The Making of a Global World

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Global trade during the pre-modern world

 For centuries before, the Indian Ocean had known a bustling trade, with goods, people, knowledge, customs, etc. criss-crossing its waters. From the sixteenth century, America's vast lands and abundant crops and minerals began to transform trade and lives everywhere. Precious metals, particularly silver, enhanced Europe's wealth and financed its trade with Asia. The Portuguese and Spanish conquered and colonised America by the mid-sixteenth century. Until the eighteenth century, China and India were among the worlds richest countries. They were also pre-eminent in Asian trade.  Chinas reduced role and the rising importance of the Americas gradually moved the centre of world trade westwards. Europe now emerged as the centre of world trade.

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Changing shape of world economy during the nineteenth century

 Traditionally, countries liked to be self-sufficient in food. This belief changed greatly in Britain in the nineteenth century. Population growth had increased the demand for food grains in Britain. As food prices fell, consumption in Britain rose.  From the mid-nineteenth century, faster industrial growth in Britain also led to higher incomes, and therefore more food imports. Railways were needed to link the agricultural regions to the ports.  New harbours had to be built.  All these activities in turn required capital and labour. The demand for labour in places where labour was in short supply as in America and Australia led to more migration. Nearly 50 million people emigrated from Europe to America and Australia in the nineteenth century. By 1890, a global agricultural economy had taken shape, accompanied by complex changes in labour movement patterns, capital flows, ecologies and technology. 

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Role of technology in changing the world

The railways, steamships, the telegraph, were important inventions without which we cannot imagine the transformed nineteenth-century world. Technological advances were often the result of larger social, political and economic factors. The trade in meat offers a good example. Till the 1870s, animals were shipped live from America to Europe and then slaughtered when they arrived there. The prices of meat were very high which only the rich could afford. The development of a new technology, namely, refrigerated ships, enabled the transport of perishable foods over long distances.  Animals were slaughtered for food at the starting point in America, Australia or New Zealand and then transported to Europe as frozen meat. This reduced shipping costs and lowered meat prices in Europe. The poor in Europe could now consume a more varied diet which earlier was an expensive luxury beyond the reach of the European poor.

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Late- Nineteenth century colonialism

 In many parts of the world, the expansion of trade and a closer relationship with the world economy also meant a loss of freedoms and livelihoods. Late nineteenth-century European conquests produced many painful economic, social and ecological changes through which the colonised societies were brought into the world economy. 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. 

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Indentured labour migration from India

In India, indentured labourers were hired under contracts which promised return travel to India after they had worked five years on their employers plantation. Most Indian indentured workers came from the present-day regions of eastern Uttar Pradesh, Bihar and the dry districts of Tamil Nadu. The main destinations of Indian indentured migrants were the Caribbean islands, Mauritius and Fiji. Nineteenth-century indenture has been described as a new system of slavery.  Living and working conditions were harsh, and there were few legal rights. From the 1900s Indias nationalist leaders began opposing the system of indentured labour migration as abusive and cruel. It was abolished in 1921. 

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Impact of colonialism on Indian trade

Historically, fine cotton produced in India were exported to Europe. With industrialisation, British cotton manufacture began to expand. Tariffs were imposed on cloth imports into Britain. Consequently, the inflow of fine Indian cotton began to decline. From the early nineteenth century, British manufacturers also began to seek overseas markets for their cloth.  Excluded from the British market by tariff barriers, Indian textiles now faced stiff competition in other international markets.  While exports of manufactures declined rapidly, export of raw materials increased equally fast. Over the nineteenth century, 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. Britains 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 Indias external debt, and pensions of British officials in India.

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Inter-war economy

The impact of the First World War (1914-18)  was felt around the world. During this period the world experienced widespread economic and political instability. It saw the use of machine guns, tanks, aircraft, chemical weapons, etc. on a massive scale. The scale of death and destruction- 9 million were dead and 20 million were injured. With fewer numbers within the family, household incomes declined after the war. 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.  

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Post-war recovery

Post-war economic recovery proved difficult. Britain faced a prolonged crisis.  While Britain was preoccupied with war, industries had developed in India and Japan. The war had led to an economic boom, that is, to a large increase in demand, production and employment. When the war boom ended, production contracted and unemployment increased. Many agricultural economies were also in crisis.  Before the war, eastern Europe was a major supplier of wheat in the world market. Once the war was over, production in eastern Europe revived and created a glut in wheat output. Grain prices fell, rural incomes declined, and farmers fell deeper into debt.

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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.  Mass production lowered costs and prices of engineered goods. Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars. Similarly, there was a spurt in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of hire purchase (i.e., on credit repaid in weekly or monthly instalments). In 1923, the US resumed exporting capital to the rest of the world and became the largest overseas lender. US imports and capital exports also boosted European recovery and world trade and income growth over the next six years. 

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The Great Depression and its impact

The Great Depression began around 1929 and lasted till the mid 1930s. During this period most parts of the world experienced catastrophic declines in production, employment, incomes and trade. In general, agricultural regions and communities were the worst affected. The depression was caused by a combination of several factors. First: agricultural overproduction remained a problem. Second: in the mid-1920s, many countries financed their investments through loans from the US. The withdrawal of US loans affected much of the rest of the world. the US banking system itself collapsed. Unable to recover investments, collect loans and repay depositors, thousands of banks went bankrupt and were forced to close.  Indias exports and imports nearly halved between 1928 and 1934. Across India, peasants indebtedness increased. They used up their savings, mortgaged lands, and sold whatever jewellery and precious metals they had to meet their expenses. The depression proved less grim for urban India. 

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Rebuilding of world economy after Second World War

 At least 60 million people, or about 3 per cent of the worlds 1939 population, are believed to have been killed, directly or indirectly, as a result of the war. Millions more were injured. The war caused an immense amount of economic devastation and social disruption. Economic stability could be ensured only through the intervention of the government. 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 and Development (popularly known as the World Bank) was set up to finance postwar reconstruction. World trade grew annually at over 8 per cent between 1950 and 1970 and incomes at nearly 5 per cent. 

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Decolonisation and independence

When the Second World War ended, large parts of the world were still under European colonial rule. Over the next two decades most colonies in Asia and Africa emerged as free, independent nations. The IMF and the World Bank were not equipped to cope with the challenge of poverty and lack of development in the former colonies. As newly independent countries faced urgent pressures to lift their populations out of poverty, they came under the guidance of international agencies dominated by the former colonial powers. Large corporations of other powerful countries, for example the US, often managed to secure rights to exploit developing countries natural resources very cheaply. Most developing countries  organised themselves as a group the Group of 77 (or G-77) to demand a new international economic order (NIEO). By this 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.

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Policy against industrialization

The British capitalists were against industrialization in India. therefore they established only those industries in India which were their need due to the geographical constraint of their own country. Raw materials were taken from India and then they were sold in Indian markets as finished goods. Due to this, the Indian industrialists were not able to compete and lost in the race. 

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Exit property of British

The amount collected by taxation and asset collected by the British in the form of profits were taken to England and utilize it in their country. This would have exhausted the wealth of the country for England as assets by which in India the advantage of its own assets was not for the countrymen. This is called exit property. 

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One side free trade policy

England wanted to sell the goods made in European markets in Indian markets. But this was not feasible as goods made in Europe were of poor quality compared to Indian goods. The Britishers sought to destroy Indian industries for their selfish purpose. So, they adopted one sided free trade policy for free trade in which heavy duties were imposed on the import of Indian cotton clothes in England, whereas there were no charges or duties imposed on the goods imported from England. 

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Direct Spoil/ fire and sword

The British in the name of trade did not directly loot the farmers. The agent of the company forcefully grabbed the material and products of the farmers, businessmen, etc. by giving one rupee worth things into five rupees. Those who rejected the unreasonable demands of the company were whipped and kept in prison.