week two - The first wave of globalisation, 1870-1913 and deglobalisation, 1914-1945 Flashcards
what increased/decreased with internationalisation between 1820-1913
- increase in trade
- increase in migrations
- increase in capital flows
what happened in terms of trade and protectionism between 1800-1913
- 1840-1870 higher growth of trade
- 1870-80 increase in protectionism
- trade grew at a higher rate than world production
between 1800-1900s where was most of trade located in the world
intra-europe, the most important growth of trade was between old and new world countries
what percentage of trade composition were primary goods in early periods of trade
63% of primary products
what were some liberalising policies in the UK and France
- Elimination of Corn Laws in 1846 in Great Britain
- Trade treaties: Cobden-Chevalier treaty (1860) between France and GB and establishment of the most-favoured-nation (MFN) clause in treaties (MFN clauses implied that bilateral trade concessions were automatically generalised to all participants in the treaties)
what are the two biggest factors behind growth trade
- liberalising policies
- technological change
what innovations changed trade growth
- channels and trains
- railways
- refrigeration
- communication innovation
- freight reduction (containerisation)
from 1881-1915 how many international immigrants were there roughly per year
900,000 (kenwood and Lougheed, 1992)
where were most immigrants from
mostly european:
- first half of 19th century: British Isles
- around 1850: Scandinavia
- 1880 onwards: south and eastern europe
- and some asian countries
where are the biggest destination countries
- USA
- 1880 onwards: Brazil, argentina, australia
what are the eight determinants of emigration
1) wage differentials
2) land availability
3) migration aids
4) chinese indentured servitude (railroads)
5) demographic factors
6) income restrictions (cost of emigrating)
7) migration chain
8) migration policy (sending countries)
what is the migration chain
the remittances of previous emigrants financing the following emigrants
characteristics of destination countries
- higher wage
- land abundance
- countries promoting immigration
characteristics of origin countries
- lower wage
- labour abundance
- only UK promoting emigration
what are the main capital-exporting countries
UK, france, germany, belgium, netherlands and sweden, but UK as the main capital exporting country
what are the main capital-importing countries
europe, and new world countries (e.g. north america, japan, argentina etc.)
what was the capital composition between 1830-1914
- portfolio investments: railway constructions, ports, telegraphs etc.
- shares
- bonds
what were the reasons to increase foreign investments between 1830-1914
- demand: needs of capital in new world countries, higher returns (more risk), political factors
- supply: increase in domestic savings, exhaustion of domestic investment opportunities
why did the heavily industrialised countries takeover africa, asia and oceania post 1880
economic reasons:
- trade
- growing population
- new investment markets (capital imperialism)
political factors:
- military reasons
- strategic raw materials
- defensive imperialism
ideology:
- nationalism
what is the heckscher-ohlin theory
- each country exports the commodities which make an intensive use of the factors found in abundance in that country and imports the commodities that make an intensive use of the country’s scarce factors
what is meant by the equalisation of prices of goods
- the decrease in transport costs leading to the decrease in the differences in prices in the international markets
why was equalisation of prices not uniform across all countries (1869-1914)
- in germany, france and sweden convergence was only modest whereas it was higher in the UK and denmark
- italys convergence was very slow
- spain and portugal did not converge
- the reason for this reaction was because of the difference in reaction to the trade tariffs
what were the effects of trade on factor price convergence (rent and wages)
- old world: demand for land decreases, the rent paid for land (R) decreases
- new world (specialised in agriculture): demand for land increases, the rent paid for land increases
- Old World: specialised in cotton textiles. The demand for labour increases, wages increase
- New World: specialised in agriculture. The demand for labour decreases, wages decrease
- Result:
– Old World: w/R increases, due to w increasing and R decreasing
– New World: w/R decreases, due to w decreasing and R increasing - As a consequence of specialisation: w/R convergence
– R being the rent paid for using land, and w being wages - Trade was between countries with land abundance and labour abundance
what did a decrease in wheat prices do to countries where agriculture had a small weight in the economy (UK/denmark)
increase in real wages
what were the effects of international trade in countries where agriculture had a greater significance but could diversify production
lower demand for labour in agriculture affected nominal wages negatively (france and germany) but they could adapt to changes in the international market towards other agricultural goods
what were the effects of international trade in backward or poorer countries
the low productivity of agriculture, need for infrastructure, and large population negatively influences the benefits of economic openness
how did international trade also contribute to the extension of the welfare state
- it promoted labour regulations (mainly in favour of children and women)
- trade treaties between european countries established conditions to trade
what was the reaction to transport costs reduction in the past
protection: tariffs were raised
what is the composition of trade in the past vs now
- past: agriculture
- now: manufacturing and services
what were the effects on wage as a result of migration
the real wages increased relative to those in destination countries
- convergence in wages in denmark, ireland, norway, sweden, netherlands, italy
- wages fell in belgium, france, spain and portugal
- increase in wages in origin countries
- decrease in wages in receiving countries
what were the effects on wage inequality as a result of migration
- origin countries: in unskilled labour abundant countries migration reduces the supply of unskilled labour, reducing wage inequality
- receiving countries: migration increases the supply of unskilled workers and increases wage inequality
before IWW, what was the main factor of convergence
international migrations (accounted for about 70% of real wages convergence)
did old/new world countries increase of decrease wage inequality
- new world countries: increased inequality
- old world countries: decreased inequality
what does higher integration of the capital markets imply
higher interest rate convergence
when do capital flows only favour wage convergence
when capital flows from rich to poor countries
what was the economic growth effect (international capital flows)
most of the capital was exported to new world countries (where natural resources can be exploited) and not to asian economies or the poorest areas where labour was cheap
were international capital flows a force of convergence or divergence in GDP per capita in relation to developed countries
a force of divergence
what were the most important investments in the past vs now
- past: portfolio investments
- now: FDI
what were the most important investments in the past vs now
- past: portfolio investments
- now: FDI
what was the reaction to deglobalisation regarding trade
protectionism
what was the reaction to deglobalisation regarding migration
migration restrictions
what was the reaction to deglobalisation regarding capital flows
they were interrupted by the IWW
