Lec 9: The Colonial World Economy

Question 1

What happened during the 19th Century trade boom? What did this set the stage for?

Answer 1

an increase in international trade occurred. Most of the work to integrate the world economy was done in this century/

Question 2

What were the drivers of the trade boom? (6)

Answer 2

 Free trade
- before then couldn’t have free trade because needed to retain gold in empire under mercantile policies
- laws such as the corn laws and the navigation acts used to protect english products in order to decrease dependency on imported products.
- laws were repealed and UK opened up to free trade, then other countries also opened up.

 Industrial revolution
- an increase in tehcnology meant an increase in resources
- endogenous growth theory: economic growth is primarily the result of internal forces
- more innovation = more trade = more surplus = more innovation & trade

 Transport and communication innovation
- investments in railways and canals
- 1844: invention of the telegraph

 Gold standard
- as of 1871 every currency was based on the value of gold

 International migration

 Peace
- peace reigned after the napoleonic wars

Question 3

What solidified the circuits of trade?

Answer 3

• an increased demand for raw materials
• the development of the middle class in England
• import substitutions (which blocked the import of manufactured goods)

Question 4

Explain why the atlantic triangle came to be and why it broke down in the 19th century

Answer 4

creation
- it followed atlantic currents
- there was no more gold to steal or mine nor a workforce to exploit

break down
- steam ships didnt have to follow atlantic currents
- slavery was abolished
- american colonies began to gain independance

Question 5

Describe the 2 waves of colonialism

Answer 5

16th-19th century:
- extraction and claims to land
- empire expansion
- God, Gold, and Glory

19th-20th century
- competitive scramble for Africa

Question 6

What are the 4 economic roles of colonies?

Answer 6

 New sources of resources and revenue
- trade deficit being run

 New markets for industrial goods
- increases in efficiency saturate markets, need new markets to sell to

 New investment opportunities
- rubber, tea, etc
- a vent for surplus

 ‘Safety value’ for excess population
- economic and social opportunities for growing middle class

Question 7

What are the consequences of colonialism?

Answer 7

 Population of indigenous peoples + slaves
 Economic ‘centering’ on primary products for
export
- certain countries focus on the export of a single product; putting all your eggs in one basket

 Formation of dual societies
- countries contain the first world and the third world in one

 Urbanization: port cities and railways
- colonial organizations focused on commerce
- primate centers with smaller towns around them are formed

 Transplantation of nation state
- transplantation of the colonizers’ home institutions into their colonies (e.g. the code of law)

Question 8

what were the outcomes of the trade boom?

Answer 8

 Economic growth
- GDP increases rapidly
- most everyone is better off (increase in income)
- increase in inequality
- stunted industrial growth

 Market integration
- product price convergence occurs

 Income divergence (between and within)
- prior to 1820, a higher population meant a higher GDP
- after 1820, increases in productivity meant GDP no longer depended on population size