Ans) Economists have referred to the following three types of movements or flows under international economic exchange –

1. The first is the flow of ‘trade’, which in the 19th century referred mainly to the trade in goods (such as textiles or wheat, etc.). The British Indian government built a network of irrigation canals to transform semi-desert areas into fertile land where wheat and cotton could be grown for export.
2. The second is the flow of ‘labour’, which involves the migration of people in search of jobs. In the 19th century, millions of Indian and Chinese labourers went to work in plantations, mines and road and railway construction projects around the world. Indian indentured labourers migrated mainly to the Caribbean islands (mainly Trinidad, Guyana and Surinam), Mauritius and Fiji. Many indentured labourers were also recruited in the tea plantations of Assam.
3. The third is the movement of ‘capital’, which was invested over long distances in the short-term or long-term. In India, local moneylenders or mahajans were among the bankers and merchants who financed export agriculture in Central and Southeast Asia. They used either their own money or money borrowed from European banks. They had a sophisticated system of long-distance money transfers.

Ans) G-77-Most developing countries did not benefit from the rapid growth experienced by Western economies in the 1950s and 1960s. So they raised their voices demanding a New International Economic Order (NIEO) and organized themselves as the Group of 77 (or G-77). By NIEO, they meant a system that would give them real control over their natural resources, more development assistance, fair prices for raw materials, and better access for their manufactured goods to the markets of developed countries. The organization of the G-77 was a response to the activities of the Bretton Woods agreements. Developing countries were in a hurry to catch up with the advanced industrial countries.

The IMF and the World Bank were designed to meet the financial needs of industrial and developing countries, but gave less importance to the economic development of former colonies and developing countries. Former colonial powers or developed countries exploited the natural resources of developing countries through the Bretton Woods agreements. Thus, developing nations organized themselves into G-77 to gain real control over their natural resources, better support and opportunities for their manufactured goods in the markets of developed countries.

Ans) Bretton Woods Agreement – In July 1944, the United Nations Monetary and Financial Conference was held at Bretton Woods, New Hampshire, US. The Bretton Woods Conference established the International Monetary Fund (IMF) to deal with the external surpluses and deficits of its member countries. The International Bank for Reconstruction and Development (also known as the World Bank) was established to finance post-war reconstruction. Thus, the IMF and the World Bank are also called the Bretton Woods twins.

The international monetary system is a system linking national currencies and monetary systems. The Bretton Woods system was based on fixed exchange rates. In this system, national currencies, for example, the Indian rupee, were linked to the dollar at a fixed exchange rate. The dollar itself was linked to gold at a fixed price of $35 per ounce of gold. The Bretton Woods system ushered in an era of unprecedented growth in trade and income for the Western industrialized countries and Japan.

Ans) Railways, steamships, and the telegraph were some of the key innovations without which we cannot imagine the changing world of the 19th century. Technological advances were often the result of larger social, political, and economic factors. For example, colonization improved transportation. Faster rail, lighter wagons, and larger ships helped food move cheaply and quickly from distant farms to final markets.

The meat trade offered a good example of this connected process. Until the 1870s, animals were shipped from America to Europe and then slaughtered where they arrived. But live animals took up a lot of space on ships. Many animals died during the journey, fell sick, lost weight, or were simply not fit to eat. Meat thus became an expensive luxury beyond the reach of the European poor. High prices, in turn, kept demand and production low. But the development of a new technology changed the scenario. Refrigerated ships made it possible to transport perishable foods over long distances.

Animals were now slaughtered for food in the US, Australia and New Zealand and then transported to Europe. This not only reduced shipping costs but also lowered meat prices in Europe.

Ans) The state of colonialism in the second half of the 19th century was as follows –

1. Trade flourished and markets expanded in the second half of the 19th century. It was not simply a period of expanding trade and increasing prosperity. We should not ignore the negative aspect of this process. In many parts of the world, the expansion of trade and closer ties with the world economy resulted in the loss of independence and livelihood.
2. The European conquests of the second half of the 19th century led to many painful economic, social, and ecological changes through which colonised societies became incorporated into the world economy.
3. If we look at a map of Africa, we will see that some countries have straight borders, as if they were drawn with a ruler. This is indeed what happened.
4. Rival European powers in Africa drew up borders demarcating their respective territories. In 1885, the major European powers gathered in Berlin to complete the partition of Africa.
5. In the late 19th century, Britain and France expanded their overseas territories, and Belgium and Germany became new colonial powers. In the late 1890s, the United States also became a colonial power, taking over some of Spain’s colonies.

Ans) In the 19th century, Indian indentured labourers were sent to work under a specific contract or agreement. These contracts promised to return to India after working for five years on their employer’s plantations. Most of the Indian indentured labourers came from the arid districts of present-day eastern Uttar Pradesh, Bihar, central India and Tamil Nadu. These areas faced many problems in the mid-19th century, such as a decline in cottage industries, increase in land rent, clearing of land for mines and plantations. All these affected the lives of the poor.

Indian indentured labourers went mainly to the Caribbean islands (mainly Trinidad, Guyana, and Surinam), Mauritius, and Fiji. Tamil migrants went to Ceylon and Malaya. Indentured labourers were also recruited in the tea plantations of Assam. Recruitment was done by agents appointed by the employers who were paid a small commission. Many migrants agreed to work in the hope of escaping poverty or persecution in their villages. Agents also lured potential migrants with false information. Once on the plantations, workers found conditions far different from what they had imagined. Living and working conditions were harsh, and legal rights were few. Despite all this, workers found their own ways to make a living.

Ans) After World War I, the US economy was in trouble for a while, but it resumed its strong growth in the early 1920s. During the 1920s, mass production became an important feature of the US economy. A famous pioneer of mass production was the car manufacturer Henry Ford. He adapted the assembly line from a Chicago slaughterhouse to his new car plant in Detroit. The assembly line forced workers to repeat the same task mechanically and continuously, such as fitting a particular part into a car at a speed set by a conveyor belt. This was a way of increasing output per worker by increasing the speed of work.

Food industrial practices soon spread in the US and were widely imitated in Europe in the 1920s. Mass production reduced the cost and prices of engineered goods. Car production in the US increased from 2 million in 1919 to over 5 million in 1929. Similarly, many people started buying refrigerators, washing machines, radios, gramophone players, etc. All of these were bought through the ‘hire-purchase’ system. The boom in house building and home ownership also increased the demand for refrigerators, washing machines, etc. In 1923, the US resumed exporting capital to the rest of the world and became the largest foreign creditor. US imports and capital exports also boosted European recovery and world trade, and income growth over the next six years.

Ans) The Great Depression began around 1929 and continued until the mid-1930s. During this period, production, employment, income, and trade fell sharply in most parts of the world. There were several reasons for this Great Depression –

1. The first reason was the problem of overproduction in agriculture. Falling prices of agricultural products made the situation worse. As prices fell and agricultural income declined, farmers tried to increase production and bring in more produce so that their total income could be maintained. As a result, there was a glut of agricultural products, which caused prices to fall even further. Agricultural products rotted due to a lack of buyers.
2. In the mid-1920s, many countries financed their investments by taking loans from the US. Although borrowing was often extremely easy when conditions were good in the US, American foreign traders panicked at the first sign of crisis.
3. In the first half of 1928, the amount of US foreign debts was more than $1 billion. Within a year, it had fallen to a quarter of that amount. Countries heavily dependent on American loans now faced a serious crisis.
4. Eventually, American banking collapsed as well. Unable to recover investments, thousands of banks went bankrupt and were forced to close. By 1933, more than 4,000 banks had closed, and between 1929 and 1932, about 110,000 companies went bankrupt.

Ans) End of Bretton Woods and the Beginning of ‘Globalization’ as follows:-

1. From the 1960s onwards, the rising cost of investing abroad weakened US finances. The US dollar was no longer reliable as the world’s dominant currency. This eventually led to the collapse of the system of fixed exchange rates and the introduction of a system of floating exchange rates.
2. From the mid-1970s onwards, the international financial system also underwent significant changes. Previously, developing countries could turn to international institutions for loans and development assistance. But now they were forced to borrow from Western commercial banks and private lending institutions. This resulted in periodic debt crises in developing countries and reduced incomes and increased poverty, especially in Africa and Latin America.
3. The industrial world was also hit by unemployment, which began to rise from the mid-1970s and remained high until the early 1990s. From the late 1970s, multinationals also began to shift their production operations to low-wage Asian countries.
4. China had been isolated from the post-war world economy since its revolution in 1949. But the New Economic Policies in China and the collapse of the Soviet Union and Soviet-style communism in Eastern Europe brought many countries back into the fold of the world economy.
5. Wages in countries like China were relatively low. Thus, they became attractive destinations for investment by foreign multinationals seeking to capture world markets.
6. The shift of industries to low-wage countries stimulated world trade and capital flows. Over the past two decades, the economic geography of the world has changed as countries like India, China and Brazil have undergone rapid economic transformation.

Ans) The global transfer of disease in the pre-modern world helped in the colonization of the Americas as –

1. By the mid-16th century, the Portuguese and Spanish conquest and colonisation of the Americas had begun decisively. They had begun to colonise the Americas.
2. The European armies did not win simply because of their superior firepower. In fact, the most powerful weapon of the Spanish conquerors was not any traditional military weapon. Rather, germs such as smallpox arrived with the Spanish soldiers and officers.
3. Having been isolated for millions of years, the natives of the Americas had no immunity to these diseases that came from Europe. Therefore, smallpox in particular proved to be a deadly killer for this new place.
4. Once entered, the disease spread deep into the continent, even before any Europeans arrived there. It killed and destroyed entire communities. Thus, it paved the way for conquest.

1. The British government’s decision to abolish the Corn Laws.
2. The coming of rinderpest to Africa.
3. The death of men of working-age in Europe because of the World War.
4. The Great Depression on the Indian economy.
5. The decision of MNCs to relocate production to Asian countries.

1. The decision to abolish the Corn Laws by the British Government – In this century, the population of Britain had grown rapidly. As a result, the demand for food grains in the country also increased. As cities expanded and industries developed, the demand for agricultural products increased. Food grain prices rose. On the other hand, under pressure from landowner groups, the government also restricted the import of corn. The laws that allowed the government to do this were commonly called the Corn Laws. Unhappy with the high food prices, industrialists and urban residents forced the abolition of the Corn Laws. After the Corn Laws were abolished, food grains could be imported, which were much cheaper than those produced within the country. Thus the situation of British farmers began to deteriorate, as they were unable to compete with imports. Vast areas of land now remained barren
2. The coming of rinderpest to Africa – In Africa, the first symptoms of rinderpest disease were found in the 1880s. This fast-spreading disease of cattle plague had a terrifying impact on people’s livelihoods and the local economy. At the time, cattle were imported from Asia to feed the Italian soldiers invading Eritrea in East Africa. This disease was carried by these infected cattle imported from British Asia. Entering Africa in the east, this disease moved to West Africa like a forest fire.’ In 1892, it reached Africa’s Atlantic coast. 5 years later, it reached the Cape (Africa’s Southernmost tip). Along the way rinderpest killed 90 % of the cattle.
3. Death of working-age men in Europe due to World War – When the war began in 1914, many governments thought it would be over by Christmas, but the war lasted for more than four years. It was a war like never before in the history of human civilization. The war caused death and destruction on a scale that was unimaginable before the industrial age, without the use of industrial weapons. More than 9 million people died and 20 million were injured in this war. Most of the people killed and maimed were men of working age. This massive destruction reduced the able-bodied workforce in Europe. With fewer members within the family, household income declined after the war. Whole societies were reorganized, keeping the needs of the war in mind
4. The Great Depression on the Indian Economy – The Great Depression had an immediate impact on Indian trade. India’s exports and imports fell by almost half between 1928 and 1934. As international prices fell, prices in India also fell. Peasants and agricultural workers suffered more than urban residents. Although agricultural prices fell sharply, the colonial government refused to grant revenue exemptions. Farmers who produced for the world market were the worst hit. Throughout India, farmers’ debt rose. They spent their savings, mortgaged lands, and sold whatever jewelry they owned to meet their expenses. In these Depression years, India became an exporter of precious metals, especially gold. The famous economist John Maynard Keynes believed that Indian gold exports fueled the global economic recovery.
5. Decision by multinational companies to shift production to Asian countries – Large companies that operate in several countries at the same time are called multinational corporations (MNCs). The earliest MNCs were established in the 1920s. Many more came into being in the 1950s and 1960s as US business expanded around the world, and Western Europe and Japan also emerged as powerful industrial economies.) Unemployment began to rise from the mid-1970s and remained high until the early 1990s. From the late 1970s, MNCs also began to shift production to low-wage Asian countries. Wages in countries such as China were comparatively low. Thus, in a race to capture world markets, foreign MNCs began to invest in these destinations.