The Making of Global World

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Globalization

• Globalization: A Modern Economic System
  • Globalization is a contemporary economic system that has evolved over the past five decades, fostering interconnectedness on a global scale.

• A Long History of Global Interaction:
  • Globalization has deep historical roots, characterized by various elements:
    • Trade: Throughout history, people engaged in trade across vast distances, exchanging goods, ideas, and culture.
    • Migration: People have migrated for various reasons, such as work, escaping persecution, or seeking new opportunities.
    • Movement of Capital: The flow of capital across borders has been a constant feature of global history.

• Ancient Globalization:
  • Even in ancient times, elements of globalization were evident:
    • Travel: Travelers, including explorers, traders, priests, and pilgrims, journeyed great distances seeking knowledge, opportunities, and spiritual fulfillment.
    • Trade Routes: Ancient trade routes, such as the Silk Route, facilitated extensive exchanges of goods and ideas between distant regions.
    • Indus Valley Civilization: As early as 3000 BCE, the Indus Valley civilization had an active coastal trade that connected it  with present-day West Asia, demonstrating early globalization tendencies.

Silk Routes

• Historical Significance: Silk Routes are a prime example of pre-modern trade and cultural connections across distant parts of the world.
• Diverse Routes: Historians have identified several Silk Routes, both overland and sea routes, which connected vast regions of Asia and bridged Asia with Europe and northern Africa.
• Trade Exchange: These routes facilitated the exchange of valuable goods. India played a central role by exporting textiles and spices, which were in high demand in various regions.
• Precious Metal Flow: Europe, in return, sent precious metals like gold and silver to Asia, creating a flow of wealth.
• Cultural Exchange: Beyond trade, the Silk Routes were conduits for the exchange of ideas, philosophies, and artistic influences, enriching societies along the way.
• Global Connectivity: The Silk Routes played a vital role in connecting diverse civilizations and fostering a global network that transcended geographical boundaries.

Food Travels

• Long-Distance Cultural Exchange: Food serves as a compelling example of cultural exchange over long distances.
• Introduction of New Crops: Traders and travelers played a significant role in introducing new crops to different regions, contributing to global food diversity.
• Noodles to Spaghetti: Noodles, originating in China, traveled west and evolved into what we know today as spaghetti, showcasing how culinary traditions can transform through cultural diffusion.
• Unfamiliar Foods in the Past: Our ancestors were unfamiliar with many foods that are now common, including potatoes, soya, groundnuts, maize, tomatoes, chillies, and sweet potatoes. These foods were introduced to different parts of the world relatively recently.
• Origin in America: Many of these now common foods have their origins in the Americas, introduced to the world by the American Indians. This exchange of crops significantly impacted global cuisine.

Trade

• Indian Ocean Trade Hub: The Indian Ocean had a rich history of trade, with diverse goods, people, knowledge, customs, and more traversing its waters for centuries.
• European Influence: The entry of Europeans into the Indian Ocean trade routes redirected these flows, leading to the transfer of wealth, knowledge, and resources to Europe.
• American Contributions: The vast lands, abundant crops, and valuable minerals in the Americas transformed global trade and lifestyles, especially after European colonization.

Conquest, Disease and Trade

• Colonization of America: Portuguese and Spanish conquest and colonization of the Americas were well underway by the mid-sixteenth century, marking a significant shift in global power dynamics.
• Biological Warfare: Europeans inadvertently introduced deadly diseases, like smallpox, to the Americas, causing devastating population declines among indigenous peoples. These diseases acted as a powerful, albeit unintentional, weapon.
• Economic Changes: Until the nineteenth century, poverty and hunger were common in Europe, while China and India were among the world’s richest countries. However, European expansion and newfound resources shifted global economic balances.
• Chinese Isolation: From the fifteenth century, China limited overseas contacts and adopted a more isolationist approach, contributing to Europe’s emergence as the center of world trade.

Complex Transformation

• The nineteenth century witnessed a complex interplay of economic, political, social, cultural, and technological factors, resulting in profound societal changes and shifts in international relationships.
• Three Key Flows: Economists have identified three significant flows or movements that characterized this period:
  • Trade Flow: This flow primarily involved the exchange of goods, such as textiles and agricultural products, demonstrating the global nature of commerce.
  • Labor Flow: A considerable movement of people seeking employment opportunities occurred during this era, reflecting the societal impact of industrialization and urbanization.
  • Capital Movement: Capital moved across great distances for both short-term and long-term investments, fostering economic development and innovation.

Shaping the World Economy

• Population Growth and Food Self-Sufficiency: The nineteenth century witnessed significant population growth in Britain, leading to the realization that self-sufficiency in food production resulted in lower living standards and social conflict.
• Impact of Corn Laws: The imposition of Corn Laws, which restricted the import of corn, exposed British agriculture’s inability to compete with imports, leading to vast uncultivated lands and a rural exodus as thousands flocked to cities or migrated overseas.

• Population Growth and Food Self-Sufficiency: The nineteenth century witnessed significant population growth in Britain, leading to the realization that self-sufficiency in food production resulted in lower living standards and social conflict.
• Impact of Corn Laws: The imposition of Corn Laws, which restricted the import of corn, exposed British agriculture’s inability to compete with imports, leading to vast uncultivated lands and a rural exodus as thousands flocked to cities or migrated overseas.
• Industrial Growth and Food Imports: In the mid-nineteenth century, industrial growth in Britain increased incomes, resulting in higher food imports to meet the demand.
• Global Expansion of Food Production: To satisfy British demand, lands in Eastern Europe, Russia, America, and Australia were cleared for food production. The expansion required capital, labor, and the development of transport infrastructure like railways.
• Role of London: London played a crucial role by providing finance and labor for these global agricultural endeavors. Many Europeans emigrated to America and Australia during the nineteenth century.

• Formation of a Global Agricultural Economy: By 1890, a global agricultural economy had taken shape, adapting to complex changes in labor migration, capital flows, ecological shifts, and technological advancements.
• Irrigation Transformation: In West Punjab, the British Indian government developed an extensive network of irrigation canals, transforming semi-desert areas into fertile agricultural lands to grow wheat and cotton for export.
• Global Cotton Cultivation: Cotton cultivation expanded worldwide to supply British textile mills, further contributing to the global agricultural economy.

Role of Technology

• Impactful Inventions: Key inventions like railways, steamships, and the telegraph had a transformative impact on the world in the nineteenth century.
• Influence of Broader Factors: Technological advances were often the outcome of larger social, political, and economic factors, highlighting the interconnectedness of these domains.
• Colonization’s Stimulus: The process of colonization stimulated new investments and improvements in transportation infrastructure, including faster railways, lighter wagons, and larger ships. These innovations made it more cost-effective and efficient to transport food from distant farms to final markets.
• Live Animal Shipping: Until the 1870s, live animals were shipped from America to Europe, highlighting the economic incentives and the potential for providing meat to European markets. This practice transformed the accessibility of meat, which had previously been considered a luxury beyond the reach of the European poor.
• Diversification of Diet: The availability of meat, as well as butter and eggs, to a broader segment of the population broke the earlier monotony of diets consisting mainly of bread and potatoes. It added variety and nutritional value to people’s diets.

Late 19th Century Colonialism

• Trade Expansion and Market Growth: The late nineteenth century witnessed a flourishing of trade and the expansion of markets, contributing to economic growth and globalization.
• Dark Side of Colonialism: However, this period of trade expansion had a darker side. In many regions, closer integration with the world economy resulted in a loss of freedoms and livelihoods for local populations.
• Berlin Conference of 1885: In 1885, major European powers convened in Berlin, marking a pivotal moment in colonial history. During this conference, they finalized the division of Africa among themselves.
• Territorial Additions: Britain and France, already colonial powers, made significant additions to their overseas territories as a result of the Berlin Conference. Belgium and Germany emerged as new colonial powers during this period.
• American Colonial Expansion: The late 1890s saw the United States also becoming a colonial power. It acquired some colonies formerly held by Spain, expanding its influence in the global colonial landscape.

Rinderpest

• Rinderpest’s Devastating Impact: In the 1890s, a rapidly spreading cattle plague known as Rinderpest had a profound impact on the livelihoods of people and the local economy in Africa.
• Abundant Land and Small Population: Africa had vast expanses of land with a relatively small population, which attracted the attention of Europeans seeking to exploit its abundant resources, including land and minerals.
• European Resource Exploitation: European colonizers came to Africa with the intent of establishing plantations and mines to produce crops and minerals for export to Europe. However, they encountered an unexpected challenge: a shortage of labor willing to work for wages.
• Changes in Inheritance Laws: To address the labor shortage, Europeans changed inheritance laws. Under the new laws, only one family member was permitted to inherit land, which disrupted traditional family farming systems.
• Rinderpest Arrival: In the late 1880s, Rinderpest was introduced to Africa when infected cattle were imported from British Asia to feed Italian soldiers invading Eritrea in East Africa. The disease had devastating consequences on African cattle populations.
• Loss of Livelihood: The outbreak of Rinderpest resulted in the loss of cattle, which were essential to the African way of life. This loss had severe economic and social repercussions, as cattle were vital for agriculture, transportation, and cultural significance in many African communities.

Indentured Labour: Migration from India

• Two-Sided Nature of the Nineteenth Century: Indentured labor migration exemplifies the contrasting aspects of the nineteenth-century world – one characterized by faster economic growth and technological advances, and the other marked by great misery, poverty, and new forms of coercion.
• Origin of Indentured Laborers: Most indentured laborers in India were recruited from regions like eastern Uttar Pradesh, Bihar, central India, and arid districts of Tamil Nadu. They were often hired under contractual agreements.
• Main Destinations: The primary destinations for Indian indentured laborers were the Caribbean islands (particularly Trinidad, Guyana, and Surinam), Mauritius, Fiji, and tea plantations in Assam.
• Comparison to Slavery: The indenture system of the nineteenth century has been likened to a “new system of slavery” due to the labor conditions and contractual agreements.
• Cultural Transformations: The presence of Indian indentured laborers influenced the cultural landscape of their destinations. In Trinidad, for example, the Muharram procession evolved into the vibrant carnival called “Hosay,” which saw participation from workers of various races and religions.
• Rastafarianism and Indian Influence: Rastafarianism, a protest religion, is said to reflect social and cultural connections with Indian migrants in the Caribbean, indicating the enduring impact of this migration.
• Abolition of Indentured Labor: From the 1900s, Indian nationalist leaders began opposing the indentured labor system, condemning it as abusive and cruel. The system was eventually abolished in 1921.

Indian Entrepreneurs Abroad

• Financing Export Agriculture:
  • Shikaripuri shroffs and Nattukottai Chettiars, along with various banker and trader groups, played a crucial role in financing export agriculture in Central and Southeast Asia. They used their own funds or borrowed from European banks.

Indian Trade, Colonialism and the Global System

• Cotton Export to Europe: India was a major exporter of cotton to Europe, contributing to global trade.
• Impact of British Tariffs: Tariffs imposed by Britain on cloth imports resulted in a decline in the inflow of fine Indian cotton.
• British Market Dominance: Over the nineteenth century, British manufacturers flooded the Indian market, reshaping trade dynamics.

The Inter-War Economy

• Worldwide Impact of World War I: The First World War, fought in Europe, had far-reaching global consequences, leading to widespread economic and political instability.
• The Prelude to the Second World War: The inter-war period saw significant global instability, setting the stage for another catastrophic war.

Wartime Transformations

• First World War Alliances: The First World War involved the Allies, including Britain, France, Russia (later joined by the US), and the Central Powers, which included Germany, Austria-Hungary, and Ottoman Turkey.
• Modern Industrial Warfare: The war lasted over four years and marked the first modern industrial war, introducing advanced technologies like machine guns, tanks, aircraft, and chemical weapons on a large scale.
• Industrial Restructuring: Industries were restructured during the war to produce war-related goods, leading to significant changes in production.

Post War Recovery

• Britain’s Economic Prolonged Crisis: Despite being the world’s leading economy before the war, Britain faced a prolonged crisis during the post-war period.
• Development of Industries in India and Japan: While Britain was preoccupied with the war, India and Japan experienced significant industrial development.
• Challenges for Britain: After the war, Britain struggled to regain its previous dominance in the Indian market and to compete internationally with Japan.
• External Debt Burden: Britain was burdened with substantial external debts at the war’s end, which influenced its post-war economic challenges.

Mass Production and Consumption

• Quick US Economic Recovery: The US economy rebounded swiftly and experienced robust growth in the early 1920s.
• Mass Production’s Emergence: Mass production, a hallmark of the US economy, had its origins in the late nineteenth century and gained prominence in the 1920s.
• Henry Ford and the Model T: Henry Ford, a renowned pioneer of mass production, established a car plant in Detroit and introduced the Model T Ford, recognized as the world’s first mass-produced car.
• Global Spread of Fordist Practices: Fordist industrial practices quickly spread within the US and were also adopted in Europe during the 1920s, contributing to increased manufacturing efficiency.
• Consumer Goods Boom: The demand for consumer goods like refrigerators and washing machines surged during this period. Many of these purchases were financed through loans, reflecting growing consumerism.
• US Capital Export: In 1923, the US resumed exporting capital to the rest of the world and became the largest overseas lender, reinforcing its economic influence on a global scale.

The Great Depression

• Catastrophic Economic Decline: The Great Depression marked a period when most parts of the world faced severe economic challenges, including dramatic declines in production, employment, incomes, and international trade.
• Impact on Agricultural Regions: Agricultural regions and communities were among the most affected areas during the Great Depression, suffering from economic hardships and food scarcity.
• Factors Leading to Depression:
  • Agricultural Overproduction: One factor contributing to the depression was the issue of agricultural overproduction, leading to falling prices and income for farmers.
  • International Loans in the Mid-1920s: In the mid-1920s, many countries financed their investments through loans from the United States. This reliance on loans had far-reaching consequences.
  • US Loan Withdrawal: The withdrawal of US loans had a significant impact on the rest of the world. Countries faced varying challenges due to the termination of loans.
• US Banking System Collapse: The United States was severely affected by the Great Depression, and the crisis reached a critical point when the US banking system collapsed. Thousands of banks went bankrupt and were forced to close their doors.

India and the Great Depression

• Immediate Impact on Indian Trade: The Great Depression had an immediate and adverse effect on Indian trade. Agricultural prices experienced a significant decline during this period.
• Colonial Revenue Demands: Despite the economic downturn, the colonial government in India refused to reduce revenue demands on agriculture, leading to added financial strain on rural communities.
• Export of Precious Metals: As a consequence of these economic challenges, India became a net exporter of precious metals, particularly gold, to compensate for the economic imbalances.
• Unrest in Rural India: The economic hardships and refusal to alleviate revenue demands caused significant unrest in rural India during the depression years. People were facing severe economic difficulties.
• Civil Disobedience Movement: Mahatma Gandhi launched the civil disobedience movement in 1931, coinciding with the height of The Great Depression. This movement aimed to address various issues, including the economic hardships faced by the Indian population.

Post War Reconstruction

• Importance of Mass Communication: One crucial lesson drawn from the inter-war economic experience was that mass production could not be sustained without mass communication. The integration of technology and communication became essential for industrial progress.
• Economic Links with the Outside World: The second lesson emphasized a country’s economic links with the external world. Recognizing the need for international economic cooperation and financial stability, nations sought to establish mechanisms to address economic imbalances.
• The Bretton Woods Conference: The Bretton Woods conference was convened to address these economic challenges. It led to the creation of two key international institutions: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, commonly known as the World Bank.
• IMF’s Role: The IMF was established to manage external surpluses and deficits of its member nations, promoting exchange rate stability and assisting countries in times of financial crisis.
• World Bank for Postwar Reconstruction: The World Bank’s primary purpose was to provide financial support for postwar reconstruction efforts, helping countries rebuild their economies after the devastation of the Second World War.
• Commencement of Operations: Both the IMF and the World Bank began their financial operations in 1947, working together to foster economic stability, development, and cooperation on a global scale

Decolonization and Development

• Post-World War II Decolonization: Following the conclusion of the Second World War, significant portions of the world remained under European colonial rule, while many nations aspired for independence and self-determination.
• IMF and World Bank for Industrial Countries: Initially, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) were primarily designed to address the financial needs of industrialized countries and facilitate post-war reconstruction.
• Shift to Developing Countries: From the late 1950s, the IMF and the World Bank began shifting their focus toward developing countries as they recognized the need to support the economic development and stability of these nations.
• Disparity in Economic Growth: Most developing countries did not benefit from the rapid economic growth experienced by Western economies in the 1950s and 1960s, leading to economic disparities.
• Formation of the Group of 77 (G-77): In response to these disparities, developing countries organized themselves as a group known as the Group of 77 (G-77). This group advocated for a new international economic order (NIEO).
• Objectives of NIEO: The New International Economic Order (NIEO) aimed to establish a system that would grant developing countries greater control over their natural resources, increase development assistance, secure fairer prices for raw materials, and improve access to their manufactured goods in developed countries’ markets.

Beginning of Globalization: End of Bretton Woods

• US Financial Weakening: The United States experienced a weakening of its financial and competitive strength starting in the 1960s, largely due to the escalating costs associated with its overseas engagements and commitments.
• Change in the International Financial System: By the mid-1970s, the international financial system underwent significant changes, impacting global economic dynamics. This period saw a shift away from the Bretton Woods system.
• Unemployment in the Industrial World: The industrialized world faced challenges related to unemployment during this era, reflecting economic disruptions and transformations.
• MNC Production Shift: Multinational corporations (MNCs) started relocating their production to low-wage countries in Asia, particularly seeking cost advantages. China emerged as an attractive destination for foreign MNC investment.
• Rapid Economic Transformation: Over the last two decades, the global economic landscape experienced a profound transformation. Countries such as India, China, and Brazil underwent rapid economic growth and development, reshaping the world’s economic geography.