Transcript EC120 week 1 - University of Essex

Globalization, 1815−1914: trade and development
Topics:
• World economy in the long 19th century
• Industrialisation, mid-19th century to 1914
• Transport & communications in 19th century
• Long distance trade, 1815−1914
• Commodity market integration and convergence
• Britain’s move to Free Trade
• Liberal interlude in commercial policy, c1860−c1880
• Retreat from Free Trade: rise of Neo-Mercantilism
• Free Trade Imperialism
EC120 week 16, topic 11, slide 0
The World Economy in the long 19th century
• Move towards international Free Trade, 1840s−60s
– Retreat from late 1870s with rise of neo-mercantilism
• Industrialisation: western Europe caught up, 1850s−60s
• Industrialisation: a “second” Industrial Revolution?
• Globalisation: the first(?) phase 1860s−1914
EC120 week 16, topic 11, slide 1
Industrialisation, mid-19th century to 1914
• Technological advance in broad range of industries
• Landes’s classification:
I. “New materials and new ways of preparing old
materials”
II. “New sources of energy
and power”
III. “Mechanisation
and division of labour”
EC120 week 16, topic 11, slide 2
Transport & Communications in the 19th cent.
• Canals: linked oceans, inland waterways expanded
• Ocean: improved ship design and refrigeration
• Railroads: expanded across the world after 1840s
• Telegraph: networks widespread from late 1840s
EC120 week 16, topic 11, slide 3
Long distance trade, 1815−1914
• Growth of trade faster than GDP; brief cyclical interruptions
• Growth dominated by Europe and the New World
• Shift from high-value/weight to bulk commodities
• Changing trade patterns affected composition of domestic
output and distribution of income
• What determined of the changing patterns of trade?
EC120 week 16, topic 11, slide 4
Commodity market integration & convergence
• International commodity markets became more integrated,
1815-1914
– Compare commodity prices at the origin (production)
with those at the destination (consumption)
• Commodity market integration and income distribution
– Commodity prices
-> trade patterns
-> production patterns
-> income distribution
EC120 week 16, topic 11, slide 5
Britain’s move to Free Trade
• In 1815, Britain remained highly protectionist
• Agricultural protection reinforced: Corn Law of 1815
• Corn Law repeal in 1846 signalled onset of Free Trade
• Free Trade Imperialism: enforced foreign openness
Sir Robert Peel
EC120 week 16, topic 11, slide 6
Liberal interlude in trade policy, c1860−c1880
• In 1815 most European nations were highly protectionist
• Gradually less protectionist policies were adopted
• Cobden-Chevalier Treaty between Britain & France, 1860
• Despite Free Trade Imperialism, much of the world
remained protectionist
EC120 week 16, topic 11, slide 7
Retreat from Free Trade: rise of Neo-Mercantilism
• From c1880, most nations retreated from trade liberalisation
• Variety of causes: preservation of existing living standards
and/or promotion of new industries
• Varying national responses: some countries upheld free
trade, others became more-or-less protectionist
EC120 week 16, topic 11, slide 8
Free Trade Imperialism
• European overseas empires expanded during the 19C:
– Mainly to impose trade “openness”
– Greater autonomy for European offshoots
• USA and Russia pursue continental expansion
• A North-South divide?
– Europe (`north’) versus the rest (mostly `south’)
EC120 week 16, topic 11, slide 9
Summing up
• In 19C, international trade expanded faster than output
• Globalisation: reflected in commodity price convergence
• Convergence of incomes (returns to factors of production)
– Partly from trade flows (goods and services)
– Partly from factor flows (migration)
EC120 week 16, topic 11, slide 10