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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