Lecture 6: 1850-1914 Flashcards
The Second Industrial Revolution:
what technology was it spurred by?
Spurred by the innovation of General Purpose Technologies (Electricity, internal combustion engine)
The Second Industrial Revolution:
What new goods were available?
New consumer goods: Cars, Refrigerators, Phones, Running water: Indoor toilets, Electric stoves
The Second Industrial Revolution: What two additional characteristics are important?
Characteristics: modern company (Scale and scope → more/research for different goods), Urbanization
What six point are important for the first Globalization wave?
- Falling transportation costs (Steamships, Telegraph, Railways), 2. Free trade policies, Gold standard
- Goods: Inter-industry trade (e.g. British machines against Indian tea), The Grain Invasion (grain ex/import)
- Capital: London as center of international finance, European capital into the world (to places with labour)
- Gold Standard: system of fixed exchange rates, made trade easier, less room for domestic econ policies
- Migration: almost free migration
Where from and to was migration during the first globalization wave?
What were pull and push factors?
Migration: From Europe, Asia → To US, Canada, Argentina, Brazil, Australia, NZ (almost free migration)
Caused by: Push: Bad harvests, unempl. // Pull: Wages, employ, social advancement + „Family”-effect
What is the Heckscher-Ohlin Theorem? What followed empirically after the first globalization wave?
“Land-rich” countries export land-intensive goods, “People-rich” labor-intens.
Therefore: New World: Land prices ↑ - wages ↓ // Old World: Land prices ↓ – wages ↑
Backlash (Protectionist policies): New World: Laborers → Migration restrictions // Old World → Tariffs
The 2nd Industrial Revolution - What happened to the Core Industrial countries?
UK fell back (too little skilled labour, dependence on relatively free trade),
Scandinavia caught up (High human capital, “Democratic” institutions),
Germany with fast industrialization (heavy industry, chemistry)
US/CAN: Receivers of European Migrants, econ. unification by Railways, growing ahead of Britain
What were the responses to the 2nd Industrial Revolution?
Response: Grain Invasion rose real wages; UK free trade, protectionism in FRA and GER
The 2nd Industrial Revolution - What happened to the Global Economic Periphery?
Commodity export boom, sometimes even explicit deindustrialization (e.g. India)
Manufacturing grew faster in Industrial countries, which lowered its relative price → periphery countries specialized in one or two primary products
Exporting primaries is an easy income but has three problems:
- Less spillovers and long-run growth potential
- Specialization on few increases volatility
- Landowners benefit most, more inequality
Terms-of-trade =
Price of exports / price of imports → decreased for UK, rose for periphery
What were the reasons for periphery’s free trade (pre WWI)?
colonies of free traders, gunboat diplomacy, land-owner interests (in charge)
Reasons for deindustrialization?
- ”Dutch disease” (Manufactured exports less competitive)
- Inequality hinders domestic market
E.g. India: Indian hand-spinning was outcompeted by British mechanized spinning (but forced to remain open)
Why was Africa invaded in the pre-WWI period?
Technological changes made it more more attractive and less costly for European powers to invade Africa, industrialization increased demand for agricultural and mineral products
Three types of colonies in Africa?
- Plantation/concession colonies: Large areas were alienated to European companies
- Settler-elite: Africans remained the majority, markets adapted itself to produce crops for the markets provided by towns and mines
- Peasant colonies: Where Africans retained almost all the land: A widespread expansion of export agriculture in the early colonial period (here Africans held more bargaining power)
