SECTION A — THE PRE-MODERN WORLD
- Globalisation is an economic system associated with the free movement of capital goods, technology, ideas and people across the globe. It developed mainly through trade, migration of those who were seeking better life and movement of
- Travellers, traders, priests and pilgrims travelled vast distances in search of knowledge, opportunity, spiritual fulfilment or to escape persecution. They carried articles, values, skills and even
- The Silk Route is a pre-modern trade route over land and sea which affected cultures of China, Central Asia and the Besides trade, art, literature and philosophical ideas were also exchanged.
- Food travelled : Potatoes from North & South America and the Caribbean islands travelled to the rest of the world, when it was accidently discovered by Christopher
- Precious metals from mines of Peru and Mexico enhanced European trade with Asia. The Europeans conquered and carried diseases like “small pox,” to South
- Europe leaped ahead of other continents due to Renaissance, Industrial Revolution, capitalism, ideas of the French and American
- Colonies were established by Europeans all over the
SECTION B — THE 19TH CENTURY (1815–1914) ECONOMY
- The 19th century saw international economic exchange by 3 types of movements or flows – Trade flow, Larbour flow and Capital
- Industrial Revolution changed the consumption and production pattern of the
- Demand for food increased, England imposed Corn Laws but tried to withdraw them under pressure from urban dwellers and industrialists. It led to import of cheap agricultural products into
- Countries like Eastern Europe, Russia, America and Australia increased their food productivity to meet British needs, and became
- Global Migration took place and nearly 50 million people migrated from Europe to America and Australia in the 19th century due to poverty, hunger and to escape religious
- Technology reached its highest peak in Europe with the invention of Railways, Steamships, Telegraph and Shipbuilding. Meat trade at this time is a fine example of interdependence of teachnology and
Late 19th century saw colonisation at huge scale by Britain, France and followed by Spain, Portugal, Germany and Belgium. The USA also became a colonial power by the 1890s. Most regions of Asia and Africa became colonies of the West.
- Rinderpest or the Cattle Plague arrived in Africa from Europe. It destroyed nearly 90% of the livestock and destroyed the livelihood of the Natives. Mine owners and colonial powers benefitted by it and Africa ceased to be a free
- A new system of slavery — Indentured labour imigration from India started to the Caribbean Islands, Mauritius, Fiji, Ceylon and
- Though cheated and treated badly, they adapted to their new environment and cultural fusion took place as a result of this process of
- Indian entrepreneurs, some bankers like Nattukottai and Chettiars financed export of agriculture to Central and South-East 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
SECTION C — THE INTER-WAR ECONOMY
- The First World War (1914–1918) transformed the socio-economic and political structure of the world.
- The war killed 9 million and injured 20 million people by using new, modern weapons of mass
- Economic Transformation took place in the form of shift in investment and capital The war encouraged war-related goods.
- The USA became international creditor of Europe, Russia beame a communist country in 1917.
- The League of Nations was formed to end all future
- Post-war Britain faced a steep war-debt and her position as a world economic power ended. Unemployment increased, grain prices fell due to overproduction. After the war Eastern Europe revived its wheat production, leading to a glut.
- The US recovered from the post-war crisis at a great speed due to the introduction of mass production.
- Henry Ford introduced the assembly line production. His T-model Ford was the world’s first mass produced
- Mass production lowered the costs and prices of engineered goods. These 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 failure of banks, and the American crisis affected other countries. By 1933, over 4000 banks closed and between 1929-32 about 110,000 companies collapsed.
- 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
SECTION D — REBUILDING OF A WORLD ECONOMY : THE POST-WAR ERA
- The Second World War (1939–1945) was even more devastating than the
- About 3% of the world population perished, more civilians than fighting
- Two countries — USA and the USSR emerged as superpowers in the post-war
- International organisations like the UNO and others were established to maintain peace and stability.
- Two lessons were learnt by the economists and the politicians in the post-war system
- to ensure mass consumption in an industrial society by high and stable
- to ensure full employment and government control of flows of goods, capital and
- Bretton Woods Agreement (July 1944). 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
- The IMF was to deal with external surpluses and deficits of its member
- The World Bank was an International Bank for reconstruction and development and was to finance the post-war
- Bretton Woods System was based on a fixed exchange rate. National currencies were pegged to the American dollar at a fixed rate. The western powers, the USA specially, controlled the decision-making provisions such as the right to veto. It linked national currencies and the monetary
- The Bretton Woods System benefitted the Western industrial nations and Japan and brought immense trade and income to
- Post-war era saw rapid decolonisation and many countries in Asia and Africa became independent nations, supported by UNO and
- 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
- MNCs or multinational companies were established in the 1950s and 1960s and operated in several