Introduction
Globalisation refers to the economic system that has emerged in the last 50 years, but it has a long
history of trade, migration, and the movement of capital. Human societies have become increasingly
interlinked throughout history, with travelers, traders, priests, and pilgrims traveling vast distances for
knowledge, opportunities, and spiritual fulfillment. They carried goods, money, values, skills, ideas,
inventions, and even germs and diseases. As early as 3000 BCE, coastal trade linked the Indus valley
civilizations with present-day West Asia. Cowries from the Maldives spread to China and East Africa, and
the spread of disease-carrying germs began in the seventh century.
Silk Routes Link the World:
The silk routes linked together vast regions of Asia, Asia with Europe and
northern Africa.
They are known to have existed since before the Christian era and thrived
almost till the fifteenth century.
Food Travels: Spaghetti and Potato
Europe’s poor began to eat better and live longer with the introduction of
potato.
The poor peasants of Ireland were so dependent on potatoes that when
disease destroyed the potato crop in the mid-1840s, hundreds of
thousands died of starvation.
Conquest, Disease and Trade
But from the sixteenth century, America’s vast lands and abundant crops
and minerals began to transform trade and lives everywhere.
The Portuguese and Spanish conquest and colonisation of America was
decisively under way by the mid-sixteenth century.
The most powerful weapon of the Spanish conquerors was the germs such
as those of smallpox that they carried.
Once introduced, smallpox spread deep into the continent, ahead even of
any Europeans reaching there.
Until the nineteenth century, poverty and hunger were common in Europe.
Religious conflicts were common, and religious dissenters were
persecuted.
The Nineteenth Century (1815-1914)
In the nineteenth century, economic, political, social, cultural and
technological factors transformed societies and reshaped external
relations.
A World Economy Takes Shape
In nineteenth-century Britain, self-sufficiency in food meant lower living
standards and social conflict.
In Eastern Europe, Russia, America and Australia lands were cleared and
food production expanded to meet the British demand.
By 1890, a global agricultural economy had taken shape, accompanied by
complex changes in labour movement patterns, capital flows, ecologies
and technology.
Role of Technology
Technological advances like the railways, steamships, the telegraph, were
the result of larger social, political and economic factors.
Colonisation stimulated new investments and improvements in transport
resulting in faster railways, lighter wagons and larger ships.
Late nineteenth-century Colonialism
Trade flourished and markets expanded in the late nineteenth century.
The expansion of trade and increased prosperity had many negative
repercussions.
Rinderpest or the Cattle Plague:
In the late 1880s Africa was hit by rinderpest, a devastating cattle
disease.
As rinderpest spread, it killed 90 per cent of the cattle which in turn
destroyed African livelihoods.
Whatever little cattle resources remained, were monopolised by planters,
mine owners and colonial governments.
Indentured Labour Migration from India
In India, indentured labourers were hired under contracts which promised
return travel after they had worked five years on their employer’s
plantation.
The main destinations of Indian indentured migrants were the Caribbean
islands, Mauritius and Fiji.
Recruitment was done by agents engaged by employers and paid a small
commission.
On arrival at the plantations, labourers found living and working
conditions were harsh, and there were few legal rights.
Most indentured workers stayed on after their contracts ended, or
returned to their new homes after a short spell in India.
Indian Entrepreneurs Abroad
Many groups of bankers and traders had a sophisticated system to
transfer money over large distances, and even developed indigenous
forms of corporate organisation.
Indian traders and moneylenders also followed European colonisers into
Africa.
Indian Trade, Colonialism and the Global System
With industrialisation, British cotton manufacture began to expand.
Tariffs were imposed on cloth imports into Britain.
From the early nineteenth century, British manufacturers also began to
seek overseas markets for their cloth.
While exports of manufactures declined rapidly, export of raw materials
increased equally fast.
Over the nineteenth century, British manufactures flooded the Indian
market.
But the value of British exports to India was much higher than the value of
British imports from India.
Thus Britain used the surplus to balance its trade deficits with other
countries
The Inter-war Economy
During the First World War the world experienced widespread economic
and political instability, and another catastrophic war.
Wartime Transformations
The First World War involved the world’s leading industrial nations which
harnessed the powers of modern industry to inflict the greatest possible
destruction on their enemies.
Millions of soldiers had to be recruited from around the world and moved
to the frontlines on large ships and trains.
The scale of death and destruction was unthinkable without the use of
industrial arms.
The war led to the snapping of economic links between some of the
world’s largest economic powers.
Britain borrowed large sums of money from US banks as well as the US
public.
Thus the war transformed the US from being an international debtor to an
international creditor.
Post-war Recovery
Britain, which was the world’s leading economy in the pre-war period,
faced a prolonged crisis.
After the war Britain found it difficult to recapture its earlier position of
dominance in the Indian market, and to compete with Japan
internationally.
When the war boom ended, production contracted and unemployment
increased.
Rise of Mass Production and Consumption
After a short period of economic trouble in the years after the war, the US
economy resumed its strong growth in the early 1920s.
Mass production became a characteristic feature of industrial production
in the US.
The housing and consumer boom of the 1920s created the basis of
prosperity in the US.
In 1923, the US resumed exporting capital to the rest of the world and
became the largest overseas lender.
The Great Depression:
The Great Depression began around 1929 and lasted till the mid1930s.
Most parts of the world experienced major declines in production,
employment, incomes and trade.
Agricultural regions and communities were the worst affected.
Causes of the depression:
Agricultural overproduction:
Indebtedness:
The withdrawal of US loans affected much of the rest of the world.
The US was also the industrial country most severely affected by the
depression.
India and the Great Depression:
Due to the depression India’s exports and imports went down to half
between 1928 and 1934.
Peasants and farmers suffered more than urban dwellers.
The depression proved less grim for urban India.
Rebuilding a World Economy: The Post-war Era:
The Second World War was fought between the Axis powers and the Allies.
Two crucial influences shaped post-war reconstruction.
The first was the US’s emergence as the dominant economic, political and
military power in the Western world.
The second was the dominance of the Soviet Union.
Post-war Settlement and the Bretton Woods Institutions:
The main aim of the post-war international economic system was to
preserve economic stability and full employment in the industrial world.
Its framework was agreed upon at the United Nations Monetary and
Financial Conference held in July 1944 at Bretton Woods in New
Hampshire, USA.
The IMF and the World Bank are referred to as the Bretton Woods
institutions or the Bretton Woods twins.
The Early Post-war Years:
With the Bretton Woods system came an era of unprecedented growth of
trade and incomes for the Western industrial nations and Japan.
Developing countries tried to catch up with the advanced industrial
countries.
Decolonisation and Independence:
Over the next two decades after the Second World War, most colonies in
Asia and Africa emerged as free, independent nations.
The IMF and the World Bank were designed to meet the financial needs of
the industrial countries.
From the late 1950s the Bretton Woods institutions began to shift their
attention more towards developing countries.
End of Bretton Woods and the Beginning of ‘Globalisation’:
From the 1960s the US’ overseas involvements weakened its finances and
competitive strength.
The industrial world was also hit by unemployment that began rising from
the mid-1970s and remained high until the early 1990s.
The relocation of industry to low-wage countries stimulated world trade
and capital flows.
In the last two decades the world’s economic geography has been
transformed as countries such as India, China and Brazil have undergone
rapid economic transformation.