History Business Issues - Assignment Example

Running Header: Business Questions Student’s Name: Instructor’s Name: Course Code: Date of Submission: 1. How did the spread and improvement of transport and communication technologies foster the growth of the international economy in the decades before 1914? Technological development spurred the increase of cross-border trade, investment and migration. This opened a new phase in the economic development as the volume of world trade increased significantly. Development of technology and especially in the medical sector enabled most European countries to be in a position of resisting diseases such as malaria. Technology also promoted the industrial revolution for example people were able to acquire raw materials more easily as the means of extracting the materials were improved. Development of technology and transportation improved a means of colonial possessions in the metropolitan for example in railway and use of telegraphy (Edelstein, 1994). According to March and Beamish (1919) the development of medical treatment was effective as it enabled colonial powers to achieve their goals in the colonies for example by acquiring raw materials, improvement of markets and trade as a result of improved transport system. Industrialisation began in the 18th century where people were using steam engine to pump water from the mines. Development of new technology therefore made mining more attractive especially to private developers. The most important technological feature in the years before 1914 was carrying trade. This was brought about by the spread of steam power which eventually introduced new business opportunities as a result of increase in speed and capacity. Technology also made rubber a commercial commodity which improved growth in the international economy. 2. Why did overseas capital investment grow so rapidly in the decades from 1870-1914?  In analysing the strong capital flows during 1870-1913 and the social economic determinant, it is important to note that these changes were as a result of saving and investment global behaviour. Capital flows was as a result of various factors including those of the British and the macro-environment. Fromkin (1998) argues that one of these factors includes the political environment and the demographic and economic condition in Europe. These conditions allowed huge migrations therefore bringing up change in the global equilibrium for the saving-investment relationship. The other reason was where excess saving practiced by the British enabled to improve global savings requirements which made capital investment to exceed form Britain towards overseas countries. The population structure and the exploitation of capital-intensive activities contributed to the introduction of a strong demand for saving. The surprising flow of capital from the Britain in the period 1870-1913 is also connected to the global imbalances. This is also linked to exchanges that could be produced by the international system. The capital flows were also as a result of a change in the international system which brought up demand for excess saving in Britain. As a result, British investors were able to use their savings and diversification brought about by the high forces in the international system (Fromkin, 1998). 3. To which countries did Chinese workers migrate in the period 1819-14? Why did they migrate, where did they come from, and what was their impact in the recipient countries?  The Chinese workers migrated to U.S and Africa and are now entrepreneurial in nature. The reasons for their migration include institutional discrimination for example in their hometowns, the Chinese citizens had been entitled to basic rights and other social services however after leaving their place of residence, and they were regarded as second class citizens. Ge et al. (2005) describes that they would be given harsh jobs and poor wages for example at the coal mines, in construction sites and in factories. The other factor that led to the migration of workers was due to work related injuries and illness. The workers used to work for long hours in hazardous conditions which deteriorated their health for example migrant workers working as coal mining, construction and manufacturing industries are more prone to silicosis which is most common in China. The lining conditions were also poor as workers spent less on daily necessities. Other factors included social marginalisation and discrimination. The migrant workers brought an impact in the recipient countries as they improved the living standards through their knowledge and networking skills. They were also able to navigate various potentials of a globalised world. 4. What was the relationship, if any, between the 1919 peace settlement and the Great Inflation in Germany, Austria (and the rest of Central Europe) of the early 1920’s?  After the peace settlement in 1919, the political, cultural and social order change din various countries such as in Europe, Asia and Africa. International organizations were also set up. Fromkin (1998) shows at this same time in Germany, there was the naval blockade which begun during the wars. Germany depended on imports and about 523,000 citizens died and 250,000 died of starvation during the war. After the war, the blockade continued and tormented the lives of Germans where the Allies demanded for ships. The German government was also unable to secure a loan from US and had to utilise its gold reserves which later made the country to suffer the great inflation. German was blamed for the entire war and was then to pay 132 billion marks as compensation for the loss experienced. This was later followed by the hyperinflation where the currency lost its value by one trillionth. After the war, the people of Austria also lost faith in allied countries as they had turned against them. The population faced food shortage and the inflation was also due to the losses incurred during the war. The relationship between the 1919 peace agreement was the cause of inflation in Germany and in Austria as the countries had been blamed for the loss and were to compensate for the loss. 5. In what ways did Britain’s role in the international economy differ from that of the United States in the 1920’s?  According to Fromkin (1998) Britain’s role differed from that of the US since the role of Britain was to usher in changes. The government concern was also to improve development in the economic activity. This is where automobile was adopted where the flexibility of cars changed the use of rail where most people had been tied to. Communication also improved as a result of introduction of electric utility networks. The British government developed both economically and culturally which brought a significant growth in agriculture and motor industry. The natural bureaucratic divisions made the British government to focus on immediate news and not on the basic economic trends. The role of the US was to introduce regulations that would reduce the deflationary rate. The US also set the minimum prices and wages in order to increase the purchasing power of the employed citizens. Farm production was also cut so as to raise prices through Agricultural Act. The US also raised revenue in order to protect farmers and to encourage people to purchase American-made products. Rapid recovery was reestablished in 1923. 6. Discuss the timing and pace of the Great Depression.  In 1920s, the federal spending grew three times larger than the tax collections. The government then cut spending in order to balance the budget. About 600 banks fail annually and organised labour declines. In 1930s, the Great depression which affected the US and other countries lead to loss of property as most people needed basic commodities such as food and shelter. The resources that could provide for these commodities were sitting idle and people were unable to find employment (Rothermund, 1996). According to Rothermund (1996) in 1941, during the World War 2, unemployment fell by about 10 percent and prices begun to decrease. In October 1929, the stock market crashed which led to a major impact to the economy. The great depression has two periods of recession where the first started in 1929 and ended in 1933. During this time, the value of goods fell by about 40 percent. The second recession started in 1937 and ended in 1938 taking about 13 months to recover. This period say a great fall in prices and interest rates. This showed that consumer spending and investment was depressed. The automobile sales also declined. Rothermund (1996) explains that The American exports decreased in 1929 from 5.2 to 1.7 billion dollars in 1933. The most affected were farm products for example cotton, tobacco and wheat which led to default of loans. 7. Which considerations led the US in 1947 to introduce the Marshall Plan? What reasons can you suggest for the Plan’s success in helping to “kick-start” the West European economies?  In 1947, the Marshall plan was introduced after 1945 since Europe lay on ruins. This is because the French country was overcome by efforts to retake Europe. At this time, Germany was being changed by the Morgenthal plan which meant to change it to a large farm and was unable to sign a peace agreement. The Great Britain on the other hand was rationing its food and the mighty empire was falling apart. There were also floods experienced in Dutch farmland in about 20 million acres. Other damages were seen in Europe where one third of its industry was destroyed by war and about 60 million citizens were unemployed and about 100 million were starving (O’Rourke and Williamson, (2000). The United Nations had just been introduced and was not capable of helping much though they gave medical services and food in serious situations through the United Nations Relief and Rehabilitation (UNRAR). Most people died due to cold as they had no shelter. The reasons that helped to kick start the European economy include improvement of personal growth and sustainable development. It also helped people to connect, share and to develop ideas that were necessary in improving the economy. The plan encompassed humanity therefore helped to transform the global community. 8. What reasons can you suggest for the establishment in 1957 of the European Economic Community (EEC) and its subsequent development into the European Union?  The reason for the establishment of EEC was in order to create a general and common market in Europe. It was also so as to create an atomic energy community. The European community wanted to transform the conditions of trade and manufacture and also to contribute to the functional construction of the political structure in Europe. The development of EEC was in order to ensure a constant growth in the economic and social progress of countries in the union. This was by taking a common action that was meant to eliminate barriers that existed to divide people in Europe. The elimination of barriers also helped in expansion, balance of trade and fair competition among member countries (Hoskyns and Michael, 2000). The establishment of the unions was also to strengthen the unity among the member countries and to ensure existence of harmonious development. This was achieved by reduction of differences that existed between various regions and to improve countries in less favoured regions. Hoskyns and Michael (2000) shows the establishment of the EU and ECC was also to contribute to the elimination of restrictions on the international trade. This was through a common commercial policy. This was also to confirm solidarity that binds Europe and other overseas countries as this promoted development of prosperity. The countries aimed at pooling their resources in order to strengthen peace and liberty. 9. What factors generated the “long boom” from 1950-1973?  According to Matthews (2007) at this period, the world economy grew by about 5 percent and the factors that contributed to the long boom include sustained economic growth which was later stopped due to by the oil crisis in 1973. The factors included the development of European Union which reduced barriers therefore promoting international trade. The political structure also led to the long boom since the countries leaders were united. Improved industrialization and free market also led to the long boom as trade among countries was facilitated by improved transportation and communication. The principle of autonomy also contributed to the long boom where people performed various activities necessary for developing the economy (Matthews, 2007). 10. What were the consequences of the “oil shocks” of 1973 and 1979? Discuss with reference to both the industrialized and the developing world.  The consequences of oil shocks of 1973 and 1979 brought about various effects to the economy for example by reducing the rate of growth there reducing output. This also led to an increase in price level and increase in inflation rate. The consequences led to rise in oil and therefore the major oil consuming countries lacked enough oil reserve. O’Rourke and Williamson (2000) describes that there was also increased demand which had been driven by global economic recoveries. The impact was major in counties such as Japan which had to change from oil-intensive industries to investments in electronics. The interest rates were reduced in order to encourage growth. The oil shock also led the industrial governments to change their foreign policy on Arab-Israeli conflict. In the developing world, production was reduced while in the oil producing countries such as Saudi Arabia, production was increased in order to gain market share. Countries that depended on oil such as Nigeria, Algeria and Libya could not prepare market reversal and their government suffered desperate situations. 11. How did the international institutions – the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (after 1995, the WTO) promote industrialization in Asia?  The IMF, World Bank and GATT promoted industrialisation in Asia for example by introducing the benefits of free market capitalism in Asia. The Asian NICs which included South Korea, Taiwan and Malaysia also had to disregard some conditions from the IIMF and World Bank. This included insisting on the nationalist development strategies as this helped them to improve their industrialization. IMF therefore blamed the Asian crisis on corruption and argued that the free market and having an independent public regulatory agency would have prevented the crisis. These international bodies also introduced structural adjustment policies to promote Asian industrialization. The IMF maintained high interest rates to attract investments and to defend currencies. This would also cut on spending therefore reducing incomes and imports as people from Asia will be forces to purchase local products therefore promoting industrialization. Labour rights were also weakened to lower costs therefore promoting exports. Watt (1990) shows other adjustments made by IMF included privatizing, reducing tariffs and restrictions on foreign ownership. This was to attract foreign investment and applied on both financial and non-financial businesses. IMF, World Bank and GATT therefore aimed at making Asia to be more dependent on exports and other foreign companies. The bodies have also shares resources, knowledge and monitored the progress of Asia. 12. Assess the role of international factors in the industrialization of China in the decades since the introduction, in 1978, of Teng Hsiao-ping’s “Open Door” Policy The open door policy is a foreign affair which allows multiple powers to access China and where none is in control. Watt (1990) explains that the Open Door Policy has been abandoned until 1978 when the new capitalist inclined system was taken up by Deng Xiaoping. This promoted market forces and China was able to adopt policies which promote foreign trade and economic investment. The role of the international factors in industrialisation was to monitor and advice on economic matters. This is by focusing on the vulnerabilities and the provision of global perspective. This help to form networks of regional analysis. After 1978 there was growth in the industry and GDP pre capita. The international factors also contributed to China’s industrialisation for example where the resources could be provided to support the country in economic crisis. Sharing knowledge and ideas also contributes in building a policy foundation in order to address the challenges the country face (Gambe, 2000). References Edelstein, M. (1994). Foreign investment and accumulation, 1860-1914: The economic history of Britain. Michigan: Springer. Fromkin, D. (1998). A peace to end all peace: Creating the modern Middle East 1914–1922. 565. Gambe, R. (2000). Overseas Chinese entrepreneurship and capital development in Southeast Asia. New York: Macmillan. Ge, Y. et al. (2005). Prevalence and prevention of occupational diseases of migrant workers, Industrial Heath and Occupation Diseases, 31(4), 259-263. Hoskyns, C. & Michael, N. (2000). Democratising the European Union: Issues for the twenty-first Century. Manchester: Manchester University Press.  March, F. & Beamish, R. (1991). History of the World War: An Authentic Narrative of the World's Greatest War. California: Leslie-Judge. Matthews, D. (2007). The performance of British manufacturing in the Post-War long boom. London: Routledge. O’Rourke, K. & Williamson, J. (2000). Globalization and history. The Evolution of a Nineteenth-Century Economy. London: The MIT Press. Rothermund, D. (1996). The global impact of the Great Depression. New York: St Martin’s Press. Watt, S. (1990). Chinese Bondage in Peru: A History of the Chinese Coolie in Peru, 1849-1874. Westport: Greenwood Press. Read More