CBSE NCERT Class X (10th) | Social Studies | History
Chapter- 4 The Making of a global world
World Trade Pre-modern to 18th Century and Shaping of the World Economy
The World trade expanded in the 19th century. There were technological, social, economic and political changes which shaped the world economy.
During this time, three flows governed international economic exchanges. These were the flow of trade or movement of goods, the flow of labour and the movement of capital. In the late 18th century due an increase in population in Britain, the demand for food grains increased considerably.
Rapid industrialisation in urban centres also contributed to the increase in the prices of food grains.
The British government imposed Corn Laws which restricted the import of corn into Britain. After the outcry of the people against high prices the government abolished these laws. Thereafter, Britain witnessed a deluge of cheap imported food which had adverse impacts on the agriculture sector of Britain.
People hence migrated to cities and other countries in search of jobs and a better life. In Russia, Australia and America, new means of transport like railways and harbours were developed to boost trade. New and settlements were built and accommodate emigrant labourers.
In the nineteenth century, world economy was in a phase of rapid growth and transformation. Technological innovations also helped in the expansion of trade. In New Zealand, America and Australia refrigerated ships were used to carry perishable items such as meat to Britain.
Impacts of Colonialism on Economy and People
In the 19th century, the world trade expanded and the European began to colonise Africa. Europeans wanted to get cheap raw material and labour from Africa.
Africa was long known as the Dark Continent due to its abundant jungles and natural resources. The continent had a relatively small population that never worked for wages. Africans had enough land and livestock to sustain them.
The Europeans wanted to exploit the minerals and other resources of Africa and had to employ people in the mines and plantations. The European rulers imposed heavy taxes and Inheritance laws on Africans.
An important event that led to the complete submission of natives was the outbreak of Rinderpest, a devastating cattle disease. Rinderpest was carried by infected cattle imported from British Asia which was used to feed the Italian soldiers invading East Africa. Rinderpest spread in Africa like wildfire and claimed almost ninety percent of the cattle.
This situation was manipulated by Colonial rulers and the native Africans were subdued and forced to work for wages. The carving of Africa was formally completed in 1885 in Berlin. Britain and France acquired a lot of colonies. Later, they were joined by Belgium, Germany, US and Spain.
Indian Indentured Labour and Indian Trade
The term indentured labour referred to a bonded labourer who was bound by a contract to work for an employer for a specific period of time.
The 19th century witnessed a rapid expansion of world trade. One of the important developments was the migration of labour from China and India. In India, the indentured workers came from present day regions of eastern Uttar Pradesh, Bihar, Central India, and parts of Tamil Nadu.
The domestic industry had declined and people migrated as indentured labour to places like Caribbean islands, Mauritius, Fiji, Sri Lanka, Malaya and tea plantations of Assam.
The Indentured labourers were hired by way of a contract which promised that the workers could return to India after they had served their employer for five years.
The indentured labourers were subjected to extremely cruel living conditions. They developed their own forms of self-expression which was actually a blend of Indian and foreign cultural forms. Indentured labour migration was extremely criticised and finally abolished in 1921.
In India, the peasants borrowed from local bankers such as Shikaripuri Shroffs and Nattukottai Chettiars. These bankers financed export agriculture in Central and South East Asia.
In the 19th century, the value of British exports to India was much higher than the British imports from India. Britain maintained a trade surplus with India which helped it balance out its trade deficits with other countries.
World Economy Before and After World War 1
The fast developing world trade and world economy suffered a huge jolt in the 20th century, due to the First World War. It was fought between two opposing groups known as Triple Allies and Triple Entente.
Years that followed the ware were marked with a lot of social, political and economic instability. World war one can technically be called the first modern industrial war. It mobilised the use of modern weapons such as machine guns, aircrafts, tanks and chemical weapons.
A large chunk of working class men were completely wiped off in Europe during World War I. Since the men were at the battle front women were recruited to do the jobs which were only reserved for men earlier. The recovery period after the war was difficult and long drawn. Britain found it hard to regain its dominant position in the world economy.
The growth of industries, production and employment had boomed during war time. During war Canada, Australia and America emerged as new centres of agriculture production. One country which recovered effectively after World War I was the US. By lending financial help to other countries during the war, the US emerged as an international creditor.
After 1920, the US economy grew at a rapid pace courtesy mass production. The owner of Ford Motor Company, Henry Ford championed the assembly line method of mass production to produce vehicles at a faster rate.
This method reduced the production time and increased the output of the worker. Henry Ford increased the pace of work and disallowed any trade unions in his plants. Due to higher wages, workers could now afford consumer goods.
The demand for consumer goods was also fuelled by the boom in the housing and construction sector. Houses were also available on loan. The 1920s turned out to be a golden era for the US economy.
The Great Economic Depression
The Great Depression began in 1929 with a steep fall in New York Stock Exchange and continued well into the mid-1930s.
During depression agricultural prices fell, industrial production came to a halt, and millions of people became jobless and homeless.
The depression was caused due to an overflow of food grains in the market which led to a fall in the agricultural prices. Canada, Australia and America had emerged as new alternate centres of wheat production during war.
During and after the war the US had emerged as an international money lender. The US withdrew loans from other countries because of which major banks and currencies collapsed in Europe. To overcome the depression, the US imposed import duties which again hindered the world trade. During the depression, India’s exports and imports shrunk to almost half. The agricultural prices fell and affected the peasants and farmers badly.
The poor peasants mortgaged their land, jewellery and other precious things to pay off debts and meet their daily needs.
The depression did not affect the middle class urban Indians so much. Due to the fall in prices all commodities began to cost less. Since the British Government provided tariff protection to industries there was also an increase in industry investment.
Growth of the World Economy After World War II
The Second World War proved even more catastrophic than the First World War. It witnessed the death of millions of civilians all over the world.
Fought between two opposing military groups, the Allies and the Axis, it was the first time that nuclear bombs were thrown and artillery attacks were used to raze down cities. The post war years were marked with a lot of social, political and economic instability.
After the war, the United States and the Soviet Union emerged as the two major superpowers. The main focus of the post war economic system was to maintain economic stability and full employment. The framework of the post-war international economic system was agreed upon at the United Nations Monetary and Financial Conference held in July 1944 at Bretton Woods in the USA.
The Bretton Woods conference established two important institutions, The International Monetary Fund and the World Bank. The International Monetary fund was created to help with the external surpluses and deficits of the member countries. The World Bank was to finance the reconstruction after the war. Bretton Woods ushered in an era of economic growth, world trade and the exchange of technological knowhow. The western countries experienced immense growth after the war but it did not help the developing countries so much.
When the European nations and Japan had strengthened their economies, the Bretton woods institutions began focusing more on the developing countries.
The developing countries collectively formed a group known as G-77 to boost the growth of their economies. The aim of this group was to demand a New International economic Order or NIEO to control their natural resources and get better trade opportunities.
The last years of 1970s witnessed a shift in the business operations of multinational companies to countries such as India, China, and Brazil. The cost of labour was comparatively low in these countries.
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