Chapter 3 The Making of a Global World Solutions
Question - 11 : - Explain the three types of movements or flows within the international economic exchange.
Answer - 11 : - Find one example of each type of flow which involved India and Indians, write a short account of it.
Answer
The three types of movements or flows within the international economic exchange are trade flows, human capital flows and capital flows or investments. These can be explained as—the trade in agricultural products, migration of labour, and financial loans to and from other nations.
1. The flow of trade (trade in goods, e.g. cloth or wheat):
India was a hub of trade in the pre-modern world, and it exported textiles and spices in return for gold and silver from Europe.
Fine cotton was produced in India and was exported to Europe. With industrialization, British cotton manufacture began to expand, and industrialists pressurized the government to restrict cotton imports and protect local industries. As a result of the tariffs that were imposed on cloth imports, the inflow of fine Indian Cotton began to decline.
2. The flow of labour (the migration of people in search of employment):
In the field of labour, indentured labour was provided for mines, plantations and factories abroad, in huge numbers, in the nineteenth century. This was an instrument of colonial domination by the British. Indentured labourers were hired under contacts which promised return travel to India after they had worked five years on their employer’s plantation. The living conditions were harsh, and the labourers had little protection of the law or from it as they had little rights.
3. The movement of capital (investments) :
Lastly, Britain took generous loans from the USA to finance the World War. Since India was an English colony, the impact of these loan debts was felt in India too. Food and other crops for the world market required capital. Large plantations could borrow it from banks and markets.
Question - 12 : - Explain the causes of the Great Depression
Answer - 12 : -
The Great Depression was a result of many factors:
1. Agriculture overproduction was a major problem. As a result, agricultural prices fell. As prices fell, so did agricultural incomes. This increased the volume of goods in the market. The situation got worsened in the market. Prices fell down further. Farm produce began to rot due to the lack of buyers.
2. Prosperity in the USA during the 1920s created a cycle of higher employment and incomes. It led to a rise in consumption and demands. More investment and more employment created tendencies of speculations which led to the Great Depression of 1929 up to the mid-1930s. The stock market crashed in 1929. It created panic among investors and depositors who stopped investing and depositing. As a result, it created a cycle of depreciation.
3. The withdrawal of US loans affected the rest of the world in many different ways. In Europe, it led to the failure of the major banks and the collapse of major currencies such as the British pound sterling. Some of the banks closed down when people withdrew all their assets, leaving them unable to invest. Some banks called back loans taken from them at the same dollar rate, in spite of the falling value of the dollar.
Question - 13 : - Explain what is referred to as the G-77 countries. In what ways can G-77 be seen as a reaction to the activities of the Bretton Woods twins?
Answer - 13 : -
After the Second World War, many parts of the world were still under European colonial rule, and it took over two decades for the colonies in Asia and Africa to become free independent nations. When they became free, they faced many other problems such as poverty, lack of resources, etc. Economies and societies were handicapped for being under colonial rule for long periods.
As colonies, many of the less developed regions of the world had been part of Western empires. The policy of the Bretton Woods twins tilted more in favour of the developed nations of the Western world. Now, ironically, as newly independent countries facing urgent pressures to lift their populations out of poverty, they came under the guidance of international agencies dominated by the former colonial powers.
Therefore these colonies organised themselves as a group – the Group of 77 (or G-77) – to demand a new international economic order (NIEO). By the NIEO they meant a system that would give them real control over their natural resources, more development assistance, fairer prices for raw materials, and better access for their manufactured goods in developed countries’ markets.