Making of a Global World

The various countries of the world are interconnected through trade and
through exchange of thoughts and cultures. The interconnectedness has
increased dramatically in recent times but the world was also
interconnected even during the days of Indus Valley Civilisation.

Silk Route
 The trade route which linked China to the western world and to
other countries is called Silk Route. There were many Silk
Routes. The Silk Routes existed before the Christian Era, and
persisted till the fifteenth century.
 Chinese potteries travelled from China to other countries through
the Silk Route. Similarly, gold and silver travelled from Europe to
Asia through this route.
 Religions; like Christianity, Islam and Buddhism travelled to
different parts of the world through the Silk Route.
Food Travels:
(1) Noodles travelled from China to different parts of the world. The
sevian; which are used in India are localized form of noodle.
Similarly, spaghetti of Italy is the European version of noodles.
(2) Many common food of today; like potato, chillies, tomato, maize,
soya, groundnut and sweet potatoes were introduced in Europe after
Christopher Columbus accidentally discovered the American
continents.
(3) Potato brought dramatic changes for the life of people of Europe.
Because of introduction of potato, the people in Europe could eat
better and could live longer.

(The Potato famine : The peasants of Ireland became so dependent on

potato that when disease destroyed the potato crop in the mid-1840s,
hundreds of thousands died due to starvation. This famine is known as
Irish Famine)

Conquest, Disease and Trade

Conquest : The discovery of new sea route not only helped in expanding
the trade but also in European conquest over other parts of the world.
America had vast reserves of minerals and there was abundant crop in this
continent. The food and minerals from America transformed the lives of
people in other parts of the world.
Disease : By the mid-sixteenth century, the Portuguese and Spanish
colonization of America began in a decisive way. But the conquest could
not be facilitated because of arms and ammunition but because of a
disease. Europeans had been exposed to small pox and hence they had
developed immunity against this disease. But the Americans had been
isolated from the world and they had no immunity against small pox.
When the Europeans reached there, they carried the germs of small pox
alongwith them. The disease wiped off the whole communities in certain
parts of America. And thus, the Europeans could easily get control of the
Americas.
Trade: Till the nineteenth century, Europe was suffering from many
problems; like poverty, diseases and religious conflicts. Many religious
dissenters fled to America for the fear of prosecution. Those people
utilised the opportunities in America
The Nineteenth Century (1815 – 1914)
The world had changed dramatically during the nineteenth century.
There were changes in social, political, economic and technological
 factors in much complex way during this period. The changes altered
the external relations beyond recognition.
Economists identify three types of flows within international economic
exchanges. These are as follows:
 Flow of Trade
 Flow of labour
 Flow of capital
A World Economy Takes Shape
 Changing pattern of food production and consumption in
Europe: Traditionally, countries liked to be self sufficient in food.
But self sufficiency in food meant a low quality of life for the
people of Britain.
 There was immense growth of population of Britain during
eighteenth century. Due to this, the demand for food had
increased exponentially. Under pressure from the landed groups,
the government restricted the imports of corn. This further
aggravated the food prices in Britain. The industrialists and urban
dwellers forced the government to abolish the Corn Laws.
Effects of abolition of Corn Laws:
 Abolition of Corn Laws meant that food could be imported at
much cheaper rate than at what it could be produced in Britain.
British farm produce was unable to compete with cheaper
imports.
 Vast areas of land were left uncultivated and a large number of
people became unemployed. People migrated to cities; in large
numbers; in search of work. Many people also migrated overseas.
Many people also migrated overseas.
 Falling food prices resulted in increased demand for food in
Britain. Moreover, industrialization also helped in increasing the
 income of the people. This necessitated more import of food
items into Britain. To fulfill the demand, large tracts of land were
cleared in Eastern Europe, America, Russia and Australia.
 The foodgrains also needed to be supplied to the ports. For this,
railway lines were to be laid so that the agricultural hubs could be
connected to the ports. Moreover, new habitations also had to
come up in agricultural hubs. For all these activities, capital
flowed from financial centres; such as London; to these places.
 There was shortage of labour in Americas and Australia. The
demand for workforce resulted in large scale migration of people
to these places. Nearly 50 million people migrated from Europe
to America and Australia during the nineteenth century.
 All over the world, about 150 million people migrated to different
placeBy 1890s, a global agricultural economy had taken shape.
This was accompanied by complex changes in labour movement,
capital flow and technological changes.
Role of Technology
 Technology definitely played an important role in globalizing the
world economy during this period.
 Some of the major technological innovations were the railways,
steamship and telegraph.
 Railways helped in connecting the hinterland to the ports.
 Steamships helped in transporting goods in bulk across the
Atlantic.
 Telegraph helped in speeding up the communication and thus
facilitated better economic transaction.
Trade in Meat:
 Trade in meat shows a very good example of benefit of
technology on the life of common people. Till 1870s, live animals
 were shipped from America to Europe. Shipping live animals had
its own problems. They took more space and many animals
either died or became sick during the transit. Due to this, meat
remained a luxury item for most of the Europeans. ury item for
most of the Europeans.
 Arrival of “Refrigeration technology” changed the picture. Now,
animals could be slaughtered in America and processed meat
could be shipped to Europe. This helped in better utilization of
space in the ships. This also helped in better availability of meat
for the Europeans and thus prices fell. Now, even the common
people could afford to eat meat on a regular basis.
 Better availability of food promoted social peace within the
countries. People of Britain were now more receptive to imperial
ambitions of the country.

Late Nineteenth Century and Colonialism

 While the expansion of trade improved the quality of life of many
Europeans; it had negative implications for people of the
colonized countries.
 When you will carefully observe the modern map of Africa, it
would appear that most of the boundaries are straight lines. It
appears as if someone had deliberately made those straight lines.
 In 1885, the big European powers met in Berlin and demarcated
the African continent for respective powers. That is how
boundaries of most of the African countries appear as straight
lines.

Africa : Africa was the land of vast resources of land and minerals.
Europeans had come to Africa to make fortune out of mining and
plantations. But they faced a huge scarcity of labour. There was another
 problem and that was that the local people were not willing to work in
spite of being offered wages. In fact, Africa was a sparsely populated
continent and people’s needs could be easily met with the available
resources. There simply was no need to work for wages.
The Europeans applied various ways to force the people to work. Some
of them are as follows:

 Heavy taxes were imposed which could only be paid by

working on plantations and in mines.
 Inheritance laws were changed and only one member of the
family was allowed to inherit land. This forced others into
the labour market.
 Mineworkers were confined to the campus and were not
allowed to move freely.

Arrival of Rinderpest:
Rinderpest arrived in Africa in the late 1880s. It came with the horses
which were imported from British Asia. Those horses came as
reinforcements for Italian soldiers who were invading Eritrea in East
Africa. Rinderpest spread in the African continent like the forest fire.
It reached to western coast of Africa by 1892 and within five years
after that, it reached to southernmost tip of the continent. Rinderpest
wiped off 90% of the cattle population of Africa during this period.
 Loss of cattle meant loss of livelihood for the Africans. They had
no choice but to work as labourers in plantations and mines. Thus,
a cattle disease enabled the Europeans to colonise Africa.
Indentured Labour Migration from India
 Indentured labour is a bonded labour who is hired on contract
for a specific employer for a specific period of time.
 Many poor Indians from modern day Bihar, Uttar Pradesh,
central India and dry districts of Tamil Nadu became indentured
labours.
  These people were mainly sent to the Caribbean Islands,
Mauritius and Fiji. Many of them were also sent to Ceylon and
Malaya.
 In India, many indentured labours went to work in tea plantations
of Assam.
 The agents often gave false promises and the workers were not
even told about the place they were heading for.
 The condition in the foreign land was quite horrible for the
workers. They did not have any legal rights and had to work
under tortuous conditions.
 Form the 1900s, the Indian nationalists began to oppose the
system of indentured labour.
 The practice was finally abolished in 1921
Indian Entrepreneurs Abroad
 Shikaripuri shroffs and Nattukottai Chettiars were among the
groups of bankers and traders from India.
 They financed export agriculture in Southern and Central Asia.
 They had their own sophisticated system of money transfer to
different parts of the world and even in India.
 Indian traders and moneylenders also ventured into Africa
alongwith the European colonizers.
 The Hyderabadi Sindhi traders ventured even beyond European
colonies.
 By 1860s, they established flourishing emporia at busy ports
around the world.
Indian Trade, Colonialism and the Global System
 Historically, fine cotton from India was exported to Europe. After
industrialization, the local manufacturers forced the British
government to impose a ban on Indian imports.
 This resulted in British manufactured cotton textiles flooding the
Indian market. The share of cotton textiles in Indian export was
30% in 1800. It declined to 15% by 1815 and to 3% by 1870s. But
from 1812 to 1871, the export of raw cotton increased from 5% to
35%.
 During this period, Indigo emerged as a major export item from
India. Opium was the largest exported item from India and it was
mainly exported to China.
 Although export of raw materials and food grains from India to
Britain grew manifold but import of finished goods from Britain
also increased.
 This resulted in a situation in which Britain was having the trade
surplus. In other words, the Balance of Payment was in Britain’s
favour.
 Income from the Indian market was utilised by Britain to serve its
other colonies and also to pay ‘home charges’ for its officials who
were posted in India.
 The home charges also included payment of India’s external debt
and pension for retired British officials in India.

The Inter-war Economy

 The First World War wreaked large scale havoc around the
world in many senses. About 9 million people died and 20
million people were injured in the wake of the war.
  Most of the people who were killed or maimed were people from
working age. This resulted in a significant reduction in the
number of able-bodied workforce in Europe. Due to fewer
earning members in the families, the household incomes
drastically reduced in Europe.
 Most of the men were forced to engage in war and thus women
had to replace them in factory jobs. Women were now working in
those jobs which were earlier considered as male bastions.
 The war also led to snapping of ties between some major
economic powers of the world. Britain had to borrow from the
US to finance the war. The war transformed the US from an
international debtor to an international creditor. Now, US and its
citizens owned more overseas assets than foreign governments or
citizens owned in the US.

Post-war Recovery
 While Britain was preoccupied with war, industries developed in
India and Japan.
 After the war, Britain found it difficult to regain its earlier
dominant position in India. Similarly, it was unable to compete
with Japan at the international level. At the end of the war, Britain
was under huge debts from the US.
 During the war, there was increased demand for goods which
resulted in economic boom in Britain.
 After the war ended, the demand drastically fell to come in tune
with the peace-time economy. About 20% of the British workers
lost their job after the war.
 During the war, Canada, America and Australia emerged as the
leading suppliers of wheat.
  Once the war was over, the Eastern Europe resumed the supply
of wheat. This resulted in a glut of wheat in the market and prices
fell. This created havoc in the rural economy.

Rise of Mass Production and Consumption

 During the 1920s, the unique feature of the US economy was
mass production.
 Henry Ford, the founder of the Ford Motors was the pioneer of
mass production in factories.
 Mass production helped in increasing productivity and reducing
prices.
 Workers began to earn better in the US and hence had better
disposable income. This created huge demand for various
products.
 The car production rose from 2 million in 1919 to 5 million 1929
in the US.
 Similarly, the production of white goods; like refrigerators,
washing machines, radio, gramophone, etc. increased manifold in
the US.
 There was a housing boom as well in the US market. The
demand could be further maintained because of the beginning of
the hire purchase culture.

All of this made for a prosperous US economy. In 1923, US resumed

exporting capital to the rest of the world and emerged as the largest
overseas lender. This also helped in European recovery and boosted
the world trade for the next six years.
The Great Depression
Agricultural Overproduction: Agricultural overproduction was a major
problem during the 1920s. More supply of farm produce resulted in
lower price. Farmers tried to compensate by producing even more.
This created a glut of farm produce in the market; leading to further fall
in prices. Farm produce rotted because of lack of buyers.

Withdrawal of US Loans:
 Many European countries heavily depended on US loans. But
the US lender panicked at the first sign of trouble.
 In the first half of 1928, the US loan amounted to $ 1 billion.
But within a year, it was just a quarter billion dollar.
 Withdrawal of US loan affected many countries in various ways.
 This led to the collapse of many banks and currencies in Europe.
 The British Pound Sterling also crashed during this period. The
Agricultural market slumped in Latin America.
 The US banks slashed domestic lending and called back loans.
But people were not in a position to repay the loan which they
had taken to buy homes and white goods. Unemployment level
increased and banks were unable to collect loans.
 Thousands of banks in the US went bankrupt.
 By 1933, over 4000 banks had closed. Between 1929 and 1932,
about 110,000 companies collapsed in the US.

In most of the economies, a modest recovery began by 1935.

India and the Great Depression
 The Depression affected the Indian economy as well.
 Between 1928 and 1934, the imports and exports of India
became nearly half. During this period, the wheat prices in India
fell by 50%.
 In spite of falling prices of farm produce, the government
continued to demand the same revenue from the farmers. Thus,
farmers were the worst sufferers in this situation.
 Many farmers were forced to utilize their savings, sell their lands
and jewelry. Thus, India became a net exporter of precious metal
during this period.

“The depression proved less grim for the urban dwellers in

India. With falling prices, many urban landowners and salaried people
found the life much easier. Under pressure from the nationalist leaders,
the industrial protection grew which led to more investment in the
industries.”

Bretton Woods Institutions

the main aim of the post wart interationa;l economioc system was to
preserve economic stability and full employment in the industrial
world.so,the famous economist John Mayanrd Keynes directed the
preparartion of the framework and it was agreed upon at the United
Nations Monetary and Financial Conference held in July 1944 ar
Bretton Woods in New Hampshire in USA.According to the
conference,the International Monetary Fund (IMF) and World Bank
were set up.IMF was set up to deal with external surplus and deficits of
its members nations and the world bank was to finance post-war
reconstruction.These two are reffered to as Bretton Woods Institutions
or “Bretton Twins”

NIEO :
Although there was unprecedented economic growth in the West and
Japan,nothing was done about the poverty and lack of development in
countries which were earlier colonies.thus,there was a need of
devel;oping nations to organise intio the G-77 group to demand a New
International Economic Order(NIEO),a system that would give them
control over their own natural resources,more developmetn
assistance,fairer prices for raw materials and better access for their
manufactured goods in developed markets.

Questions with answers

Question 1. Give two examples of different types of global exchanges

which took place before the seventeenth century, choosing one example
from Asia and one from the Americas.
Answer:
Examples of the different types of global exchanges which took place
before the seventeenth century:
∙∙ Textiles, spices and Chinese pottery were exchanged by China, India
and Southeast Asia in return for gold and silver from Europe.
∙∙ Gold and foods such as potatoes, soya, groundnuts, tomatoes and
chillies were first exported from the Americas to Europe.

Question 2. Explain how the global transfer of disease in the pre-modern

world helped in the colonisation of the Americas.
Answer:
The global transfer of disease in the pre-modern world helped in the
colonization of the Americas because the native American Indians were
not immune to the diseases that the settlers and colonizers brought with
them. The Europeans were more or less immune to small pox, but the
Native Americans, having been cut off from the rest of the world for
millions of years, had no defense against it. These germs killed and wiped
out whole communities, paving the way for foreign domination. Weapons
and soldiers could be destroyed or captured, but diseases could not be
fought against.

Question 3. Write a note to explain the effects of the following:

a) The British government’s decision to abolish the Corn Laws.
Answer:
(a)The British government’s decision to abolish the Corn Laws was
theinflow of cheaper agricultural crops from America and Australia. Many
English farmers lefttheir profession and migrated to towns and cities.
Some went overseas. This indirectly led toglobal agriculture and rapid
urbanisation, a prerequisite of industrial growth.
b) The coming of rinderpest to Africa.
Answer:
b)The coming of rinderpest to Africa caused a loss of livelihood for
countless Africans. Using this situation to their advantage, colonising
nations conquered and subdued Africa by monopolising scarce cattle
resources to force Africans into the labour market.
c) The death of men of working-age in Europe because of the World
War.
Answer:
(c)Most of the victims of world war belonged to young generations of
working men. As a result ,it reduced the workforce in Europe, thereby
reducing household income. The role of women increased and led to
demand for more equality of status. It made the feminist movement
stronger. Women started working alongside men in every field. Women
and youngsters became more independent and free with long-term effects.
d) The Great Depression on the Indian economy.
Answer:
D)The impact of the Great Depression in India was felt especially in the
agricultural sector. Itwas evident that Indian economy was closely
becoming integrated to global economy. Indiawas a British colony and
exported agricultural goods and imported manufactured goods. Thefall in
agricultural price led to reduction of farmers’ income and agricultural
export. Thegovernment did not decrease their tax and so, many farmers
and landlords became moreindebted to moneylenders and corrupt
officials. It led to a great rural unrest in India.
e) The decision of MNCs to relocate production to Asian countries.
Answer:
Impact of MNC’s decision to relocate production in Asian Countries:
a. It provided for cheap labor to MNC’s
b. It stimulated world trade.
c. Increased capital inflow in the Asian Countries
d. Brought about new technology and production methods to the Asian
Countries.
e. Greater choice of goods and services to the people.
f. Greater employment opportunities for Asian countries.
g. Rapid economic transformation resulting in the growth of economies
like India, China
Question 4. Give two examples from history to show the impact of
technology on food availability.
Answer:
Two examples from history to show the impact of technology on food
availability were:
∙∙ Faster railways, lighter wagons and larger ships helped transport food
more cheaply and quickly from production units to even faraway markets.
∙∙Refrigerated ships helped transport perishable foods such as meat, butter
and eggs over long distances.

Question 5. What is meant by the Bretton Woods Agreement?

Answer:
The Bretton Woods Agreement was finalised in July 1944 at Bretton
Woods in New Hampshire, USA. It established the International
Monetary Fund and the World Bank to preserve global economic stability
and full employment in the industrial world. These institutions also dealt
with external surpluses and deficits of member nations, and financed post-
war reconstructions.
Discuss
Question 6. Imagine that you are an indentured Indian labourer in the
Caribbean. Drawing from the details in this chapter, write a letter to your
family describing your life and feelings.
Answer:
I am working in Trinidad (Caribbean) as an indentured labourer.
Through this letter, I want to tell you about my hardship and
misbehaviour of the contractor towards me.
The contractor at the time of hiring me did not provide the correct
information regarding place of work, mode of travel and living and
working conditions.
Very few legal rights are provided to us. The contractor uses harsh and
abusive language at the worksite. He treats us like coolies and we are an
uneasy minority in the cocoa plantations in Trinidad.
Whenever I do not attend my work, I am prosecuted and sent to jail.
There is a lot of work at the plantations with heavy workload and
sometimes I have to finish all of it one day.
In case of unsatisfactory work (in the contractor’s thinking), my wages are
cut.
I am living a life of a slave and in great trouble.
Question 7. Explain the three types of movements or flows within
international economic exchange. Find one example of each type of flow
which involved India and Indians, and write a short account of it.
Answer:The three types of movements or flows within the international
economic exchange are
(a) trade flows, (b)human capital flows and (c) capital flows or investments.
These can be explained as—the trade in agricultural products, migration of
labour, and financial loans to and from other nations.
India was a hub of trade in the pre-modern world, and it exported textiles
and spices in return for gold and silver from Europe. Many different
foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies and
sweet potatoes came to India from the Americas after Columbus
discovered it.
In the field of labour, indentured labour was provided for mines,
plantations and factories abroad, in huge numbers, in the nineteenth
century. This was an instrument of colonial domination by the British.
Lastly, Britain took generous loans from USA to finance the World War.
Since India was an English colony, the impact of these loan debts was felt
in India too. The British government increased taxes, interest rates, and
lowered the prices of products it bought from the colony. Indirectly, but
strongly, this affected the Indian economy and people.
Question 8. Explain the causes of the Great Depression.
Answer:
The Great Depression was a result of many factors:
(1) Prosperity in the USA during the 1920s created a cycle of higher
employment and incomes. It led to rise in consumption and demands.
More investment and more employment created tendencies of
speculations which led to the Great Depression of 1929upto the mid-
1930s.
(2) Stock market crashed in 1929. It created panic among investors and
depositors who stopped investing and depositing. As a result, it created a
cycle of depreciation.
(3) Failure of the banks. Some of the banks closed down when people
withdrew all their assets, leaving them unable to invest. Some banks called
back loans taken from them at the same dollar rate in spite of the falling
value of dollar. It was worsened by British change in policy to value
pound at the pre-war value.

Question 9. Explain what is referred to as the G-77 countries. In what

ways can G-77 be seen as a reaction to the activities of the Bretton Woods
twins?
Answer:
G-77 countries is an abbreviation for the group of 77 countries that
demanded a new international economic order (NIEO); a system that
would give them real control over their natural resources, without being
victims of neo-colonialism, that is, a new form of colonialism in trade
practised by the former colonial powers.
The G-77 can be seen as a reaction to the activities of the Bretton Woods
twins (the International Monetary Fund and the World Bank) because
these two institutions were designed to meet the financial needs of
industrial and developed countries, and did nothing for the economic
growth of former colonies and developing nations.