Alcohol History PDF

Start at week 7: Week 7 part 1: Business of alcohol - Two examples of the politics of spirits - Gin and rum The Gin craze - Alcohol mixed with juniper berries for flavor and medicine - 16th century dutch made genever which british made gin- combined sometimes wine...

Start at week 7: Week 7 part 1: Business of alcohol - Two examples of the politics of spirits - Gin and rum The Gin craze - Alcohol mixed with juniper berries for flavor and medicine - 16th century dutch made genever which british made gin- combined sometimes wine with not just juniper berries but other herbs - Inexpensive - William 3rd was from Holland and he was the king of england in the late 1600’s who placed tariffs on french brandy and wine and gave tax breaks to british distilleries because he did not want to give more money to the french to fight them - People struggle with public drunkenness because government made it easy to be produced - Cheapness led to backlash leading to temperance movements and government licensing to control production- Gin act of 1751 is an example - In the 1800’s gin recovered as a popular drink because it was mixed with quinine water as an anti malaria potion (GIN AND TONIC!!) - Rum: - Distilled from molasses - Rose to popularity in late 1600’s, especially in 1700’s - Sugar plantations created in french and british colonies in caribbean - Need cheap plentiful labor, leads to import of african slaves - In 1731 British sailors received daily pint of jamaican rum for each man and a half - Tradition lasted until 1970’s Cuba: - Sugar plantations - Bacardi was supplier of rum to spanish royal family from 1880’s in facilities in cuba - Rum + coke= cuba libre different meaning in 1950’s when castro seized distilleries - Family fled to establish to puerto rico to transfer operations and became huge producer of rum - Still wanted compensation from cuba for taken distilleries - Facundo Bacardi founded bacardi - Did not lessen embargo of rum until they get property back Week 7 part two- temperance movement Prohibition: retraining liquor trade  - Forbidding the manufacture or storage transportation sale possession and consumption of alcohol - Based on protestant church moral belief Prohibition movement in canada - Influenced by american and british, largely a protestant movement - Two canadian organizations in 1800’s ; dominion alliance for total suppression of the liquor traffic and women’s christian temperance union - Close idea between prohibition and allowing women to vote - Only way to settle problem is to give right to vote to women because they will agree with the law - Sir John A did not care about prohibition but liberals believed this was an issue 1898 referendum - Wilfredd laurier government in 1896 has large temperance - Laurier decided to hold non binding referendum - Results were close and every province except quebec saw a yes vote but quebec was over 80% against, but 51% of people did want to enact the prohibition, he just thought the numbers were off - Laurier decided to do jack shit WW1 and prohibition - 1901 PEI introduced prohibition which lasted until 1948, other provinces began to do so in WW1 as a way to conserve grain for food rather than booze - Only quebec did not - March of 1918 federal government stopped production of liquor - Na poo was soldier slang for no Demon rum - Most canadian soldiers received rum ration - Became morale booster and for medicinal reasons - soldiers decided that no rum = no going back to trenches - After war the lack of success in eliminating alcohol - Working class person of color would go to jail for drinking alcohol American experience - Passed 18th amendment in 1920 and alcohol remained illegal until 1933 when 21st amendment repealed 18th - Ken burns said effects of prohibitions were negatived because jobs were very displaced  - Labatt said that 35 breweries were forced to close and the well paying jobs associated with this disappeared - The alcohol market was driven to become a black market Lack of success - Opens door to crime for alcohol End of prohibition - In 1927 ontario ended prohibition - Laws became more liberal - Prohibition remained in US and made canada a tourist destination LCBO - Solution in ontario was to create a government monopoly on distribution - Purpose of LCBO was to “promote temperance sobriety, personal liberty and restore respect to law Buzzkillers article - LCBO opened June 1, 1927 - New customers had to be vetted by LCBO employee to determine whether they were moral enough to receive annual purchasing permit - If passed they would get a small book to fill out when making order - Those who abused limit lost permit - LCBO officials believed that superior customer service was reflected not in sales volume but in the “prevalence of good social conditions in the surrounding community and absence of drunkenness and of complaints from neglected dependents.” - System was highly prejudicial, women and visible minorities were not allowed to work in store while members of first nations could not hold a permit until 1959 - Permit books scrapped in 1958 and became wallet cards Week 7 part 3: Trends Video: - InBev was made through a merger of AmBev and interbrew in 2004 - Growth is driven by heritage brands (Budweiser marketed into british market) and name recognition - Governments want to control levels but company profits rely on consumption- tension - Restricting by limiting advertising or restrictions by law/ regulation - Voluntary codes of conduct from producers are also restriction - Loi Evin is france’s regulation of alcohol marketing - Medical and community concern prohibited advertising on television and cinemas and sponsorships - Advertising that is allowed in print media for adults and alcohol ads had to be targeted toward adults and no advertising for young people Article 2: - Brand name is trademark - Commercial use of brands developed in industrial industry 18th-1900’s but after WW2 brands took off - Study in wales showed that children as young as 10 are familiar with alc names - ⅘ of kids recognized carlsberg - Familiarity grows through advertising television radio and cinema but there is also below the line activities: Competitions promotions celebrity endorsements - Related marketing approach to grow sales and increase consumer awareness is brand extensions - Brand extension can be achieved through line extension= brand name is applied to product in one of company’s existing categories - Can also be done through category extensions when company applies existing brand name to new product category because brand associations are transferred from parent company and help build brand equity - Brand extension causes erosion to core brand - Brand extension must fit with core brand - Young people who own ABM (Alcohol branded merchandise) are likely to initiate drinking Group Article #1: The article "Alberta's and Ontario's liquor boards: Why such divergent outcomes?" by Malcolm G. Bird explores the contrasting approaches taken by Alberta and Ontario regarding the distribution of alcoholic beverages. In Alberta, the government privatized the Alberta Liquor Control Board (ALCB) in 1993, establishing a private market for alcohol, while Ontario maintained and expanded its Liquor Control Board of Ontario (LCBO). Bird analyzes these divergent choices through two theoretical lenses: John Kingdon's multiple streams decision-making model and historical institutionalism. He emphasizes the influence of each province's unique political culture, history, and institutional structures. Alberta's shift toward privatization aligns with a more market-driven, neoliberal agenda, reflecting the province's smaller government ethos. In contrast, Ontario's decision to retain and modernize the LCBO was shaped by its history of state intervention and a more cautious approach to alcohol distribution, influenced by historical Protestant values and a strong temperance movement​ The article concludes that these decisions were not only about political ideologies but also rooted in each province's broader social and historical context. Alberta's privatization aligned with a shift toward market-oriented policies, while Ontario's strategy focused on modernizing the state-run LCBO to meet consumer demands without increasing access to alcohol in a way that could heighten consumption risk Group Article #2: Article: Julie Bower and David M. Higgins, “Litigation and Lobbying in Support of the Marque: The Scotch Whisky Association, c. 1945-c.1990.” Enterprise and Society, Vol. 24. (2023)286-316 The article "Litigation and Lobbying in Support of the Marque: The Scotch Whisky Association, c. 1945–c. 1990" by Julie Bower and David M. Higgins examines the efforts of the Scotch Whisky Association (SWA) to protect and promote the "Scotch whisky" brand over a period of several decades. From 1945 to 1990, the SWA undertook significant lobbying efforts aimed at influencing both domestic and international regulations related to whisky production. The association's work extended beyond traditional lobbying to include litigation in domestic and international courts, as well as engagement with supranational organizations like the European Union to secure a legal framework that would protect the authenticity of Scotch whisky. The article highlights the SWA's strategic use of nonmarket activities, such as legal battles and policy advocacy, which were crucial in building the "Scotch whisky" appellation. This was achieved even before the term was officially registered as an appellation in the late 20th century, positioning Scotch whisky as a globally recognized and protected product. The SWA's actions were distinctive compared to other trade associations of the time, as they focused not just on national interests but also on broader international frameworks​. Week 8: Travel and tourism Week 8 part 1: Business of tourism - Rome’s roman empire made tourism possible because its strong and rich - In order to have tourism you must Have money circulating Assure them they can travel without fear - Romans developed version of grand tour to include southern italy, greece, troy and egypt to cruise the nile  - Built spas/baths Pilgrimage Pilgrimage is a journey to a holy place - Christianity buddhism and islam call for pilgrimage - Journey’s were made to sightsee ands set up business - Other business included inns alongside food and drinks Grand tour: - Begins in 17th century in england - Custom for gentlemen to spend 2-3 years touring france, italy, and greece - Only something for the rich - Bank makes arrangement with european banks to allow credit for the gentlemen - Fades away because of the french revolution Thomas cook travel - Guy in 1840’s- temperance advocate who talks about temperance - Railways in lester allow him to resell tickets to put together tours for people across the world - Introduce travel checks - Company replaced by cook’s grandsons in 1899 until they sold it in 1928 to the belgian company running the orient express - During ww2 it was taken over by british railway companies - After war railways were nationalized and then privatized in 1970’s - Bankruptcy in 2019 Post ww2 travel: - New jet plane tech made travel easy - Air travel expensive until deregulation in late 1970’s Importance of travel and tourism - In 2019 travel accounted for 10.5% of all jobs and 10.4% of GDP while spending amounted to $1.91 trillion - World travel and tourism council project contribution of 11.1 trillion Week 8 part 2: Tools of tourism - Idea of passenger cruise ships began with Peninsular and Oriental steam navigation company in 1844 (cruise), a predetermined route Mauretania and Lusitania - Owned by cunard line of england - Largest ships at the time  - Carried 50% more passengers than other ships and were very fast - Tradition of dressing for dinner - Lusitania was torpedoed May 7, 1915 by german boat killing 1,200 of 1,959 people onboard bc they thought they were carrying weapons on board Titanic - Luxury travel - Allegedly unsinkeable - Titanic left southampton england on april 10, 1912 - Stopped at cherbourg france and queenstown then set sail to NYC - Sunday april 14 the ship hit the iceberg and sank in 2.40 hours, 1500 deaths Industry after - Advent of jetliners in 1960’s changed and declined transatlantic transport - By 1980’s cunard lines serviced small clientele through cruise on Queen elizabeth 2 Expansion of cruise industry: - Love boat a tv series ran from 1977 to 1986 to popularize idea of taking a vacation on a cruise Article: - The love boat set on the MS pacific princess caused a surge in cruise passengers, 1.4 million that began season 9 in 1977- next year numbers increased to 36 million passengers - Mass market operators keep ticket prices low enough even during recession and ⅓ of revenue comes from spas, drinks etc. - Royal caribbean is 5x size of titanic, fits 7600 people - Before pacific princess industry used jet travel in 1960’ - Icon of the sea (new megaship) has 12x internal area of pacific princess - Powered by relatively clean liquefied natural gas Week 8 part 3: Tools of tourism- commercial aviation - Jan 1, 1914 the St petersburg tampa airboat line became first scheduled passenger airline service - First flight pilot was Tony Jannuss- first passenger was Abram C pheil a mayor of petersburg - By 1930’s transpacific flights were expanding - Clipper 314 could fly 73 passengers up to 3500 miles but ww2 interrupts travel - Boein 747 went into service in 1970 and could go 8000 miles without refueling - 2004-2019 commercial flight numbers rose from 23.8 mil to 38.9 mil Airways magazine article:  - First ever passenger flight was may 1908 when wilbur wright carried charles furnas 2000 feet across beach in north carolina - Air travel in 1920’s was when planes had to land to refuel and fly at low altitudes - 1935 Qantas opened international flight from brisbane to singapore - Pan Am was first airline to fly worldwise and added jet aircraft - British owned laker airways founded by freddie laker in 1966 offered budget alternatives with lower fares by reducing free meals and reduce fuel consumption But they went bankrupt in 1980’s Group Article #3: Article: Carter A Hunt "Why Latin America Has Embraced Ecotourism." Current History 121, no. 832 (2022): 69-74. The article *"Why Latin America Has Embraced Ecotourism"* by Carter A. Hunt (2022) explores the region's early adoption and continued leadership in ecotourism. It highlights case studies from places like the Galápagos and Costa Rica to show how ecotourism can effectively balance environmental conservation with economic needs. Hunt argues that ecotourism not only supports biodiversity but also fosters local community development and sustainable livelihoods. The article examines how ecotourism became a primary strategy for conservation, offering a viable alternative to other potentially destructive economic activities. Group Article #4: Article: Sara Fieldston “‘Our Dollars are Celebrities Abroad’: American Tourists, Consumption, and Power after World War ll,” Journal of Tourism History 11, no. 2 (2019), 187–207. In her article “‘Our Dollars are Celebrities Abroad’: American Tourists, Consumption, and Power after World War II,” Sara Fieldston explores the intersection of American tourism, global consumption, and U.S. power during the post-WWII period. She examines how American tourists were seen as agents of foreign aid, boosting economies through spending while simultaneously spreading American cultural influence. Tourism officials and government leaders portrayed American tourists as helping to rebuild war-torn nations and stimulating global prosperity, with a focus on the economic and diplomatic benefits of their consumerism. However, Fieldston notes that tourists’ actual experiences often complicated this idealized narrative. As American tourists shopped abroad, their spending both reinforced and challenged the idea of U.S. global dominance. By the 1960s, the declining value of the U.S. dollar abroad became a symbol of America's waning power on the global stage. Week 9 1035 week 9 Money: medium of exchange that allows society to trade goods - coins , bank notes, electronic record of ownership of these values Kinds of money Commodity money- gold silver or anything that has agreed value Token money: coins or paper exchanged for the face value of gold or silver Fiat money- issued by government not backed by any gold or another commodity Potosi and Silver: - Potosi is first city of capitalism - Mountains were rich with silver and enslaved local population to mine at this mountain - Power in spain increased - Jack weatherford a historian said potosi is first city of capitalism that supplied money - Influx of gold and silver from south america - spanish silver changed their trade with change and made it hard for other countries to find smth like silver - Potosi in Bolivia is leading in resources of lithium - How and for whom they develop the lithium will be the next impact on capitalism - Lithium rich salt ponds being bought by china What is a bank? - Bank of england, model for central banks was formed in 1694 - Designed to raise money to fund a navy 1.2 mil pounds - Became bank for government accounts By end of 18th century, the bank issued british currency and had become the bankers bank and held enough gold to cover its own currency and that of others too Other central banks: - In USA its the federal reserve - Made december 23, 1913 - Response to financial crisis that happened in post war period - Crisis of 1907- banks in new york city had entered into real estate transactions where they didn't have enough cash to cover deposits made by customers This led the bank to go to the government for help to which the govt gave them $31M - Centralize control of money and regulate banks - Approached JP morgan with 30 million dollars to fix the new york banking system - By 1913 they created the federal reserve and appointed them three roles 1. Maximize employment 2. Stabilize prices  3. Moderate long term interest rates The bank of canada: - When 1913 US made their federal bank we still aint do shit and made no central bank - 1931 we moved off gold standard to fiat currency system in order to inflate the economy - Royal commission established in 1933 to look into creating a central bank - Bank established 1935 - Initially controlled by private interests but then transferred to government in 1938 - Standardized currency by 1950 Chartered banks in canada: - They take deposits and makes loans to businesses and people - Banks operate under charters separate from federal government - FIrst canadian bank was bank of montreal 1817 and then bank of nova scotia in 1832 - Limits on amount of debt related to deposits - Branch banking system- pools of capital became even bigger and stability - In usa there was a fear of centralized banking systems because of centralized authority and monopoly Evolution of banking - Home bank failure in 1923 led to stronger regulation and great depression hit in 1929 - In 1964 the royal commission on banking and finance (porter commission) recommended a more open and competitive banking system - 1967 bank act revision lifted 6% annual interest rate ceiling banks could charge on personal loans - Canadian deposit insurance company Week 9 part 2: - Werner plan and currency snake Treaty of Rome in 1957 outlined methods to promote coordination in economic and monetary matters but this was not very pressing until the 1960’s because the stability of international monetary system is ensured by bretton woods arrangement with fixed exchange rates between the US dollar and western currencies Only when bretton wood shows cracks at hague summit in 1969 they lay down task to make an economic union as a way to fix bretton woods, led by pierre werner Werner report in 1970 plans to replace national currency with common european currency This rests on a number of conditions: 1. Stronger coordination of budgetary and fiscal policy/ stronger economic policy  2. Free movement of capital 3. Fixed exchange rates - Economic convergence necessary for monetary integration - Monetarist approach= Monetary integration leads to economic convergence- monetary integration pushes member states economies to greater uniformity - In 1971 US administration ends bretton woods system - In 1972 the member states come up with currency snake to restore stability to international monetary system- the currencies are allowed to fluctuate against each other within a margin of 2.25% - The member states currencies are pegged to one another - 1973 failure of currency snake due to the oil crisis, leading countries to depreciate their currencies- marked by high volatility of exchange rates in the US which is bad for the internal market - The 9 member states join the EU European monetary system: - France is in favour of deepening monetary cooperation but Germany thinks inflation might spread to its economy- but this disagreement is overcome In 1978 by the creation of european monetary system - The european monetary system is based on: 1. Virtual european currency unit to replace dollar (ECU) to replace the dollar 2. Exchange rate mechanism based on fixed but adjustable exchange rates where they can fluctuate between 2.25% above or below central rate - 1986 single european act is established by building on the conditions of the werner report - 1989 delors report proposes implementation of economic and monetary union in 3 acts: 1. Stage one Coordination of economic and monetary policies Free movement of capital 2. Stage 2 Monetary policy gradually transferred to EC European system of central banks Smaller fluctuation bands 3. Stage 3: Monetary competence transferred to EC Fixed exchange rates The Maastricht treaty:  - Fall of berlin wall in 1989 - Stage 1 starts in 1990 - Germany and netherlands believe that member states should fulfill economic convergence before stage 3 while france and belgium believe that once the monetary union is completed, economic convergence will come naturally - Leads to signing in 1992 of the Maastricht treaty that establishes a european union with common monetary policy - Compromise is found between monetarist and economist approach being that the new currency will begin automatically on January 1, 1999 and at the same time convergence criteria that the states must fulfill are also identified - UK does not move to stage 3 and opts out of the monetary union - Maastricht convergence criteria set out requirements for member states to participate in monetary union - Convergence criteria included: Exchange rate stability Limit to public deficit and debt Durable convergence Price stability - Crisis in 1992 when referendum in DEnmark rejects the treaty putting the union in question - Followed by speculation against weaker currencies like the Lira and Pound, forcing them to leave the monetary system and the remaining countries to widen fluctuation band to 15% above or below the central rate - DEspite this the plans for the union go forward - Stage 2 begins in 1994 when European monetary institute is created - In 1998 11 countries are allowed into the monetary union - Stage 3 began in 1999 when euro is introduced as a virtual currency, allowing the euro coins to circulate January 1, 2002’ Week 9 part 3- currency exchange - Free floating exchange rate- currency value is set by market forces Menas that currency can appreciate or depreciate No intervention by the central bank and there is no target for the exchange rates Countries interest rates are not set to influence the value of the currency Managed floating exchange rates Central bank gives freedom for market exchange rates Central bank might intervene occasionally by buying or selling the currency Higher exchange rate to control inflation Fixed exchange rate Centrla banks decides value of currency Pegged rate becomes the official rate Group Article #5 Article: Lila MacLellan, “The history of Black management reveals an overlooked form of capitalism”, Quartz at Work, qz.com June 18, 2020 Lila MacLellan’s article *“The History of Black Management Reveals an Overlooked Form of Capitalism”* (2020) highlights the underrecognized role of Black entrepreneurship and management practices in the development of American capitalism. She examines how Black business leaders, particularly during the early 20th century, incorporated cooperative and community-centered models of management to build economic independence and address systemic racial inequalities. MacLellan explores how influential Black business figures, like Charles Clinton Spaulding, who led North Carolina Mutual Life Insurance Company, focused not only on profitability but also on collective well-being, community development, and social responsibility. This approach was rooted in the African philosophy of Ubuntu, emphasizing interconnectedness and mutual support. By prioritizing the well-being of their communities, these entrepreneurs created thriving businesses that also addressed the needs of African Americans, often excluded from mainstream economic systems. This model of Black capitalism, though overlooked in mainstream business history, provided a unique form of capitalism that blended entrepreneurship with social justice, offering lessons for contemporary management and corporate responsibility. Group Article #6 Article: Sean H. Vanatta, “Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991”, Business History Review 90 (Spring 2016) The article "Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991" by Sean H. Vanatta examines the regulatory challenges faced by banks in the postwar period, particularly around the use of credit cards. During this time, state-level regulations, especially interest rate limits, significantly impacted the profitability of bank credit card programs. However, banks, motivated by the potential for national expansion, found ways to circumvent local laws by utilizing "mobile financial instruments" like credit cards. A pivotal moment in this shift occurred when Citibank moved its credit card operations to Sioux Falls, South Dakota, in 1981. This move allowed Citibank to operate under more favorable state regulations and ultimately put pressure on other states to reconsider and eliminate restrictions on consumer finance. The article provides a broader perspective on the growth of consumer finance during the late 20th century, highlighting the strategic manipulation of state laws by financial firms seeking national customers. MGMT 1035- week 10 part 1 Cotton and textiles: - T-shirt cotton Inexpensive but ethics of manufacturer can be controversial Cotton has been used in South and central america and early egypt in the 5000 BC 3000 BCE cotton is grown in indus river valley Clothing made from linen was the norm even though they knew cotton existed Europe and early greece used wool Silk and cotton made its way into greece after the war Alexander the great invaded india and found cotton clothes Herodotus said that cotton was a wool exceeding in beauty\ By the middle ages traders from silk road were bringing cotton fabric into europe into spain and sicily along with cotton spinning Columbus finds cotton in Bahamas Cotton becomes popular in the 1500's By 1610 cotton is being grown in virginia Spanish had grown it in florida even earlier In virginia you need a large workforce so it expanded the slave business even more that existed bc of tobacco India had a large supply of dying cotton Supplied it for most of europe in exchange for gold 1600’s and early 1700’s it supplied 95% of europe's cotton Supply limited by costs and technology British east india company began to import cotton in 1690’s Calico, a brightly colored version of wool became popular When BEIC grew in power they were able to sell cotton back to india after processing it Restrictions: Cotton seeds have to be removed manually or else it spoils and you must comb through the cotton Very timely to comb through cotton and spin it afterwards Then it had to be spun into thread to be turned into cloth and then fabric Industrialism role: Spinning jenny allowing cotton to be spun made into thread Invented in 1764 by james hargreaves and could do 8 spindles at once  Reduced the need for people to manually spin cotton Richard arkwright: Added water powered system to create stronger thread One person could do the work of many because the spinning jenny was doing the work, so unemployment level became very high Then an angry mob destroyed his factory in 1768 Reverend cartwright: Made powered loom in 1785 Need more cotton and the solution was the Eli whitney cotton gin and you would dump raw cotton into the machine and turn the crank of the machine to quickly spin it and remove the cotton seeds First Industrial Revolution in England increased production levels and cotton cloth output was 21 million yards in 1796 347 million yards in 1830, showing how the value of the industry is skyrocketing In 1770 industry was worth 600,000 In manchester alone in 1790 there were 2 successful cotton mills, and 30 years later there were then 66 cotton mills, making england the cotton capital of the world Work force: - In england the prime sources of labour were women and children because they could pay them much less - Children as young as 8 years old could be working in factories - Kids had the job of cleaning the lint from the machine filter as the machine was working so they did not have to stop the production of cotton- regardless of how dangerous this was for the kids - 1833 factory act banned kids from working in textile industry under age 9 From 9-13 they worked 9 hours a day and 48 a week The problem with the 1833 act was that they had good regulations but no one to enforce them Conclusion: - Cotton facilitated transition of england into first industrial power because they went into India and restructured their economy to force them into doing what they wanted to do - Expanded the english middle class at the expense of horrible working conditions America gets into cotton industry: - Britain made it illegal to export any of the technology for cotton and made it illegal for skilled workers to leave england  - This upset the american workers and after the revolution they went to England to steal their technology and bring it back to america - Throughout late 1800’s and early 1900’s American industrial spies roamed the british isles seeking skilled workers and machines Francis Cabot Lowell became a member of the british mills and built his own version when returned home He built his own version of the Cartwright power loom and Lowell massachusetts was founded in early 1820’s to manufacture textiles By 1840’s it employed 8000 mill workers or mill girls Decline at Lowell: 1830’s cloth prices drop, wages are cut and hours are extended On three occasions the girls went on strike until 1845 Massachusetts Wave of poor irish immigrants replaces the more independent girls in the 1840’s and 1850’s King cotton By 1850’s cotton accounted for more than 50% of exports Late 1850’s cotton accounted for 77% of the 800 million pounds of cotton consumed in britain Accounted for 90% of 192 million pounds in france 60% of 115 million pounds 92% of thing in russia Civil war- 1861-65 Lost access to cotton in america caused britain to look to india and middle east Slavery ends Sharecropping replaced slavery- give section of farm to slave to grow cotton on property and share the benefits of growing the cotton The plantation owners of cotton could now go to poor white people in the area and offer them the same deal they offered to slaves before Entire idea of sharecropping caused a resentment between the white and black workers Triangle to rana plaza: Triangle shirtwaist factory in new york Had rows of people sitting and sewing shirts Poor working conditions March 25 1911 factory burns down Caused 146 deaths May 2013 the fall of rana plaza clothing factory  - Occurred in a building in bangladesh Killed 1134 people due to building collapsing and owners threatening to fire anyone who tried to run out of building Part 1 Blog: - Humans began wearing clothes between 500,000-100,000 years ago - Earliest trade hubs are china turkey and india - The primary driving factors for a company’s success in the textile industry are the ability to operate efficiently and securing contracts with clothing marketers for their products. Part 2 blog: - he main routes of The Silk Road began being established around 100 to 200 BCE and from that time on silk was in high demand in the Roman Empire, which spanned from Europe to Northern Africa and the Middle East - Silk clothing more comfortable than woolen clothing - 300 AD, China had a monopoly on the production of silk and Chinese weavers and harvesters were forbidden from sharing their secrets with outsiders. - he Silk Road is also believed to be the primary facilitator of the Black Plague, which made its way from Asia to Europe in the 14th Century and went on to kill over 20 million Europeans, which accounted for approximately one-third of the population. Part 3: - Industrial revolution started in england in 1700’s - used its colonies in the Americas and Asia to provide resources such as silk, tobacco, sugar, gold, and cotton, and provided its colonies with finished products such as textiles and metalware. - Britain controlled international trade and by late 1790’s 57% of british exports went to north america and 32% of british imports - Before industrial revolution textiles were made by hand in cottage industry - where materials would be brought to homes and picked up when the textiles were finished. - New technological innovations such as Hargreave’s “spinning jenny”, Richard Arkwright’s water frame, and the Boulton and Watt steam engine improved the quality of thread and the speed it took to produce. - Textile industry based in britain until samuel slater brought it back to US in 1780’s - Technological innovations in the United States such as Eli Whitney’s cotton gin were able to further benefit the production of textiles; the cotton gin separated seeds from the cotton more quickly than before so that the United States was able to produce fifty times more cotton - Francis Cabot Lowell who brought the power loom and other factory ideas from England to the United States, which lead to the first factory where raw cotton could be made into cloth in the same location. - Before the Industrial Revolution, over 80 percent of people lived in rural areas and by 1850 Part 4: - Textile generate $450 billion and employ over 25 million - Estimated that over 120 billion pounds of textiles are made each year - However, as of 2007, only $3 billion of the $450 billion—0.5%—of the revenue generated by the textile industry is considered “fair trade or environmentally stable - One of contributors is sweat shops - For example, in Cambodia, the textile industry represents 80% of their export earnings and the industry makes up 75% of the earnings in Bangladesh. Typical hours for a textile industry employee range from 10-18 hours per day and up to 80 hours per week - Working in sweatshops is seen as a way better alternative - Women in Informal Employment: Globalizing and Organizing estimate that up to 60% of garment production in China and Latin America is done by homeworkers. Part 2 article 1: colonialism and indian textile industry - British impose ban and restriction on indian textiles to safeguard interests of manufacturing and industrial sectors - By imposing restriction on textiles they wanted to get a supply of raw cotton from india, alongside protectionism policies - British also involved in colonial exploitation for india resources - The british colonial administration also wanted to establish a socio economic structure that aligned with british values like undermining handloom weaving Part 2 article 2: - 1846 patented sewing machine - s the 2012 fire at the Tazreen Fashion factory in Bangladesh that killed at least 117 peopl - , it was the 1960s, as young people embraced cheaply made clothing to follow these new trends and reject the sartorial traditions of older generations - echnically, H&M is the longest running of these retailers, having opened as Hennes in Sweden in 1947, expanding to London in 1976 and eventually reaching the states in 2000. - Zara founder Amancio Ortega opened his first store in Northern Spain in 1975, supposedly using the same principle that it follows today: make speed the driving force. When Zara came to New York at the beginning of 1990, the New York Times used the term "fast fashion" - Forever 21, which opened as a small shop in Los Angeles back in 1984. Part 2 article 3: 1862, fully 20 million people worldwide—one out of every 65 people alive—were involved in the cultivation of cotton or the production of cotton cloth. Cotton exports alone put the United States on the world economic map. On the eve of the Civil War, raw cotton constituted 61 percent of the value of all U.S. products shipped abroad. Before the beginnings of the cotton boom in the 1780s, North America had been a promising but marginal player in the global economy. Group Article #7 Article: Stephanie 0. Crofton, Luis G. Dopico. “Zara-Intidex and the Growth of Fast Fashion” Essays in Economic & Business History — Vol XXV, 2007 The article "Zara-Inditex and the Growth of Fast Fashion" by Stephanie Crofton and Luis Dopico (2007) explores how Inditex, particularly its flagship brand Zara, pioneered the fast fashion model, transforming global fashion retail. Zara’s approach deviates from traditional fashion cycles, creating designs based on rapid adaptation to customer preferences. By minimizing advertising and inventory, Zara was able to control costs and democratize fashion, making trendy styles more accessible to the public. The brand’s operational model includes vertically integrated production, short design-to-shelf times, and a focus on flexible supply chains. Inditex expanded internationally by 2005, leveraging its model to become a dominant player, with over 2,700 stores globally. The fast fashion model established by Inditex set a precedent that other fashion companies have since emulated, cementing Zara's role as a leader in efficient, trend-responsive fashion production. Group Article #8 Article: Mukti Khaire “The Indian Fashion Industry and Traditional Indian Crafts” The Business History Review, Vol. 85, No. 2 (SUMMER 2011), pp. 345-366. Area of focus for drawing connections: Catering to and creating regional markets. In “The Indian Fashion Industry and Traditional Indian Crafts,” Mukti Khaire explores the transformation of India’s fashion industry from the 1980s onward, with a specific focus on how traditional Indian crafts became central to its development. Khaire examines how entrepreneurs promoted Indian-style clothing, such as saris and salwar-kameez, over Western styles, which were more common in export markets. These traditional styles leveraged India’s textile heritage and unique handcrafted techniques, like embroidery and intricate fabric patterns, to create a distinct national fashion identity. This move toward traditional designs helped cultivate a domestic market by aligning fashion with cultural identity, while also appealing to an emerging middle class that valued cultural heritage. By focusing on Indian clothing traditions, the industry carved a niche within both regional and global markets, positioning itself as a provider of high-quality, culturally rich garments. Khaire’s work highlights how this approach allowed Indian designers to differentiate themselves internationally and resist homogenization with Western fast fashion trends, instead catering to consumer preference for unique and culturally significant attire. This strategy not only supported the preservation of artisanal crafts but also encouraged a broader acceptance and celebration of traditional Indian attire on the global stage​ Week 11 What is gasoline? - Byproduct of refining oil into kerosene - Before the internal combustion engine there was limited use for gasoline - In the USA in the 1800’s it was routinely dumped into nearby rivers - Difficult to control a reaction so they must stabilize it Internal combustion - In germany internal combustion cars were developed in the 1870’s and by mid 1880’s karl benz began commercial production - Created a new market Ways to consider gasoline impact - Individuals who benefited from increasing import of gasoline - William knox d'arcy developed oil industry in persia and middle east - He wanted to create a monopoly on the extraction and sale of oil in the middle east - Created british petroleum company and are given monopoly by the british government John D Rockefeller - Founded standard oil in the later half of 1800’s - In the 1890’s standard oil owns more than 90% of refining capacity in the world - Internal combustion gave him huge market - Standard oil becomes a monopoly- in the 20th century it broke the company up Technology - Ford develops model T to exploit success of internal combustion engine - Power of gasoline made internal combustion engines superior to other types - Henry Ford’s model T made the car widespread and allowed him to introduce assembly lines rather than craftsmen who would assemble each car - In agriculture, tractors replaced steam engines - Need networks of gas stations along highways because of car growth Changes in oil business - Increased gasoline market means increased exploration - Canada = alberta - USA = from pennsylvania to texas, oklahoma - Middle east becomes very important in politics War: - Gasoline = tool of war bc tanks, ships, planes, etc. needed it Politics:  - American and British roles in the August 1953 coup against iranian premier mohammed Mossadeq to charge more loyalties to big western companies to get oil - In 1953 the CIA and UK organized a coup to replace popular government with one more amenable to oil and gas industry - You would think there wasnt any proof of this HOWEVER, the Freedom of Information acts allowed american historians and political scientists to see that the CIA did orchestrate the overthrow of the government in the 1980’s OPEC - Organization of petroleum exporting countries - Has origin in small group of countries like iran who wanted control of the sale of oil so they created a cartel - In 1973 after the Yom Kippur war OPEC launched an Oil embargo in 1973 caused a recession in western economies - Problem is that you need discipline in a cartel regarding that some members could want to sell oil at a higher price than everyone else, which causes the cartel to lwk break down Environment - Used in production in refineries - Transport of products Canada: - Imperial oil is a branch of rockefeller's standard oil that he bought near the end of the 1800’s Petrocanada: - Started as crown corporation (Government owned entity) during economic crisis in 1970’s - In the 1970’s oil prices went way up in canada - Window on the industry owned by american dutch and british companies - Pierre trudeau in 1970’s created petro canada - Never made money because they spent everything expanding - Eventually privatized, 50% of the company was sold off Investopedia article: - Petroleum = naturally occurring liquid found beneath earth’s surface to be refined into fuel - Petroleum created by the decomposition of organic matter - Non renewable energy source Problem: - The extraction and processing of petroleum and its availability is a driver of the world's economy and geopolitics - Petroleum is discovered by oil drilling and refined into various fuel types - Denser petroleum means its more difficult to process - Petroleum companies are divided into upstream midstream and downstream depending on the company position in the supply chain Downstream = oil companies engage in post production of crude oil  Midstream = oil and gas companies connect downstream and upstream by storing and transporting oil Upstream = extracting the raw materials Pros and cons - Petroleum provides heat light and plastics to consumers - Easy to extract but non renewable - High power ratio and easy to transport - Extraction process is toxic to environment - Underwater drilling causes leaks and fracking can affect water table Petroleum industry: Oil is classified into three categories including Geographic location Sulfur content API gravity/ density measure Reservoirs: Geographical structures that hold petroleum using seismic reaction Investing in petroleum - Energy sector attracts investors who speculate demand for oil - Mutual funds like Vanguard Energy Fund Investor Shares (VGENX) with holdings in ConocoPhillips, Shell, and Marathon Petroleum Corporation,3 and the Fidelity Select Natural Gas Fund (FSNGX), holding Enbridge and Hess, are two funds that invest in the energy sector and pay dividends. - Oil and gas exchange-traded funds (ETFs) offer investors more direct and easier access to the often-volatile energy market than many other alternatives. Three of the top-rated oil and gas ETFs for 2022 include the Invesco Dynamic Energy Exploration & Production ETF (PXE), First Trust Natural Gas ETF (FCG), and iShares U.S. Oil & Gas Exploration & Production ETF (IEO). Classifications of petroleum - Unrefined petroleum classes include asphalt, bitumen, crude oil and natural gas Part 2: Oil and gas marketplace: - Growing economies means greater demand for energy - Transportation sector depends on petroleum products such as gasoline or diesel fuel - Petroleum products made from crude oil account for one third of total energy consumption in the world OPEC can influence world oil supplies and prices - OPEC includes countries with largest oil reserves  - In 2021 OPEC members controlled 72% of world proved crude oil reserves and accounted for 37% of world crude oil production in 2021 - Manages member countries by setting crude oil production targets Main factors determining OPEC ability to influence prices include: Extent to which OPEC members comply with production quotes Ability or willingness of consumers to reduce petroleum consumption in response to higher product prices Competitiveness of non opec producers when oil prices change Efficiency of OPEC producers to supply oil compared to non opec producers - The difference between oil market demand and supply from non-OPEC sources is often referred to as the call on OPEC - Saudi arabia is largest OPEC oil producer - Developing and maintaining idle spare production capacity is not cost effective for international oil companies (IOC) because IOC maximizes revenue by producing oil as long as price of selling oil is higher than cost of supplying additional barrel of oil to the market World crude oil prices and supply are results of… - Geopolitical events and weather - Create uncertainty about supply or demand and result in volatility - Price volatility is tied to inelasticity of supply and demand to price changes in short term. Several major oil price shocks have occurred at the same time that political events caused supply disruptions, most notably the: Arab Oil Embargo in 1973–74 Iranian revolution Iran-Iraq war in the 1980s Persian Gulf War in 1990–91 - Hurricanes in Gulf of mexico impact refineries in gulf region - US product prices increase - Cold weather strains market bc producers must heat oil to consumers in short time Buyers and sellers in global auction - Global auction where highest bidder wins available supply Different types of oil market transactions - Traded in the futures market - Future contract is a standard contract to buy or sell a specific commodity of standardized quality at a certain point in the future - Futures contracts are bought and sold by market participants or speculators who don't consume oil - Crude oil is sold in spot transactions- on the spot purchases of a single shipment at market price Energy encyclopedia article: - OPEC created in Baghdad on september 10-14, 1960 - Founding members were iran, iraq, kuwait, saudi arabia and venezuela Early years: - In 1950’s soviet union increased output of oil and members of the seven sisters dropped their prices - Seven sisters were largest oil companies at the time: Esso, Mobil, Standard, Gulf, Texaco, BP and CFP - Arab countries came together to ensure prices would not fall further - In 1962 meeting a battle broke out over export limits for OPEC and a drop in price was not welcome - During the six-day war in 1967 Israel launched a preemptive military action against its Arab neighbors Syria, Egypt, Jordan, Lebanon and Iraq Many of the Arab members of OPEC wanted to boycott Israel. - EMbargo failed because Venezuela and iran did not support israel - In 1968 OPEC released declaratory statement of petroleum policy in member countries to enshrine every nation of its right to sovereignty over natural resources - OPEC membership expanded and by 1969 5 more countries joined - Qatar (1961) - Indonesia (1962) - Libya (1962) - United Arab Emirates (1967) - Algeria (1969) 1970’s - By 1973 OPEC was supplying 56% of world oil, up 47% in 1965 - October 1973 egypt and syria launched attack on israel known as Yom-Kippur war - US had high consumption but falling production and high imports of oil - US intervening in war on israel's side had drawbacks for US economy - Since they supported israel, the arab delegation of OPEC imposed embargoes to US canada UK Japan and netherlands - OPEC did and does not have a monopoly over oil market because in 1973 they only had 56% of oil market - OPEC = international Cartel because the governments of member countries coordinate with petroleum firms to manipulate world supply - Additionally, the OPEC nations had inadequate or underdeveloped downstream activities so they are reliant on mostly western companies to get their product refined and to market 1980’s - Crude oil became scarce and price rose - Countries reliant on OPEC sought to mitigate effects by replacing oil with other sources like coal, nuclear power and natural gas - Iranian revolution (1979) and the subsequent iran-iraq war (1980-1988) restricted supply of oil from iran - By July 1980 the oil market price was $30 more than double the 12.70 price in december 1978  - By 1990’s the price of oil increased almost 40% since 1980 - Technological advances in the North Sea led to overall increases in production and by 1973, the USSR had become the top oil producer worldwide, further eating into OPECs share of the market.[ - Opec sought to force a rise in prices by placing quota - Quota was a maximum of 17.5 million barrels per day - crash in 1986, oversupply to the market and an attempt to shift away from hydrocarbons caused the price of oil to drop 1990’s to present - End of iran iraq war in 1988 bought short stability - 1989 USSR collapsed - Iraq invaded Kuwait in 1990 - After the war iraq was struggling to rebuild and wanted to export more oil - Ecuador and Gabon suspended memberships 1992-2007 and 1995-2016 to increase production levels - 2003 invasion of iraq by american led coalition created short term drop in supply - Conflicts in OPEC countries such as the conflict in Libya (2011-present), Attacks on Nigerian oil infrastructure (present), the ongoing conflict in Iraq and Syria etc. caused periodic disruptions in supply and continue to do so. Second article: Not all oil is equal - Price producer receives for barrel depends on type of oil, where its produced and purchased - Lighter oil receive higher process because they are easier to refine - Brent oil is a global benchmark. Its name refers to oil fields in the European north sea. Many oils produced in middle east, africa and europe all trade in relation to brent oil - Brent oil moves easily and is inexpensive to move in large tankers - West texas intermediate oil represents oil produced in US based on oil at large tank in cushing oklahoma - WTI is priced as light oil but does not have global reach because: Us prohibits export of crude oil Supplies are produced in landlocked areas - WTI trades at price discount to brent oil - A benchmark price in canada is Western canada select - Stream of conventional heavy oil mixed with bitumen and diluents - Since WCS is heavier its priced at a discount to WTI - Oil produced from oil sands is delivered in various blends of bitumen and diluent commonly called dilbit - Theoretical price of bitumen is determined once you deduct transportation costs known as bitumen netback - Producer revenues and royalties are based on bitumen netback price - Royalties = albertans getting value of resources when produced and sold - Amount of value depends on price received for resources - The lower the price the less value - Prices we receive for oil products are lower than brent and WTi prices Week 12: Deindustrialization and the rise of the service economy Service economy= fast food, heart surgery, consulting, anything with finance and education It is not end products and raw materials used to make those products- they are intangible things - Considering GDP composition by sector- agriculture, service - Currently the service section is 50% of all employment and 67% of global GDP (⅔) - In 1867 half of the workforce was employed in agriculture but this was brought down to 4% in 1987 - In 1911 ⅔ of workers produced goods and ⅓ worked in service- by 1987 this had reversed - For a long time lot of people believed that making tangible goods were the most important things to developing an economy, believing its more efficient to make lots of goods - It is also easier to trade goods, so people believed services were not as important - 19th century economist david ricardo trading wine and cloth, you could trade things as fast as you could communicate- which meant not so fast - Since the development of the telegraph it has become easier to trade services From manufacturing to service - Always had services that were concentrated in cities dedicated to agriculture - Shift from farming to industrialization with the revolution, looking at this in textile production - As more people lived in cities, more demand grew for services - In the 1950’s and 70’s there was deindustrialization where an industry makes a smaller portion of the economy - Deindustrialization is a flip side of the rise of the service sector because mechanization and mass production make farming and manufacturing much easier Example 1: detroit - Birthplace of automobile industry: ford, chrysler and general motors - City dependent on a single industry - In 1900 detroit had a population of 285K and by 1950 they had 1.8 Million - By 2010 it declined to 700K - In the 70’s and 80’s automobile had competition from Japan like toyota and honda but in the 40’s and 50’s they were seeing lots of job losses when manufacturing began to slow down - They have widespread poverty, inequality and social issues, causing it to go bankrupt in 2013 Pittsburgh: From Steel to Healthcare - 1875 when andrew carniti opened edgar thompson works - Between 1870 and 1910 the population jumped from 80K to 530K - Same year in 1910 pittsburgh made 60% of Steel in US and US steel corporation was once the largest company on the whole planet- edgar thompson works joined US steel corp  - The 1970’s recession and oil crisis caused pittsburgh to rapidly lose jobs, which accelerated in teh 1980’s and by the end of the decade, 75% of steel making capacity was closed - Between 1980-1983 95K jobs were cut and employment spiked to 27% and by 1990, half the population disappeared - Old population was left behind and they were sick and need of care- causing demand for healthcare- 1980, healthcare surpassed steel - Biggest difference between them was that the steel industry was unionized and had well paying jobs but healthcare was often part time, not paid much, and not in a union - Service economy = care economy - However pittsburgh has grown its population through healthcare, education and finance sectors - - Service work tends to be very well paid or not paid at all - Rise of new york, london, and tokyo became global cities in the 1980’s and were the big 3 - In each of these countries the fastest growing sectors were accounting, law, and finance - As phones, faxes, and internet made communication easier, the world economy became more complex and decisions about investment and trade became huge - As multinational corporations grew, a group of centralized workers became necessary, and groups of low wage workers were also needed - Glbola cities looked more to each other because they were more affected by the global economy than the national economy of the country itself First article from the world counts: - $61 trillion worth of transport, insurance, restaurant visits, etc is produced globally- $116 million every minute - Service sector= non material goods (ie. Transportation, hotel, etc)/ intangible goods - Twice as big as industrial sector, making up 63.6% of global economy - US has the largest service sector and account sfor 30% of global output, more than the next 4 countries altogether (China, japan, germany, UK) - The definition of 5 I’s Intangibility Inseparability- delivery and consumption of product cannot be split up Inventory: Services cannot be stores Inconsistency: Each service is unique Involvement: Provide and customer must participate in service provision - Tourism industry is a heavy polluter and transportation makes up %14+ of global greenhouse emissions - Example of polluting service: THe cruise industry  Largest cruiseship with 7000 people can create 200K glalons of human sewage and 1 million gallons of greywater World has 220 large cruiships carrying over 25M people a year They burn large amounts of waste at sea Incinerators are operated with less regulation so cruiseships burn 2.5 tons of waste per day, emitting carcingoens like furans and dioxins, heavy metals (lead, cadmium, and mercury), alongside hazardous gasses Estimated 84,000 people die because of these emissions, and bunker fuel used by ships has 2000 times the sulfer content of fuel used by cars, trucks, busses One ship can cause as much pollution as 350,000 cars Large cruiseship uses same amount of energy s 8000 households Average cruiseship generates 15 gallons of chemical waste 10 hours in a port = 66 tons of CO2 Ships dump 100 million gallons of petroleum, almost 10x oil spilled in 1989 Exxon Valdez oil spill The knowledge economy: Modern services; quaternary and Quinary sectors - quaternary and Quinary sectors are main part of service economy - Quaternary = The knowledge based part of economy, including information tech, consultation services, research and development, education, financial services, design Includes programers, lawyers, scientists, researchers - Quinary = top level decision making Consists of CEO’s and government executives People working in this industry are the “gold collar” professionals - 59% of the economy is the size of quaternary and quinary sectors in the western world - In australia they make up 59% (47.6% quaternary and 11.6% quinary) Week 12 part 2: - Offshoring is= the location of productive facilities outside a firms home market for the purpose of making goods to be sold in that home market - Offshore production distribution and sales are managed within a single multinational enterprise - Offshoring is not the same as outsourcing - Outsourcing occurs when company purchases goods from an independent foreign supplier than coudlve been procured domestically - Offshoring involves company establishing and managing own facilities in foreign location and outsourcing relies on external supplier in that location, but they often overlap - They’re related because as manufacturing jobs moved offshore and economies experienced deindustrialziation, the second is that competitive pressure created by globilizaiton were  also applied to services so companies would outsource things like customer support and payrolling to reduce costs How did offshoring become a thing - In the 1500’s europeans began to ship a lot of things because they couldnt supply these things at home - Offshoring took off after WW2 - First of these factors is institutions IMF promoting currency stability, world bank supporting development of countries Tech also improved transportation and communication (air travel, steam ships) Communications- advances in telecommunications, and trans atlantic telephone cables reduced communication costs and improved reliability - This laid groundwork for businesses to manage production effectively Offshoring electronics production - Began around 1960 with east asia being primary destination for manufacturing and japan led the way on this through radios and semi conductors - USA began importing these products and imposed tariffs and to bypass this Japanese companies set up factories in east asia (Hong Kong and Taiwan) where wages were much lower than USA - Companies like Sony and Sanio took advantage of british colonial trade preferences to export products to US by the millions - US companies moved production offshore to hong kong (TransAir set uo factory in Honk Kong in 1962 to expand) - COmpanies followed suit and set up factories in low wage countries - Semi conductor industry began offshoring in 1963 to set up operations in east asia - By late 1970’s high tech tasks like design and fabrication were made in developed countries while labour intensive tasks were made to low wage countries - Many firms embraced global production in 1980’s to spread different stages of production across multiple countries based on politics, available tech, to make production more efficient by placing each phase in most suitable location - Choice between running one big global production system or keep factories for different markets - Global system is efficient but fragile- if something goes wrong in one part it messes up whole thing + can cause inefficiency and is hard to coordinate - Also very difficult to offshore research and development especially when products are new - Most research and development stays at home - Another factor is that company prefer benign closer to customers and countries go abroad to tap into labour or tech unavailable at home  - When customization and quality matter, labour costs don’t matter in terms of where you set up shop Effects of offshoring: - Very controversial used to cut costs and avoid unions - Countries like hong kong and taiwan benefit even though they have low cost labour in bad working conditions - Many developing countries fail to benefit - US lost millions of manufacturing jobs and inequality has increased - Made it easier to move jobs to places with bad work protection Offshore Finance: - De Beers case 1906 founded in south africa in 1988 and head office is in south africa but directors meeting took place in london where important decisions were made - Next year egyptian delta company moved production back to Cairo - Offshore finance means moving banking out of regulation and control of country it was in to minimize taxes and escape regulations - A formal word for this is tax neutral = - IMF definition of an offshore financial centre = a country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy - Example is cross border banking assets which were a trillion dollars in 1970’s and gre to 30 trillion in 2020 - Currently 8-10% of global gdp is held offshore Effects of offshoring finance - Controversial - Lost tax revenue, estimated 55% of US foreign corporate profits are earned in low tax profits resulting in $130 billion in lost corporate tax each year, worldwide is $500-600 billion - Sparked controversy in 2016 with panama papers with leaked papers that showed how different individuals, corporations used off shore entities to hide assets and evade taxes - Ultimately launched investigations that implicated 140 politicians How are the two offshores related? - Both offshoring practises accelerate in 1970’s and end of a process of decolonization in africa - Other connection is that people from newly independent countries seeked tax savings