Political Economy of Trade: The Twentieth Century Lecture Notes PDF

Summary

These lecture notes present an overview of the political economy of trade in the 20th century. The notes cover key events such as the World Wars, inter-war economic struggles, and post-Cold War developments. They also mention the rise of international organizations and the emergence of the three-world structure. The summary highlights the major geopolitical and economic shifts. These notes look at the historical context of political economy and trade.

Full Transcript

**[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

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