09.13.

Lecture 1
World economics

Introduction
 some International economics (theoretical based on mathematics etc.)
 no maths here
 what are the important factors of these theories
 world economics: deal with the impacts and effects of the International economics
 there will also be covered ‘International political economics’

Outline
1. A short historical overview of world economic development
2. Globalisation, international competition
3. International trade
4. Demography, labour, employment, migration in global economy
5. Technology (Key enabling technologies, protection, TRIPS)
6. International capital flows – multinational companies
7. Global inequality, development assistance
8. Global financial system

Requirements
 at the end there will be an oral exam (one of the lecture topics)
 ten minutes to repair and then present it (after that there may be some questions)
 lectures + some recommended literature
 slides with narrations will be uploaded to Teams (links intended)
 for the exam the lectures are essential to be able to talk about it for 10 minutes

I. The world by the first Millennium

 When was World economics shaped?
 around 1000 there are different trade routes (it already existed)
 In the Roman Empires Chinese coins could be found (so trade existed back then too -
interactions)
 African, Asian and European interactions (China – India – Europe)
 Table 2.1 (most important parts of the world + the interactions these regions)
 ivory, textiles, gold, slaves etc.
 the core region (in the centre) was the Islamic world
 Arabs and Persians went to China and Europe (Arabic travellers)
 exchange of ideas, knowledge, technology, and labour (similar to the World
economics nowadays, however not as specifically)
 knowledge was also exchanged (philosophy, mathematics, technology etc.)

The GDP (percentage) how different regions

 Western Europe was not very important (around 10.8+ in 0, around 8.7% in the 1000s)
 India and China were essential (32,9% and 26,2% in 0)
 The peak of the Western European economics was in 1870 (33.1%)
  The two dominant factors and regions (China and India) declined and new shapes of
the 20th, 21st century arrived (USA)
 in 1950 China 4.2% and India 4.5% (now it is getting higher and higher again)
 the World economics system is also changing and shaping (the will of the USA and
European countries) – nowadays these rules are challenged by other countries
 huge challenge of the rules that shaped World economics
 economy has a huge impact on politics and military

Why not China became the world leading economic power in the 15th century?
 China was stronger and there were factors that could have allowed China to be the
most powerful country
 China also started expeditions
 in the mid 15th century, the expeditions stopped (Cheng-ho)
 article in the slides (Why Europe and the West? Why not China?)
 1. Science without development
o lack of free market
o lack of institutionalised property rights
o state control over everything (included science)
 there was only one power who ruled, and everything was decided by him
 in Europe on the other hand there were other powers (countries) and rulers
 there were also competitions between countries in Europe
 2. learning from the barbarians (China was suspicious of everything that came outside
of China – they have everything they need, all the knowledge etc.)
 3. Why did China ‘fail’?
 HOWEVER, China’s population was constantly growing (in the 1500s around
103.000, in the 1820s around 381.000)

Why could Europe dominate the World economics?

 discoveries and competitions of expeditions (Portugal, England, Spain, France)
 discoveries to South America, North America, Africa etc.
 competitions became monopoly for specific products
 as a result goods and capital were imported to Europe from other continents
 also an effect on the industry (focus on production and manufacturing)
 ‘free inflow of money’ – help the industries in France, Italy etc.
 economical and industrial development
 Triangular trade – Britain produced clothing items, products – these were imported to
Africa in exchange for gold, ivory, spices etc.
 From Africa slaves were taken to America in exchange for iron, clothing items etc.
 and from America sugar, wood, rice, whale oil and cotton were taken to Europe in
exchange for luxuries and manufactured goods

Why Britain?
 there is also an article that can be read (in the slides)
 the production of a British worker and an Indian worker productivity was almost the
same
  in the 18th century it a British worker made 100% more than an Indian worker
(because of machines and new technology)
 so much more productive than other countries
 Why was Britain the first?
 universal pattern or discrete event by each nation?
 there are many factors
 the reasons may be connected to politics
o in France centralized power by the King (everything was decided by the King –
who did not show too much interest in new technologies and economics)
o the innovations that came from France were not used in France and came to
Britain
o in Britain the economic elite got into the Parliament and had their voice, interest
(more democratic political system)
o new elite could get their interest while in France the elite was rigid and not
ready for the change
o Britain – more flexible and ready for changes (adapt and have the industrial
revolution)
Britain
 leading industrial power but falling competitiveness by the 19th century
 Britain became the example of successful economy
 however, this model had weaknesses too
o one of the weaknesses was colonies
o colonies – extensive development instead of improving technology
o specialisation – instead of manufacturing they overspecialised
o free trade policy – if you are strong, it is better to specialise (specialise on
particular products and then trade it with other countries)
o it comes from the British development

Germany
 unification
o the role of state was different
o they started from the ‘second wave’ (heavy industries)
 industrial conglomerates
 qualified labour
 educational system
o the best universities in Britain, but the average workers were not qualified
o in Germany there was a good educational system and they centralised it and
educated qualified workers
o it also helped the German success in development
 no colonies – they needed intensive development (advantage)
 but politically it was a disadvantage (they also wanted colonies)
 the wish for colonies (disadvantage) became an advantage economically

United States
 colony until 1776
  agricultural export (cotton, tobacco) from the south
o the northern colonies were not so successful in agricultural export
o they started industrialisation, protectionism
o the Civil War also had an economic cause (North vs South)
o after the Civil War – infrastructural development (canals, railways, telegraphs)
 growing domestic markets
 mass production (new technologies)

Japan
 isolated island
 they were forced to open by US
 Meiji restoration (reform)
o they sent people to Europe and US to adopt the methods (education, technology
etc.)
 they also started with textile industry – industrialisation was first based on textile
o home industries (discipline, savings – society)
 competing on global markets
 special characteristics making Japan competitive in the 20st century

‘The Kondratieff Wave’

 the leading technologies shape the World economics
 wave 1 – was industrial revolution (steam engine and cotton) – 1800s
 wave 2 – with steel industry and railways – 1850s
 wave 3 – electrical engineering and chemistry – 1900s
 wave 4 – petrochemicals (automobiles) – 1950s
 wave 5 – information technology – 2000s