Transcript Economic Growth and Globalization since 1850

Economic Growth and Globalization
since 1850
The Age of Globalization
• Exponential change
I. Introduction:
A. Global time line
1850-1914
Industrialization and growth
of international trade
19181939
Interwar
years
1950-1990
Liberalization and Acceleration of
trade/
Development of Communist
Economic Model
B. Successive Shifts of Power
19th-21st Centuries
1850-1914
1914-1990
1990 -2013
• British Hegemony
• American Century
• Multipolar World
II. Stages of Economic Growth
• How did the world progressively enter into a
system of production of wealth?
A. 19th Century
Economic Growth since 1850
• Since 1850, continual acceleration of technical
progress and strong economic growth
• Sustained demographic growth
• Inequalities in development continue
3 stages of economic growth
1. Entering a world of intensive growth
2. Increasing world growth after 1945
3. Capitalism in Crisis
1st Stage: Intensive Growth
• From the 18th Century, western European
countries, facing rapid increase in population
growth, begin industrializing
Intensive growth = wealth production
surpasses basic needs of the population
Capitalism, well-established in the 19th c. in
Europe, contributes to this trend
Despite the rise in global population,
economic growth enabled improvement in
standard of living.
2nd Stage: Increasing world growth
after 1945
19th C industrialization accompanied by weak growth
rates even for the most advanced countries
a. newest technologies extremely dynamic (e.g.
textile, steel, railroads)
b. continued importance of agricultural sector into
the 20th c.
c. low domestic consumption
2nd Stage: Increasing world growth
after 1945
After 1945, world growth rate increases
•Stimulated by the gradual liberalization of trade
•From 1970’s by acceleration of globalization
•Between 1945 and 1975, growth originates mostly
in the industrialized nations (western Europe and
Japan)
2nd Stage: Increasing world growth
after 1945
• Early 21st C. highest economic growth rates in
emerging countries
BRIC nations (Brazil, Russia, India, China) +
South Africa since 2011
– Known for rapid growth of their industrial sectors
– Capitalizing on their advantages (e.g. natural
resources, labour, infrastructure)
– Strong state intervention
BRIC nations
3rd Stage: Capitalism in Crisis
3rd Stage: Capitalism in Crisis
Series of financial/economic crises highlight the
limits of capitalism and the interdependence
of the world
– Stock market crash 1929, end of period of strong
growth of US economy, warning to speculators
– Collapse of 1st economy in the world causes
contraction of international trade and massive
increase in unemployment around the world
3rd Stage: Capitalism in Crisis
3rd Stage: Capitalism in Crisis
3rd Stage: Capitalism in Crisis
• Periods of Crisis enable capitalism to adapt
and for new powers to emerge.
– Slowing down of growth in Europe
– Birth of multinational corporations
– Progression of international trade
– Appearance of new competition in Europe
(Germany) and outside of Europe (U.S. / Japan)
3rd Stage: Capitalism in Crisis
• Financial crisis in 2008 leads to growing
intervention of international regulatory
organizations
– IMF
– G20
The Global Power Shift
Key Words
• capitalism:
economic system which relies on the private
ownership of the means of production (e.g.
factories, machines). Owning capital produces
revenue. The end goal of the system is the
accumulation of profit
• Growth:
constant increase in the production of wealth.
Prior to 1750, the rate is low, but demographic
growth in Europe subsequently helps to increase
the development of industry and services
Key Words
• Innovations:
inventions which have industrial applications and
which stimulate the growth of new sectors.
• Globalization:
the process whereby
– (1) economies and societies become interconnected;
– (2) a global stage exists for the free exchange of
goods, services and information
• Globalization: the process whereby
economies and societies become
interconnected and a global stage for the free
exchange of goods, services and information
Key Terms
• Emerging Countries:
underdeveloped countries which have become
more developed thanks to their successful
integration in the globalized economy. By
attracting foreign investors, they have been able
to develop.
• Consumer society:
According to the economist Rostow, the last stage
of industrial development, characterized by the
democratization of mass-produced industrial
products (e.g. cars, appliances, etc.)