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The various countries of the world are interconnected through trade and through exchange of
thoughts and cultures. The interconnectedness has increased dramatically in recent times but
the world was also interconnected even during the days of Indus Valley Civilisation.
Silk Route
The trade route which linked China to the western world and to other countries is called Silk
Route. There were many Silk Routes. The Silk Routes existed before the Christian Era, and
persisted till the fifteenth century.
Chinese potteries travelled from China to other countries through the Silk Route. Similarly, gold
and silver travelled from Europe to Asia through this route.
Religions; like Christianity, Islam and Buddhism travelled to different parts of the world through
the Silk Route.
Food Travels:
Noodles travelled from China to different parts of the world. The sevian; which are used in India
are localized form of noodle. Similarly, spaghetti of Italy is the European version of noodles.
Many common food of today; like potato, chillies, tomato, maize, soya, groundnut and sweet
potatoes were introduced in Europe after Christopher Columbus accidentally discovered the
American continents.
Potato brought dramatic changes for the life of people of Europe. Because of introduction of
potato, the people in Europe could eat better and could live longer. The peasants of Ireland
became so dependent on potato that when disease destroyed the potato crop in the mid-1840s,
hundreds of thousands died due to starvation. This famine is known as Irish Famine.
By the mid-sixteenth century, the Portuguese and Spanish colonization of America began in a
decisive way. But the conquest could not be facilitated because of arms and ammunition but
because of a disease. Europeans had been exposed to small pox and hence they had
developed immunity against this disease. But the Americans had been isolated from the world
and they had no immunity against small pox. When the Europeans reached there, they carried
the germs of small pox alongwith them. The disease wiped off the whole communities in certain
parts of America. And thus, the Europeans could easily get control of the Americas.
Till the nineteenth century, Europe was suffering from many problems; like poverty, diseases
and religious conflicts. Many religious dissenters fled to America for the fear of prosecution.
Those people utilised the opportunities in America and could dramatTill the eighteenth century,
India and China were the richest countries of the world. But from the fifteenth century onwards,
China began to restrict overseas contacts and went into isolation. Because of Chinas reduced
role and Americas rising importance; the centre of the world trade shifted to Europe.
The Nineteenth Century (1815 1914)
The world had changed dramatically during the nineteenth century. There were changes in
social, political, economic and technological factors in much complex way during this period.
The changes altered the external relations beyond recognition.
Economists identify three types of flows within international economic exchanges. These are as
follows:
a. Flow of trade
b. Flow of labor
c. Flow of capital
Vast areas of land were left uncultivated and a large number of people became unemployed.
People migrated to cities; in large numbers; in search of work. Many people also migrated
overseas. Many people also migrated overseas.
Falling food prices resulted in increased demand for food in Britain. Moreover, industrialization
also helped in increasing the income of the people. This necessitated more import of food items
into Britain. To fulfill the demand, large tracts of land were cleared in Eastern Europe, America,
Russia and Australia.
The foodgrains also needed to be supplied to the ports. For this, railway lines were to be laid so
that the agricultural hubs could be connected to the ports. Moreover, new habitations also had
to come up in agricultural hubs. For all these activities, capital flowed from financial centres;
such as London; to these places.
There was shortage of labour in Americas and Australia. The demand for workforce resulted in
large scale migration of people to these places. Nearly 50 million people migrated from Europe
to America and Australia during the nineteenth century. All over the world, about 150 million
people migrated to different placeBy 1890s, a global agricultural economy had taken shape.
This was accompanied by complex changes in labour movement, capital flow and technological
changes.
Role of Technology
Technology definitely played an important role in globalizing the world economy during this
period. Some of the major technological innovations were the railways, steamship and
telegraph. Railways helped in connecting the hinterland to the ports. Steamships helped in
transporting goods in bulk across the Atlantic. Telegraph helped in speeding up the
communication and thus facilitated better economic transaction.
Trade in Meat: Trade in meat shows a very good example of benefit of technology on the life of
common people. Till 1870s, live animals were shipped from America to Europe. Shipping live
animals had its own problems. They took more space and many animals either died or became
sick during the transit. Due to this, meat remained a luxury item for most of the Europeans. ury
item for most of the Europeans.
Arrival of refrigeration technology changed the picture. Now, animals could be slaughtered in
America and processed meat could be shipped to Europe. This helped in better utilization of
space in the ships. This also helped in better availability of meat for the Europeans and thus
prices fell. Now, even the common people could afford to eat meat on a regular basis.
Better availability of food promoted social peace within the countries. People of Britain were now
more receptive to imperial ambitions of the country.
Post-war Recovery
While Britain was preoccupied with war, industries developed in India and Japan. After the war,
Britain found it difficult to regain its earlier dominant position in India. Similarly, it was unable to
compete with Japan at the international level. At the end of the war, Britain was under huge
debts from the US.
During the war, there was increased demand for goods which resulted in economic boom in
Britain. After the war ended, the demand drastically fell to come in tune with the peace-time
economy. About 20% of the British workers lost their job after the war.
Before the war, Eastern Europe was a major supplier of wheat. But during the war, Canada,
America and Australia emerged as the leading suppliers of wheat because Eastern Europe was
involved in war. Once the war was over, the Eastern Europe resumed the supply of wheat. This
resulted in a glut of wheat in the market and prices fell. This created havoc in the rural economy.
increased manifold in the US. There was a housing boom as well in the US market. The
demand could be further maintained because of the beginning of the hire purchase culture.
All of this made for a prosperous US economy. In 1923, US resumed exporting capital to the
rest of the world and emerged as the largest overseas lender. This also helped in European
recovery and boosted the world trade for the next six years.
The depression proved less grim for the urban dwellers in India. With falling prices, many urban
landowners and salaried people found the life much easier. Under pressure from the nationalist
leaders, the industrial protection grew which led to more investment in the industries.
Controlling the influence of the outer world on flow of capital, goods and labour.
Wages were quite low in countries; like China, India, Brazil, Philippines, Malaysia, etc. These
countries became preferred sourcing destinations for many MNCs. India has also emerged as
the most preferred hub for Business Process Outsourcing. In the last two decades, many third
world countries have grown at a rapid pace and India, China and Brazil are their leading
examples.