• Globalisation is an economic system associated with the free movement of goods, technology, ideas and people across the globe.
Section I: Pre Modern World
• There are several silk routes, over land and by sea, knitting together vast regions of Asia, and linking Asia with Europe and northern Africa.→ Famous Chinese silk cargoes used to travel through these routes.
Fig: The Silk Route
Food Travels: Spaghetti and Potato
• Noodles travelled west from China to become spaghetti.
• Common foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies, sweet potatoes were only introduced in Europe and Asia after Christopher Columbus discovered Americas.
Conquest, Disease and Trade
• Precious metals from mines of Peru and Mexico enhanced European trade with Asia.
• The Spanish conquerors used the germs of smallpox in the conquest of America.
• Until well into the eighteenth century, China and India were among the world’s richest countries.
• Until the nineteenth century, poverty and hunger were common in Europe.
Section II: The Nineteenth Century (1815-1914)
Fig: The Nineteenth Century
• In the late eighteenth century, growth in the population increased the demand for food grains in Britain.
• The imported food into Britain more cheaply than it could be produced within the country.
• Industrial growth took place in Britain which led to higher incomes meaning more food imports.
• It was transported by railway and by ships.
• Food is only an example. Products such as cotton, rubber, coal also had same fate.
Role of Technology
• The railways, steamships, the telegraph were important inventions that transformed nineteenth-century world.
• After the introduction of new technology, namely, refrigerated ships animals were slaughtered for food at the starting point and then transported to Europe as frozen meat.
Late nineteenth-century Colonialism
• European conquests of Asia and Africa as colonies.
• Belgium and Germany became new colonial powers.
• The US became a colonial power in the late 1890s by taking over some colonies earlier held by Spain.
Rinderpest, or the Cattle Plague
• Rinderpest is a fast spreading cattle plague which hit Africa in the late 1880s.
• It was carried by infected cattle imported from British Asia and destroyed 90 percent of the livestock.
• The colonial governments now strengthen their power and to force Africans into the labour market.
Indentured Labour Migration from India
• Indentured Labour was a bonded labourer under contract to work for an employer.
• In the nineteenth century, thousands of Indian and Chinese labourers went to work on plantations, in mines, and in road and railway construction projects around the world.
• Recruitment was done by agents by providing false information about the work and location.
• On arrival at the plantations, labourers found living and working conditions harsh.
• It was abolished in 1921.
Indian Entrepreneurs Abroad
• Indian entrepreneurs, some bankers like Nattukottai and Chettiars financed 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.
Section III: The Inter-war Economy
• The First World war was the first modern industrial war.
• During the war, industries were restructured to produce war-related goods.
• The war transformed the US from being an international debtor to an international creditor.
• 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.
India and the Great Depression
• India was also affected by the Great Depression.
• Indian exports and imports declined extensively, prices fell.
• Bengal jute growers suffered the most.
• Large scale migration took place from villages to towns and cities.
Section IV: 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
Fig: 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.
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.