Economic Growth and Globalization since 1850

The Age of Globalization Exponential change

I. Introduction: A. Global time line 1850-1914 Industrialization and growth of international trade 1918-1939 Inter-war years 1950-1990 Liberalization and Acceleration of trade/ Development of Communist Economic Model

B. Successive Shifts of Power 19th-21st Centuries 1850-1914 British Hegemony 1914-1990 American Century 1990 -2014 Multipolar World

II. Stages of Economic Growth How did the world progressively enter into a system of production of wealth?

A. 19th Century Economic Growth since 1850 Since 1850, continual acceleration of technical progress and strong economic growth Sustained demographic growth Inequalities in development continue

3 stages of economic growth Entering a world of intensive growth Increasing world growth after 1945 Capitalism in Crisis

1st Stage: Intensive Growth From the 18th Century, western European countries, facing rapid increase in population growth, begin industrializing Intensive growth = wealth production surpasses basic needs of the population Capitalism, well-established in the 19th c. in Europe, contributes to this trend Despite the rise in global population, economic growth enabled improvement in standard of living.

2nd Stage: Increasing world growth after 1945 19th C industrialization accompanied by weak growth rates even for the most advanced countries a. newest technologies extremely dynamic (e.g. textile, steel, railroads) b. continued importance of agricultural sector into the 20th c. c. low domestic consumption

After 1945, world growth rate increases Stimulated by the gradual liberalization of trade From 1970’s by acceleration of globalization Between 1945 and 1975, growth originates mostly in the industrialized nations (North America, Western Europe and Japan) = the Triad

Change of Paradigm late 20th/early 21st century Early 21st C. highest economic growth rates in emerging countries BRIC nations (Brazil, Russia, India, China) + South Africa since 2011 Known for rapid growth of their industrial sectors Capitalizing on their advantages (e.g. natural resources, labour, infrastructure) Strong state intervention

BRIC nations

3rd Stage: Capitalism in Crisis Early signs of instability in 1929

Lithograph by Otto Bollhagen and Fritz Jacobsen, Krupp Factories in Essen, Germany in 1912

Series of financial/economic crises highlight the limits of capitalism and the interdependence of the world Stock market crash 1929, end of period of strong growth of US economy, warning to speculators Collapse of 1st economy in the world causes contraction of international trade and massive increase in unemployment around the world

Periods of Crisis enable capitalism to adapt and for new powers to emerge. Slowing down of growth in Europe Birth of multinational corporations Progression of international trade Appearance of new competition in Europe (Germany) and outside of Europe (U.S. / Japan)

More Recent Financial Crises and Economic Recessions Financial crisis in 2008 leads to growing intervention of international regulatory organizations IMF G20 Economic recession in 2011-2012

Comparison of 1929 and 2008 Crises GNP Growth (%) 1929-1932 2009 2010 World -30 -0.6 +4.2 United States -51 -2.4 +2.7 Germany -23 - Euro Zone -4.1 +1 International Trade -57 % -12% +13.5% Unemployment rate 1929 1933 2007 3.1 25.2 5 10 9.7 33 7.8 9.8 10.3

The Global Power Shift