Page # 1

The Making of
Global World _

5 pre-Modern World

Globalisation refers to an economic System that has appeared since the last 50
years and so. The history of trade, migration,
people looking for work, capital movement, and other factors have all led to the
formation of the global world.
|, Human communities are becoming closely interlinked due to globalisation.
Travellers, traders, priests, and
pilgrims have travelled large distances for information, opportunity, and spiritual
fulfillment, as well as to avoid
| discrimination, since ancient times.
2. Travellers brought commodities, money, values, skills, ideas, innovations, and
even germs and diseases with them.
3. The Indus valley civilisations and modern:day West Asia were linked by an
intensive coastal trade about 3000

BCE. In these civilizations Cowries or seashells, have been used as a form of

currency in the Maldives for
centuries and made their way to China and East Africa also.

The long distance spread of disease germs may be traced as the 7" century.
. By 13" century India became globally active in the arena of trade.

Importance of Silk Route

The term "silk routes" refers to the importance of western Chinese silk cargoes
exports along this route. Historians

have discavered several silk routes, both across land and by water, that connected
vast parts of Asia and connected

Asia with Europe and northern Africa. These routes existed even before the
Christian era.

1] Silk Route served as a really important example of pre-modem trade and cultural
ties between many distant countries.

1] Chinese pottery from China,textiles and spices from India also travelled through
the same route. In return, precious
metals like gold and silver imported from Europe to Asia.

(] Trade and cultural exchange were always connected. Early Christian missionaries
and Muslim preachers travelled
via this route to Asia. Buddhism developed in eastern India and spread throughout
the world through intersections
on the silk routes.

we
Food as a Medium of Exchange of Culture
Many examples of long-distance cultural exchange are associated with food.

0 Traders and travellers brought new crops to the areas they travelled through.
In case of spaghetti and noodles, it is believed that noodles travelled to the
West from China and became spaghetti. Arab traders brought pasta to fifth-
century Sicily, which is today part of Italy.

0} Many of our common foods such as potatoes, soya, groundnuts, maize,

tomatoes, chilies, sweet potatoes, and so on were not known to Indians until
Christopher Columbus accidentally discovered the Americas. These foods
Were introduced in Europe and Asia after the discovery of America when
American Indians brought these foods to India. These crops were commonly
grown in North America, South America and Caribbean islands. e ati

O} The new crops may mean the difference between life and death. For oP tah
example,with the introduction of the humble potato, Europe's poor began to Fig. 1:
Irish Potato Famine 1849
Page # 2
pendent on pot

. go dep
ame 80
1s rthousands died

atocs that when the Ih

Ir
eland bec Vey

cat better and live longer. The poorest peasants 1" I {rec
' (
Was destroyed by Great Irish Famine in the mid 18405, mn

. )») knowueDce HuB

or Famine of 1845-49, ig Wa
5

Great Irish Famine frish famine

. / Great Irish F ee oncecutive yee
The Great Famine, also known as the Irish Potato Famine, “ ‘ otato crop ailed In
consecutive years, due |
famine that devastated Ireland between 1845 and Ka whe le 008 or tubers, of the
potato plant. Hundred,
the ¢ 7

Late blight, a disease that destroys both the Ieaves an

‘amine.

of people died of hunger in Ireland during this F

Conquest, Di i i

4 t, pisense and Trade in World. European sailors discovered

J Colonization, disease, and trade all have an imp: India was a central point in
the
r

routes to Asia in the sixteenth century which trans

mode!
ntire situation.

act on the Pre~

formed the ¢

trade network.

7} The Indian Ocean served as a center for the exchange of commerce, people,
knowledge, and customs, among
other things. After the arrival of Europeans, all of these things began to flow to
Europe:

J America's vast lands, rich agriculture, and minerals began to transform trade and
lives everywhere from the Ig

century.
7] The extraction of precious metals from modern-day Peru and M
us wealth spread across seve

trade with Asia. Legends about South America's famo

expeditions set out in search of El Dorado,

[J The colonization of America by the Portuguese and Spanish was

By the mid-

of germs carried by their persons, such as smallpox.

Smallpox in particular proved a de

had successfully conquered and colonised America.

ut Europe until the nineteenth century. Cities were overcrowded, and |

exico increased Europe's wealth and financed i,

nteenth-century Europe. Many

the fabled city of gold.

not just the result of superior weapons, but also
sixteenth century, the Portuguese and Spanish

adly virus.

[7 Poverty and hunger were common througho

fatal diseases were common.

Religious dissenters were tortured, and religious conflicts were common. Asa
result, thousands escaped Europe
for America. Apart from all these, they even started purchasing slaves from Africa
to grow cotton and sugar in

America for European markets.

t nations of the world till 18th century but when China restricted itself from

7] India and China were the wealthies'

outside world, Europe became the important center of the world trade.

Ei 19th Century (1815-1914)

the globe changed dramatically. Economic, political, social, cultural, and

technological
licated ways to change societies and reshape international relations.

In the eighteenth century,

elements, all interacted in comp

ecognize three forms of movement or 'flows' in international economic trade

|. Trade of Goods: The first movement was largely based on the trade of goods.
(e.g., cloth or wheat).
2, Flow or Labour: People migrated from one country to another in search of
employment
3, Movement of Capital: The third is capital movement over long distances for
short- or long-term in

Economists 1

vestments.
ld be

All three flows were linked and had a stronger impact on people's lives than ever
before. Interrelations cO
interrupted at times; for example, labour migration was frequently restricted
contrary to goods and capital flows.

Udaan Study Material Class* @

Page # 3

6) KNOWLEDGE HuB
zs,

i i i : : ‘e forme i m India to the rest

(1 Spices, tea, rice, and a variety of other agricultural products were formerly
supplied ho " ms during
. . . . + rof cture s
of the world. India became a greater exporter of raw materials and importer! of
manufactured g
the nineteenth and twentieth centuries,

. . . - / Lo : ; to invest in railways,
(7 European capital, particularly British capital, moved to India in large numbers
to inve: y
industries, and other projects,

Formation of World Economy

ies have
The changes in food production and consumption in industrial Europe are an
excellent place to start. Count P ial
historically preferred to be food self-sufficient. Self-sufficiency in food meant
lower living conditions and soc
conflicts in nineteenth-century Britain,

1, Population growth: In the late 18th century, population growth in Britain led to
increase in the demand for food

grains. Urban cities and industries grew, the demand for agricultural products
increased leading to increase 1n
food grain prices.

nw

- Corn Law: The government also imposed restrictions on corn imports commonly known
as the ‘Corn Laws’, in
response to pressure from landowner groups. Industrialists and city residents,
frustrated with high food prices,
urged the abolition of the Com Laws. After the abolition of the Corn Laws, food
could be imported into the UK
at a lower cost than it could be produced locally.

3. Migration of people: Agriculture in the Great Britain was unable to compete with
imported goods. Vast areas

of land were now left uncultivated, and thousands of men and women were thrown out
of work. They migrated
to the cities or relocated to other countries.
4. Increase in food imports: Faster industrial growth in Britain from the mid-
nineteenth century resulted in
higher incomes and, as a result, it increased food imports. To meet British demand,
lands were cleared and food
production increased all over the world, including in Eastern Europe, Russia,
America, and Australia.

. Construction of Railways and Ports: It was not enough to just clear land for
agriculture. Railways were
required to connect agricultural land to ports. New major ports had to be built,
and existing ones had to be
expanded, in order to ship the new products.

. Capital and Labour: People had to settle on the fields in order to cultivate
them. This required the construction

of homes and towns. All of these activities required both labour and capital.
Financial centers such as London
| were a source of capital. More movement resulted from the demand for labour. In
the 19thcentury, almost 50
| million individuals moved from Europe to America and Australia where labour was
in short supply. Around 150
million people have left their homes around the world, in search of a brighter
future.

. Canal Colonies of Punjab: In Punjab, the British Indian government created a

network of irrigation canals to
convert semi-desert wastelands into fertile agricultural fields where wheat and
cotton could be
Peasants from various parts of Punjab settled in the Canal Colonies, which were
irrigated by the

an

grown for export.

new canals.

oo

- Expansion of World Trade: Local expertise in the production of goods (cotton and
rubber) developed so
quickly that world trade is believed to have expanded 25 to 40 times between 1820
and 1914.
such as wheat and cotton, and minerals, such as coal, contributed for over 60% of
this trade.

‘Primary goods,'
The Corn Laws imposed taxes and other trade restrictions on imported grain and corn
in the United Kingdom

between 1815 and 1846. They were created to keep corn prices high so that domestic
farmers would benefit.
The laws increased the cost of food and life for the British people,
Page # 4

ced the government 10 abolish cg,

tc

©) TRY IT YOURSELF

Q. Why did the industrialists and pe

Laws in the 18th century ? Give two Te

es of Britain fo

ople living in citl

asons.

ts. Rail
all these developmen , Ways, Steg
eto visualize the transform,

Role of Technology important role in

al, political, and econ

‘ ayed al ibl

1. Technological Advancement: Technology played vewhich it WAS not possi im

engine, ships, telegraph — were great inventions will hou wre the results of larget
s
of 19% century world. But technological developmen ed improverne ts in transport.
“sc helned

factors, For example, colonization led to new funding ns and huge ships helped move
foo

‘ 01
‘ok: ilways, lighter WaBC™™" export
2. Movement of food become cheap and quick: Faster rai anal markets. Live animals
were exported to Europe

more cheaply and ina faster way from far away farms 4 in Europe, till 1870's.

from America for meat purpose which were then slaughtere America to Europe and then
slaughtereq in
3. Trade of meat: Till the 1870s, animals were exported Inve nt of space in the
ship. Many died or fej] ill
Europe. The demerit of this system was live animals took up sive item for a large
Population

i me an expen :
during the travel and thus become unfit to eat. Due to this meat becai However, the
innovation of re frigerae
of Europe. The high prices kept the demand and supply of meant down. >

i i were slaughtered for

ships enabled the transport of parishable foods over long distances. Now Tee ope .
ie vena mex
at the starting point in America, Australia or New Zealand and then s Pe ro aaerid
now eat meat . is
decreased shipping costs and reduced meat prices in Europe. The poor in E ; Pp
vvithin the coun » OBgs,
butter, etc., in their diet. Hence their better living condition promoted social
peace try and

gathered support for imperialism in foreign countries.

§f Colonization Process (Late 19th Century)

Though trade grew in the late 19th century

leading to prosperity; it also meant a loss of
freedom and livelihoods for many in other
centuries. In 1885, the big European powers
met at Berlin to divide and allocate African
continent amongst themselves. Britain and
France made large additions to their foreign
territories in the late nineteenth century.
Belgium and Germany became new colonial
rulers. The US also became a colonial power
in the late 1890s by taking control of some
colonies previously held by Spain.

Impact of Cattle Plague

Africa had a large amount of land and a small

population. Europeans were attracted to Africa
in the late eighteenth century because of its
large land and mineral resources.
1 Europeans came to Africa with the SOUTHERN
: , - : . West RHODESIA
intention to establish plantations and mines
to produce crops and minerals for export to
Europe. However, there was an unexpected
issue: a shortage of workers willing to work
for wages.

tion
Omi
in the end of 19th century. @
|

Study Material Class-X /

Page # 5

jeavy taxes were Imposed to recrui

ruit ; :
Jantations and mincs. Peasants wore vw retain workers which could only be paid by
working for wages on
only one member of a family to acauite Peay from land duc to the change in
inheritance laws, which allowed
ad i and, forci . : :
‘etained in compounds and not permitted to y orein me others into the labour
market. Mineworkers were also
: . . . © out free
Rinderpest came in Africa in the | y.
ate 3 :
d soldiers occupying Eritrea in East ee Drought by infected cattle imported from
British Asia to feed Italian
: ° -a. Cattle loss destroyed African livelihood:

Planters, mine owners, and coloni Stroy rican livelihoods.

, nig
D allowing them to strengthen their a ee now have a monopoly on the few remaining
cattle resources,

to dominate and rule Africa b 7 Tol and push Africans into the labour market.
European colonisers were able

‘a by controlling the valuable resource of cattle.

4d I

migration of Indian Indentured Labourers

The nineteenth-century world had two sides
ter economi : :
|, Faster economic growth, higher incomes, and technological developments in some
sectors.

2, Colonial exploitation and poverty.

Indenture as a new form of slavery

Indentured labourers were hired on a fixed - term contract in India, and the
majority of them came from the present-
day regions of eastern Uttar Pradesh, Bihar, central India, and Tamil Nadu's dry
districts. The Caribbean islands
(namely Trinidad, Guyana, and Surinam), Mauritius, and Fiji were the main
destinations for Indian indentured
migrants. In Assam, indentured workers were also hired for tea plantations.
Indenture has been considered as a
"new system of slavery" in the nineteenth century,From the 1900s India’s
nationalist leaders started opposing the
process of indentured labour migration as exploitative and cruel. It was abolished
in 1921.

Culture Fusion

1 The annual Muharram march in Trinidad was turned into a rowdy festival
which gathered workers of all races and religions.

() Rastafarianism, a protest religion popularised by Jamaican reggae arti

and cultural ties that have developed as a result of Indian migrations to the
Caribbean.

1) Another, unique modern expression of the post-indenture experience is ‘Chutney

music,’ which is popular in
Trinidad and Guyana.

1) After their contract end

As a result, these countries

familiar with West Indies cric

Naipaul a Trinidadian writer of Indian descent known

known as 'Hosay' (after Imam Hussain),

st Bob Marley, is meant to reflect the social

ed, the majority of indentured workers stayed on or returned to their new homes in
India.
have considerable populations of people of Indian heritage. Some of you may be
keters Shivnarine Chanderpaul and Ramnaresh Sarwan's performances and V.S.
for his pessimistic novels set in developing countries.

9) KNOWLEDGE HUB /

&A
c -. ig a fusion genre of Indian folk music, specifically Bhojpuri local Cé
soln and ‘oca music and later on Bollywood music. This genre of music that
developed in Trinidad and
Tobe i Jar in Trinidad and Tobago, Guyana, Suriname, Jamaica, other parts of the
Caribbean, Fiji,
ago 1s popu ed mid-20th century and reached a peak of popularity during

Mauritius, and South Africa. Chutney music emerg}

the 1980s.

uri folk music, with local Caribbean

Indian E Abroad

ntrepreneurs
Shikaripuri sh A and Natukottai were amongst the many groups of bankers and traders
who financed export
agriculture in ry intl and southeast Asia, using either their own funds or those
borrowed from European banks.
on at busy ports worldwide, selling local and imported

From 1860's Hyderabadi Sindhi traders, started product empora

Products to increase the number of tourists. a

\
@

@ The Making of Global World

Page # 6
ame more industrialigeq

lobal System

~ country bee
began to expand as the country

Indian Trade, Globalisation and the G

Cotton production in the United Kingdom

th in the carly nineteenth century

2. Taxes were Imposed on cloth imports into Britain.

y a erials increased equ,
f raw mat | ally fae

abroad markets for their clo

juickly, export 0
nineteenth century.
the value of Britis
n's trade deficits wit

British manufacturers began looking for

4. While exports of Indian manufactured goods dropped ¢

h imports from India by a

h other countries,

S. British products flooded the Indian market throughout the

ports to India exceeded 7

6. However. the value of British ex

alance Britail

margin. As a result, the surplus was used to b

§ inter-war Economy
e. However, it had an international impact, Duty
ig

as fought mostly in Europ’

tability, as well as another destructive wa,

The First World War( 1914 to 1918) w:

olitical ins

this time, the world was torn apart by severe economic and p

Wartime Transformation
ocs; the Allies — Britain, France and Russia ({z.,

The First World War (1914-1918) was fought between two power bl
and Ottoman Turkey.
Germany, Austria-Hungary
revious ones. The war involved the worl;

‘om the p'

joined by the US) and Central Powers —

f modern industry to create the greatest destructig,

1. First World War: World War I was completely different fr

top industrial countries. Countries now led the huge powers 0}

to their enemies.
‘al war. It saw the use of machine tanks, gun,

industri

ial war: This war was the first modern i

na large scale. To fight the war millions of soldien

ns, etc. O
d to the frontlines on large ships and trains.

dor disabled men were of working age. These deaths

household income

2. Modern Industri
sub-marines, aircraft liquid chemical, fire weapo
were recruited from around the world and shippe'

Most of the killed, wounde

3. Reduction in the work Force:

With fewer members within the family,

and injuries reduced the workforce in Europe.

decreased after the war.

structing the whole society and economy. Industries wer

New Social Setup: The war was responsible for recon

related goods. To meet the needs of war. So, there was shortage of consumer gots
wer: The United States of America became a Super Powe!

Allies during the war. Though, Its economic supremacy W%

| debtor to an international creditor.

restructured to produce war-

nce of America as a Super World Po

ar America provided huge loans to the

S from being an internationa

5. Emerge

after the w
established. Thus the war converted the U

Post-war Recovery
7 Britain's Debts: Britai
industries grew in India and Japan. After the war, Britain could not gain its p

During the war,

ein the Indian market, and failed to compete with Japan internationally. To finance
¢

of dominance
at the end of the war Britain was overloaded with huge external det

had borrowed large amounts from the US,

The war had led to an economic prosperity, when the war ended, production ¢o

n was the world's leading economy before the war but after war it faced crisis for
a longtime
revious positie®

he war Bri

ntracted aa

7] Unemployment:

unemployment 11 921 every fifth British workers was out of work,

ncreased. In |
s: Various agricultural economies also faced crisis. During the war, wheat
productio” :
d Australia increased dramatically. But after the war, production in oe Europe
create

II, rural incomes decreased and farmers fell deeper into debt.
Udaan Study Material class 8

i —

< aan

oO Agricultural Crisi
Canada, America an
flood of wheat out

put. Grain prices fe

Page # 7
-

ise of Mass Production and Consumption

ys recovered from war quickly. In the early 1920s, the US economy resumed its huge
growth. The main feature of
US economy was mass production.

read all over the United States

d goods were reduced due to

q Henry Ford's assembly line" method for the mass production of cars quickly sp'
and was largely copied in Europe in the 1920s, The cost and price of manufacture
mass production.

work at first. As a result, a large number of

them quit.

O In January 1914, Ford doubled the daily

wage to $5 out of necessity. He recovered the
high wages by continuously speeding up the
production line and pushing workers to work |
harder. .

1) More workers can now afford to buy lasting

consumer products thanks to higher wages.
Refrigerators, washing machines, radios,
record players, house construction, and home
ownership all witnessed a surge due to the ‘hire
purchase! system.

(J Inthe 1920s, there was a housing and consumer

surge, which eventually established prosperity
in the US. Large investments in housing and Fig. 3: Henry Ford Assembly Line (1913)
consumer goods created a cycle of higher
employment and earnings, rising consumption demand, more investment.

(1 In 1923, the US became the largest overseas lender by resuming export of capital
to the rest of the world.

The Great Depression

Around 1929, the Great Depression began and lasted until the mid-1930s. Most parts
of the world saw catastrophic

decreases in output, employment, incomes, and commerce during this time. /

were the badly affected. This was due to the fact that the fall in agricultural
prices

the fall in industrial products prices.

0 Agricultural regions and villages
was higher and lasted longer than

Causes of Depression

on in agriculture: Overproduction in agric

1. Overproducti
prices to collapse. Due to a shortage of buyers, farm produce rotted.

2. The Financial Crisis in the USA: Many countries borrowed money from the United
States in the mid-1920s
to fund their investments. At the first sign of difficulty, foreign lenders
panicked. The withdrawal of US loans

triggered a serious crisis in countries who were highly dependent on US. It caused
large banks to fail and

currencies to drop.
3. Consumers failed to pay their

ulture remained an issue. It causes agricultural product

loans: Between 1929 and 1932, approximately 4,000 banks and 110, 000
ist wealth of the 1920s has now vanished into thin

y could find as unemployment rose.

@
eT
Page # 8
India and the Great Depression

The Indian economy was severely impacted by the Great Depression.

| India was an importer of manufactyreg

dia's exports and imports were oy
In

Ody

The impact of the Great Depression on Indian trade: Colonia

and a major exporter of agricultural goods in the nineteenth century. In 1928 and
1934.Farmers , |
between 1928 and 1934. Wheat prices in India fell nearly half between ‘ong in
agricultural pri . and Pease
suffered the most, notably more than city dwellers. Despite massive reductions in 8
duced . “Ss; the eg)
British government refused to lower their revenue demand. The peasants who produced
items for the
market were hit the hardest in India during the Great Depression.
C1 Jute Producers in Bengal: The raw jute cultivated in Bengal was later processed
into gunny bags In factories Ds
to the collapse of gunny bag exports, the price of raw jute had dropped by 60%.As
the prices dropped, Pare,

continued to fall deeper into debt, unable to pay the loans they had taken from
moneylenders.

Oni,

Wor),

J Impacts of the Great Depression Throughout India: In India, peasant debts have
insteased- Peasants We,
forced to sell any valuables they had. Peasants were compelled to sell their
precious metals, Jewell
mortgaged lands, and savings. For urban India, the depression was less severe.
Those on fixed income,
such as town-dwelling landowners who receive rents and middle-class paid employees,
are now bette; Of
as a result of falling prices.

1 Export of gold: During the Great Depression, India became a major exporter of
precious metals, mainly Bold,
These gold exports helped the British, but they had little impact on the Indian
peasants who were suffering, Ciyi
disobedience campaign was launched by Mahatma Gandhi in 1931, at a time when rural
India was in turmoil,

Hf Rebuilding of World Economy: The Post-war Economy

After almost two decades of the First World War, Second World War took place. It
also led to the huge destruction.
1939, the second world war began and lasted until 1945. The two opposing camps
were: the Allies, which included
Britain, France, Russia, and the United States of America; and the Axis Powers,
which included Germany, Italy, and
Japan. Post war period restoration was shaped by two major factors. The first was
the United States! emergence as the
world's leading financial, political, and military force. The second was the
supremacy of the Soviet Union.

Post-war Settlements and the Bretton Woods Institutions

At the United Nations Monetary and Financial Conference in Bretton Woods, New
Hampshire, USA, a framework
was agreed upon to maintain a stable economy. It founded the World Bank and the
International Monetary Fuad
(IMF). The International Monetary Fund (IMF) is in charge of dealing with its
member countries! external surplus
and deficits. The International Bank for Reconstruction and Development (IBRD,
often referred to as the World Bank)
was established to aid the post-war recovery. In 1947, the IMF and the World Bank
began their financial operation
therefore these institutions are called ‘Bretton Twins’. A fixed exchange rate was
used under the Bretton Wood
System. At a fixed rate, national currencies were linked to the US dollar,
Decision-making in all of these institutio®
is dominated by the Western industrial powers largely by the US,

S \TRYITYOURSELF —_

2 > Woods conference ¢. ‘

Q. When was the Bretton f erence convened? State the main ai
. aim of the ference.
re contere

=. Ss:
@®) . Udaan Study Material Clas
Page # 9
India and the Great Depression
The Indian economy was severely impacted by the Great Depression.

1 The impact of the Great Depression on Indian trade: Colonial India was an
importer of mamutsctared Product,
and a major exporter of agricultural goods in the nineteenth century. India's
exports and imports were cut in hale
between 1928 and 1934. Wheat prices in India fell nearly half between 1928 and
1934.Farmers and Peasants

suffered the most, notably more than city dwellers. Despite massive reductions in
agricultural prices, the Colonial
British government refused to lower their revenue demand. The peasants who produced
items for the Worl

market were hit the hardest in India during the Great Depression.

Jute Producers in Bengal: The raw jute cultivated in Bengal was later processed
into gunny bags in factories, Due
to the collapse of gunny bag exports, the price of raw jute had dropped by 60%.As
the prices dropped, farmer,
continued to fall deeper into debt, unable to pay the loans they had taken from
moneylenders.

Impacts of the Great Depression Throughout India: In India, peasant debts have
increased. Peasants were
forced to sell any valuables they had. Peasants were compelled to sell their
precious metals, Jewellery,
mortgaged lands, and savings. For urban India, the depression was less severe.
Those on fixed incomes,
such as town-dwelling landowners who receive rents and middle-class paid employees,
are now better off
as a result of falling prices.

Export of gold: During the Great Depression, India became a major exporter of
precious metals, mainly gold.
These gold exports helped the British, but they had little impact on the Indian
peasants who were suffering. Civil
disobedience campaign was launched by Mahatma Gandhi in 1931, at a time when rural
India was in turmoil.

Bi Rebuilding of World Economy: The Post-war Economy

After almost two decades of the First World War, Second World War took place. It
also led to the huge destruction. In
1939, the’ second world war began and lasted until 1945. The two opposing camps
were: the Allies, which included
Britain, France, Russia, and the United States of America; and the Axis Powers,
which included Germany, Italy, and
Japan. Post war period restoration was shaped by two major factors. The first was
the United States' emergence as the
world's leading financial, political, and military force. The second was the
supremacy of the Soviet Union.

Post-war Settlements and the Bretton Woods Institutions

At the United Nations Monetary and Financial Conference in Bretton Woods, New
Hampshire, USA, a framework
was agreed upon to maintain a stable economy. It founded the World Bank and the
International Monetary Fund
(IMF). The International Monetary Fund (IMF) is in charge of dealing with its
member countries' external surpluses
and deficits. The International Bank for Reconstruction and Development (IBRD,
often referred to as the World Bank)
was established to aid the post-war recovery. In 1947, the IMF and the World Bank
began their financial operations
therefore these institutions are called ‘Bretton Twins’. A fixed exchange rate was
used under the Bretton Woods
System. At a fixed rate, national currencies were linked to the US dollar.
Decision-making in all of these institutions
is dominated by the Western industrial powers largely by the US.

TRY IT YOURSELF ——

Q. When was the Bretton Woods conference convened? State the main aim of the
conference.

‘D>
Udaan Study Material Class-X @
Page # 10
>

The Early Post-war Years

The early post-war years: The Bretton Woods institution established an cra of
remarkable growth of trade and incomes

for the Westen industrial nations and Japan. World trade dev eloped annually at
over 8 per cent between 1950 and

1970 and earnings at nearly S per cent. The growth was mostly stable, without much
fluctuations. These decades also
experienced the worldwide spread of technology and enterprise. Developing countries
Inv ested large amounts of

capital, importing industrial plant and tools featuring modern technology

pecolonisation and Independence

When World War Il ended, huge areas of the world were under the European colonial
rule. Over the next couple of
decades, most Asian and African colonies became free. independent nations,but they
were burdened by poverty and
a lack of resources, and their economies and societies were hampered by colonial
rule for long periods of time.Many
of the world's less developed regions had been colonised by Western countries. As
newly independent countries, they
now depend on international bodies controlled by former colonial powers to help
them lift their population out of
poverty. The Bretton Woods institutions started to pay more attention towards
developing countries.

NIEO: New International Economic Order

71 The rapid growth of Western economies in the 1950s and 1960s did not benefit
most developing countries.

7] Developing countries came up with a plan as a group. The Group of 77, or G-77,
is a group of 77 countries that
have come together to seek a new international economic order (NIEO).

7] It was a system that would provide them actual control over their natural
resources, more development support,
fair prices of raw material prices, and better access to developed-country markets
for their produced goods.

TRY IT YOURSELF

Q. Explain the two key, lessons learnt by economists and the politicians from the
economic experiences of
the Second World War.

End of Bretton Woods and the Beginning of ‘Globalisation’

1 Despite years of consistent and fast growth, everything in the post - war world
was not great. The US's finances
and competitiveness started to fail in the 1960s as the costs of its international
investments increased. The US
dollar is no longer considered the world's most important currency as It was unable
to sustain its value in relation
to gold. This eventually resulted in the bank's failure and failure of the system
of fixed exchange rates and the
introduction of the concept of floating exchange rates.

J The international financial system began to change in the mid-1970s. Developing

countries were forced to depend
on commercial banks and private lending institutions in the West. In the developing
world, this led to frequent
debt crises, lower incomes, and increased poverty, especially in Africa and Latin
America.

J Unemployment in the industrial world began to rise in the mid-1970s and remained
high until the early 1990s.
MNCs started to shift production operations towards low-wage Asian countries in the
late 1970s.

1 Incountries like China, wages were extremely low. The Chinese economy's low-cost
structure allowed its products
to be more affordable. China has been a favourite market for multinational
companies. China's liberal economic
policy after the collapse of Soviet system has brought the foreign countries back
into the its economy.

Industry's shift to low-wage countries increased global trade and money flows.
India, China, and Brazil have all
experienced rapid economic transformations.

The Making of Global World &®

Page # 11

'. Globalisation: The Process by which the world is becoming increasingly

interconnected as a reg

Significantly increased trade and cultural interchange is known as globalisation.

The production of
and services has increased as a result of globalisation.

2. Cowries: Sea shells are often known as Cowries in Hindi. These were used as
currency in pre-modern erg
3. Silk Route: Route taken by traders to carry silk cargos from China to the west.

4. El Dorado: El Dorado is a legendary lost gold city that has served as a landmark
for explorers and gold
seekers for thousands of years

Ult gg
800ds

Religious Dissenters: A person who refuses to accept traditional beliefs and

practices.

6. Plantation: Tea, coffee, cotton, tobacco, sugarcane, and other cash crops are
grown on the plantation,
7. Corn Laws: The Corn Laws were a set of laws that allowed the government to
restrict corn imports,
8. Emigrant: A person who leaves their own country in order to settle permanently
in another.

9. The Canal Colonies: The British Indian government constructed a network of

irrigation canals in Punjab
to convert semi-desert wastelands into rich agricultural lands where wheat and
cotton could be grown for
export. .

10. Rinderpest: Rinderpest (also cattle plague) was an infectious viral disease of
cattle.

11. Perishable foods: Perishable foods are those that deteriorate, degrade, or
become unsafe to eat if not kept
refrigerated at 40 degrees Fahrenheit or lower.

12. Imperialism: A policy of increasing a country's power and influence by colonial

rule, military force, or
other ways.

13. Indentured labour: A contracted labourer is a person who has agreed to work for
an employer for a set
period of time in order to pay for his or her journey to a new nation or residence.

14. Hosay: In Trinidad the annual Muharram procession was transformed into a
riotous carnival called
‘Hosay’ (for Imam Hussain) in which workers of all races and religions joined.
15. Rastafarianism: It is a protest religion made famous by the Jamaican reggae
star Bob Marley. It is 4
. Jamaican religion that considered black people to be the children of god.

a Udaan Study Material Class“ @

= oes 7

d
Page # 12
16.

17.

18.
19.

20.

21.

22.

23.
24.

25.

26.

27.

28.

29.

30.

tney Music: ¢ sic is a fue: “ol ae ‘

a eal Cait Music is a fusion genre of Indian folk music, specifically Bhojpuri folk
music,
wit deean calypso and soca music. This genre of music, that developed in Trinidad
and Tobago
and is popular in Trinidad and Tobago.

reneur: S ages i i ibili

Entrep irs A Person who engages in a commercial venture with the possibility of
profit or loss. Start
his or her own business at his or her own risk
Coolie: Descendants of Indian indentured workers, often referred as ‘coolies’.
Indigo: A deep violet blue colour crop grown as a commercial crop for dying clothes
in India during
British period.

tna?

‘ aecoueed line’ method: It allowed a faster and cheaper way of producing vehicles.
The assembly line
pushed workers to repeat a single task mechanically and continuously such as
fitting a particular part to
the car at a pace dictated by the conveyor belt.

Allies: In the First World War, Britain, France and Russia established an alliance
and fought together in
the War. They were known as Allies or Allied Powers.

Central Power: An alliance formed by Germany,Austria-Hungary, Italy, Later Ottoman

Turkey in the
First World War. Together they were known as Central Power.

Axis-Power: Germany, Italy, Austria, Turkey were referred as Axis powers during the
Second World War.
IMF: The Bretton Woods conference established the International Monetary Fund (IMF)
to deal with
external surpluses and deficits of its member nations in 1944.

IBRD: The International Bank for Reconstruction and Development, popularly known as
the World Bank,
was set up to finance post-war reconstruction.

Bretton Woods Twins: The IMF and the World Bank are referred to as the Bretton
Woods institutions or
sometimes the Bretton Woods twins.

New International Economic order(NIEO): The NIEO meant a system that would give
developing
nations real control over their natural resources, more development assistance,
fairer prices for raw
materials, and better access for their manufactured goods in developed countries’
markets.

G-77: The Group of 77 (G77) at the United Nations is a coalition of 134 developing
countries, designed
to promote its members’ collective economic interests and create an enhanced joint
negotiating capacity
in the United Nations. There were 77 founding members of the organization
headquartered in Geneva.
Fixed Exchange Rates: When currency rates are fixed and governments intervene to
restrict them from
fluctuating.

Floating Exchange Rates: These rates fluctuate based on currency demand and supply
in foreign exchange
markets, with no government intervention.

Dates & Personalities

Important Dates
1. 15th century: Silk routes connected the world.
2. 1845-1849: Great Irish Potato Famine devastated Ireland.
3. 1815-1846: Corn Laws was enforced.

: Q@ The Making of Global World

@
Page # 13
1.

Ans.

Ans.

OF 8 is SaaS

of global
venteenth
a and one

Give two examples of different yee

exchanges which took place before ne
century, choosing one example from

from the Americas.

Jes of
. century, examp
Before the seventeenth ions include:

various sorts of worldwide interacti as

Asia: Traders and travelers introduced meet .
of crops to Asia and Europe as they en Chins
thought that noodle arrived in Europe ro hom
and was transformed into spaghett. Pottery cast
China, spices and textiles from India and Sou ant
Asia, and precious metals like gold and silver

from Europe to Asia along the Silk Route.

America: After Christopher Columbus
accidentally discovered America, common
foods such as potatoes, soya, groundnuts, maize,
tomatoes, chilies, sweet potatoes, and others
made their way to Europe and Asia. Even disease
germs like smallpox were brought from Europe to
America.

. Explain how the global transfer of disease in the

pre-modern world helped in the colonisation of the

Americas.

The colonisation of the Americas was supported

by the global spread of disease in the pre-modern
world. The reason for this was that.

The native Americans were not immune to the

diseases introduced by the European settlers.
Because of centuries of exposure, Europeans
were largely immune to the impacts of diseases
like smallpox, while native Americans lacked
this immunity because they were isolated from
diseases common to the old world.

Sometimes, colonisers used smallpox viruses in

objects as ‘friendship gifts' to the native population.

Without turning to weapons, the disease was far

more effective in destroying entire tribes and

villages.

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

(a) The British government’s decision to abolish

the Corn Laws.
(5) The coming of rinderpest to Africa.

(c) The death of men of workin

g-age in Eur
because of the World War. one
Page # 14
(d) The Great Depre

(ce) The decision 0

Ans. (a) The de

(b

(c

ssion on the Indian economy,

f MNCs to relocate production

to Asian countries.

ecision by the British (

ws resulted in

heaper agricultural crops from

Australia. Agriculture in the
s unable to compete with

government to

abolish the Corn La

An import of ¢
America and
Great Britain wa
imports.

Many British farm

to cities. Some of t

ers left their job and moved

hem moved overseas. This

unexpectedly resulted in globalized agriculture

and rising urbanisation, both of which are
necessary for industrial growth.

Faster industrial growth in the Great Britain

resulted in better incomes and, as a result,
more food imports. Lands were cleared and
food production increased to fulfill British
demand in Eastern Europe, Russia, America,

and Australia.
Rinderpest came in Africa in the late 1880s,
brought by infected cattle imported from
British Asia to feed Italian soldiers occupying
Eritrea in East Africa. Cattle loss destroyed
African livelihoods. Planters, mine owners, and
colonial governments now have a monopoly on
the few remaining cattle resources, allowing
them to strengthen their control and push
Africans into the labour market. European
colonisers were able to dominate and rule
Africa by controlling the valuable resource of
cattle.

Millions of soldiers had to be recruited from all

over the world and brought to the battlefront
on large ships and trains in order to fight the
first world war also known as an industrial
war. The amount of death and destruction
was huge. The majority of those murdered
me wounded were men of working age, and
er ueaths and injuries dramatically reduced
a ope ‘ bay workforce. Household
weet Te ropped after the war because there
were ke vr members in the family. As a result,
nme arted to enter jobs previously held

n. It enhanced women's participation

Udaan Study Material Class-X @

Page # 15
‘Ans.

in society, resulting in a dem; .

and for equal
quality

in society. It really boosted the feminist

movement.

d) India's exports and imports were cut in half

between 1928 and 1934. During the Great
Depression, India became a major exporter of
precious metals, mainly gold, The Price of raw
jute dropped by 60% due to the collapse of
gunny bag exports.

(c) Due to an excess supply of workers, wages in

Asian countries are comparatively low. The
cost structure of most of these economies was

low. Most of these nations have a huge market.

. Give two examples from history to show the

impact of technology on food availability.

Following are the two examples of impact of

technology on food availability:

Better transport systems: This allowed foods

to be transported to markets on time and in good
condition. Faster railways, lighter coaches, and
larger ships helped deliver food from distant farms
to consumer markets more cheaply and rapidly.

Refrigerated ships: The invention of refrigerated

ships allowed the long-distance transport of
perishable foods. Animals were slaughtered for
food in the beginning — in America, Australia, or
New Zealand — and then shipped frozen to Europe.
In Europe, this resulted in a lower shipping costs
and lower meat prices. The poor in Europe could
now enrich their diet with meat, which had
previously been limited to bread and potatoes.

. What is meant by the Bretton Woods Agreement?

Ans.

At the United Nations Monetary and Financial

Conference in Bretton Woods, New Hampshire,
USA, a framework was agreed upon to maintain
a stable economy. It founded the World Bank
and the International Monetary Fund (IMF). The
International Monetary Fund (IMF) is in charge
of dealing with its member countries’ external
surpluses and deficits. The International Bank for
Reconstruction and Development (IBRD, often
referred to as the World Bank) was established to
aid the post-war recovery. In 1947, the IMF and
the World Bank began their financial operations
therefore these institutions are called ‘Bretton
Twins’. A fixed exchange rate was used under the
Bretton Woods System. At a fixed rate, national
currencies were linked to the US dollar. Decision-
making in all of these institutions is dominated by
Page # 16
the Western industrial powers largely by the US.

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.

Ans. Greetings, Mummy and Papa!

T hope you're both doing well and having a good

time there. This letter is about my experiences as
an indentured labourer in the Caribbean.
| When I first arrived here, things appeared to be quite
hard, which stunned me. However, I am optimistic
that I will be able to recover quickly. Despite the fact
that life here is full of challenges and hardships, I did
not choose all of this. Only false facts and promises
were used to make the contract attractive. I'm a slave
here, and I don't make much money. However, I feel
this will pass quickly.
Dearest Son,
Vasu
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.

economic trade:

(i) Trade of Goods: The first movement was

largely based on the trade of goods. (e.g.,
cloth or wheat).India was one of the centers of
| trade in the pre-modern world, and it exported
textiles and spices in exchange for gold and
silver from Europe.

we .
Ans. Three forms of movement or 'flows' in international
|

(ii) Flow or Labour: People migrated from one

country to another in search of employment.
People from India were taken to distant lands
to work in fields, mines and plantations as
indentured labourers.

(iii) Movement of Capital: The third is capital

movement over long distances for short- or
long-term investments. European capital,
particularly British capital, moved to India in
large numbers to invest in railways, industries,
and other projects.

8. Explain the causes of the Great Depression.

Ans. Causes of Depression are:

(i) Overproduction inagriculture: Overproduction

in agriculture remained an issue. It causes
agricultural product prices to collapse. Due to
a shortage of buyers, farm produce rotted.
Page # 17
(ii) The Financial Crisis in the USA: Many
countries borrowed money from the United
States in the mid-1920s to fund _ their
investments. At the first sign of difficulty,
foreign lenders panicked. The withdrawal of
US loans triggered a serious crisis in countries
who were highly dependent on US. It caused
large banks to fail and currencies to drop.

(iii) Consumers failed to pay their loans: Between

1929 and 1932, approximately 4,000 banks
and 110, 000 businesses in the United States
went bankrupt. The consumerist wealth of the
1920s has now vanished into thin air. People
travelled large distances in search of any Wo k
they could find as unemployment rose ~
Page # 18
9. Explain what is referred to as the G-77 countries.

- Ans.

In what ways can G-77 be seen as a reaction to the

activities of the Bretton Woods twins ?

The rapid growth of Western economies or

establishment of Bretton wood twins in the

1950s and 1960s did not benefit most developing
countries.Developing countries came up with
a plan as a group. The Group of 77, or G-77, is
a group of 77 countries that have come together
to seek a new international economic order
(NIEO). It was a system that would provide them
actual control over their natural resources, more
development support, lower raw material prices,
and better access to developed-country markets for
their produced goods,