Political Economy of Trade: The Twentieth Century Lecture Notes PDF

**[The Twentieth Century]** See O'Brien and Williams (2020); Hannah and Ravenhill (2024) **1914-1945: The World Wars** - Wars resulted in a retreat from the imperialist and liberal policies. - WWI left countries in Europe in a much weaker position as countries switched trading partne...

**[The Twentieth Century]** See O'Brien and Williams (2020); Hannah and Ravenhill (2024) **1914-1945: The World Wars** - Wars resulted in a retreat from the imperialist and liberal policies. - WWI left countries in Europe in a much weaker position as countries switched trading partners and production was redirected towards the war effort. - After WWI, there was an attempt to create a new order based on international law and institutions but it substantially failed. - System was inadequate to maintain peace - League of Nations (encouraged states to resolve their differences peaceably) - Peaceful co-existence - Appeasement - US isolationism **Inter-war Economic Failure** - Period marked by change, uncertainty and erratic growth - 1919 -- 1929 states revived their economies. Economic relations were liberalized and currencies floated on the international market but this was short lived. - Late 1920s-mid 1930s period of rising unemployment, a return to the gold standard by Britain in 1925 and departure in 1931 - Mid 1930s to WWII marks a retreat from the global economy with a period of protectionism. General agreement that failure to manage international currency conversion was a major contributor to the great depression (Barry Eichengreen) **1914-1945: The World Wars** - WWII had an even greater impact on the world economy - Fundamental shift in the balance of world power. Move from Europe to the US. - Massive growth in the US economy - At the end of the war the US was responsible for half of the world's output - US began to dominate international finance (Gave massive loans to the Europeans during the war) - Emergence of welfare states in Europe after the war **1945:1989 Developments in the Global Order** - The US expands as an economic, political, military and cultural force - US firms dominate world production, technological growth, and US financiers control international finance - Remains the most significant power in the world although its power relative to other countries has declined - Emergence of the three world structure - First world: Western Europe, US, Canada, Australia, New Zealand, Japan - Second World: Communist states of Eastern Europe and Soviet Russia - Third World: Countries which were involved in the process of development **The US and the Western System** - Conflict with Russia evident from the last years of the war - Balance of Terror much discuss after the development of nuclear weapons by Russia or what became known as Mutual Assured Destruction - Post Cold War, a new global threat emerged - Some conflicts moderated but a number of new and more terrible conflicts arrived - Former Yugoslavia, Rwanda - The threat of fundamentalist Islam - New economies emerged into the global order; China, **Post Cold War** - It appeared for a time that western ideology had triumphed; capitalism over communism - Francis Fukuyama (1992) argued that there would be no new models for society, everybody would drift to the liberal democratic model - 25 Years after the end of history - In the move towards the C21st some analysts began to speak about the world's hyper power - Military giant and economic powerhouse - Major economic power with the highest number of transnational corporations - Major cultural leader, music, film, tv - But 21^st^ century US decline - Key features of the new system were liberalism, legalism and materialism (Ravenill, 2020) - Liberal economic principles were re-instated in the post WWII environment - However the free trade liberalism was tempered by a greater consideration for social welfare concerns. - Post war reconstruction was aided by US investment - International organisations were developed to aid international trade but in practice the IMF, etc limited membership to countries that were committed to free trade - Regional economic institutions emerged; the EU, NATO - The EU has emerged as an economic counterbalance to US dominance - European empires quickly crumbled in the post war period - A combination of European states realizing that it was difficult to rule foreign territories and violent campaigns forced Europeans to re-evaluate their colonial empires - The French were more willing to use violence to maintain the empire than Britain with bloody wars in Algeria and Vietnam - The US supported the process of decolonization, giving independence to the Philippines in 1946 and urging European states to relinquish their empires. It opposed the British/Israeli/French invasion of Egypt during the Suez crisis. - Many post-colonial states struggled with economic development in C20th and just a few became industrialized nations (Ireland, South Korea, Taiwan). In Latin America and Africa, post WWII performance was weak and economies remained overly focused on the primary sector (agriculture, raw materials). - France, Britain and Holland emerged at the end of WWII in very weakened positions and much less likely to be able to maintain and control foreign territories - Colonies began to pose a serious financial drain on the home nations - Mobilization of the populace in the empires had created a far less "docile" polity over which the Europeans could rule - The result was the creation of a huge number of new independent states - Though formally independent, many still retained strong economic and political ties to their former colonial masters - Emerging during a period of bi-polar conflict many had to tread a careful path between the US and the USSR, resulting in an initiative known as the non-alligned movement **State Transformation** - Post WWII was characterized by a proactive role for the state cushioning citizens from the ravages of the market, extensive welfare programmes were designed - At the close of C20th, some challenges to the post WW2 settlement emerged - Move from the welfare state to the competition state - Environment no longer fosters failing industries and sectors but opens up the economy to global competition - Welfare to work programmes have replaced the universal social policies of earlier generations - Different economic responses to the great recession and the covid pandemic - Second half of twentieth century witnessed the rise of international organisations: - UN - Economic Organisations - Corporate and Civic Associations - Multi-national corporations were the dominant trade innovator of the late C20th - But in C21, production is no longer organised around assembly lines - Sophisticated technologies and computers create new lines of products which are customised to the needs of individual consumers - Production processes have spread across the globe and companies compete and collaborate globally. - New lines of products appear and disappear at extraordinary pace raising questions about sustainability. - This has resulted in a new phenomenon in trade of outsourcing and specialization - Challenge of globalisation, deglobalisation - Artificial intelligence - There are patterns that can be identified across the centuries in economic activity. - The global economy at the start of the 21^st^ century is a product of developments from previous centuries. - The major changes at the end of the 20^th^ century were driven by economic globalization. - US Decline