs and prices of engineered goods.
- There was a housing and consumer boom in the 1920s, which ultimately led to the Great Depression of 1929.
- Markets crashed in 1929 and led to the failure of banks and the crisis affected other countries.
- By 1933, over 4000 banks closed and between 1929-32 about 110,000 companies collapsed.
Rise of Mass Production and Consumption
- The US economy recovered quicker and resumed its strong growth in the early 1920s.
- Mass production is one of the important features of the US economy which began in the late nineteenth century.
- Henry Ford is a well-known pioneer of mass production, a car manufacturer who established his car plant in Detroit.
- The T-Model Ford was the world’s first mass-produced car.
- Fordist industrial practices soon spread in the US and were also copied in Europe in the 1920s.
- The demand for refrigerators, washing machines, etc. also boomed, financed once again by loans.
- In 1923, the US resumed exporting capital to the rest of the world and became the largest overseas lender.
The Great Depression
- The period of The Great Depression began around 1929 and lasted till the mid1930s, most parts of the world experienced catastrophic declines in production, employment, incomes and trade.
- The most affected areas were agricultural regions and communities. Combination of several factors led to depression.
- The first factor is agricultural overproduction, second is in the mid-1920s, many countries financed their investments through loans from the US.
- The rest of the world is affected by the withdrawal of US loans in different ways.
- The US was also severely affected by depression.
- Unfortunately, the US banking system collapsed as thousands of banks went bankrupt and were forced to close.
India and the Great Depression
- The global economy was highly integrated by the early twentieth century.
- The depression had a significant impact on India's trade.
- India's exports and imports nearly halved between 1928 and 1934.
- Agricultural prices in India fell sharply, causing suffering for peasants and farmers.
- Peasants producing for the world market were hit the hardest.
- Jute producers in Bengal faced a crash in prices, leading to increased indebtedness.
- Indian peasants sold precious metals and became exporters of gold.
- Indian gold exports helped promote global economic recovery, but did little for Indian peasants.
- The civil disobedience movement was launched by Mahatma Gandhi during the depression.
- Urban India fared better during the depression, with falling prices benefiting those with fixed incomes and industrial investment growing.
Rebuilding a World Economy: The Post-war Era
- The Second World War broke out a mere two decades after the end of the First World War and once again, it led to destruction.
- After the USA and the USSR emerged as superpowers.
Post-war Settlement and the Bretton Woods Institutions
Bretton Woods Institution
- To ensure a stable economy a framework was agreed upon at the United Nations Monetary and Financial Conference held at Bretton Woods in New Hampshire, USA.
- It established the International Monetary Fund (IMF) and the World Bank.
- The International Monetary Fund (IMF) to deal 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 the World Bank commenced financial operations in 1947.
- Bretton Woods System was based on a fixed exchange rate.
- National currencies were pegged to the American dollar at a fixed rate.
- Decision-making in these institutions is controlled by the Western industrial powers largely by the US.
The Early Post-War Years
An era of unprecedented growth of trade and incomes was inaugurated by the Bretton Woods for the Western industrial nations and Japan. During this decade, technology and enterprise were spread worldwide.
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 these countries real control over their national resources, raw materials, manufactured goods in their markets.
- MNCs or multinational companies were established in the 1950s and 1960s and operated in several countries.
End of Bretton Woods and the Beginning of ‘Globalisation’
- The US’s finance and competitive strength were weakened due to rising costs of its overseas involvements from the 1960s.
- In the mid-1970s the international financial system also changed and the industrial world was also hit by unemployment.
- MNCs began to shift their production to low-wage Asian countries.
- China became attractive destinations for investment by foreign MNCs.
- 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.