worldeconomy.doc

Some terms in world economy1. world economy2. great geographical discoveries3. international labor divisionBritish history from the Norman conquest to the middle of the 14th century1. the manor system2. the town and the guilds from the middle of the 14th century to the end of the 15th century1. money economy and commutation 2. social development in the 15th centurythe sixteenth century1. cloth manufacture and enclosure2. process of primitive accumulation3. foreign trade and colonial robberythe early of the 17th century1.development of Capitalist economyfrom the end of the 17th century to the middle of the 18th centuryeconomic development :accumulation of capital1. Bank of England and national debt2. enclosure and decay of Yeomanry3. foreign trade and colonial exploitationfrom the middle of the 18th century to the middle of the 19th centurythe beginnings of the industrial revolution1. Premises of the industrial revolution2. improved means of production3. the capitalist and laissez-fairethe mid-19th century1. expansion of industry and commerce2. free trade and industrial monopolythe later 19th centuryeconomic development:imperialism1. Britainthe Bank of the world2. British imperialismcolonial imperialism ? Why did the industrial revolution first take place in England? The formation of world economy Capitalist world economy, based on the industrial revolution and the establishment of capitalist mode of production, promote the formation and development of capitalist international division of labor, international commodity exchange and world market, further the formation of world economyEmbryonic stage of world economy: end of 15 century (geographical discovery) to 1760s (capitalist primitive accumulation of Western Europe-created essential conditions of industrial revolution and the establishment of capitalist mode of production); international economic contact and relations were loose, accidental and partial Industrial revolution: 1760s to 1860s a few advanced countries in Europe and AmericaInvention of steam engine and its implication, machine factory replaced workshop of handicraft industry, dominant sector: industry instead of agriculture, international labor division1. labor division and international labor division2. two factors affecting international division of labornatural factors: natural resources, climate, soil, geographic location, and area of country etc.social factors: education, science and technology level, social and economic structure , size of domestic market, population, productive force development of countries3. the relationship of the two4. types of international labor divisionvertical / horizontal/mixed go across the national border between industry in a few European and American developed countries and agriculture in many less developed countriesThe combination of industrial revolution and establishment of capitalist mode of production result in capitalist international division of labor. Why international division of labor is the result of industrial revolution? 1819/211869/71，cotton textile production in Britain from 29.4 million pounds to over 100 million poundsexport of cotton textile to production in Britain from 52.8% to 67.1%;cotton import from 141 million pounds to 1150 million pounds Why international division of labor is the result of the establishment of capitalist mode of production?law of surplus value, law of competition and law of capital accumulation in pursuit of profit and increasing capital accumulation overseas market for sale and source of agricultural material and grain How can the combination of industrial revolution and establishment of capitalist mode of production make international division of labor possible?Capitalists in a few developed European and American countries invaded the less developed countries in Asia, Africa and Latin America where capitalist mode of production played a dominant role and destroyed their natural economy and made them gradually involved in international division of labor, international commodity exchange and world market. international commodity exchange - result of international division of labor1. International trade increased much faster.( international trade volume data calculated on the price of 1870)$100 million in 1800; $140 million in 1820;$240 million in 1840;$620 million in 1860; $1060 million in 1870during the period of these 70 years, average annual growth rate of international trade -3.4%2. Growth rate of international trade exceeded that of world industry.18401860, average annual growth rate of the former4.84%, the latter3.5%; 18601870, 5.53% and 2.9% respectively3. Importance of foreign trade increased. 1840-1870, export value in GNP, Britain-from 9% to 16% ;France from 7% to 16%; Germany from 7% to 16% world currencyForeign trade and world market result in world currency.Main functions of world currency:measure of value; means of payment; means of storagethe form of world currency - gold and silverbefore World War I, Britain took an advantageous position in world market and international credit, world currency system was gold standard with Pound in the centre; after world war II, capitalist system of world currency was established with the centre of American dollar;1973 this system finished.world market (world commodity market) 1860sdominant positionBritain, then France, Germany and Americasubordinate positionless developed countrieswhen world market was formed , capitalist world economy was formed.stages of world economy after WWIIrecovery of world economy (1945-1952)1. difficulties : 2. economic recovery in European countries and JapanGNP growth for main market economy countries (on fixed price)193819481950Belgium100115124Denmark100118135France100100121West Germany1004564Italy10092104Netherlands100114127Norway100122131Sweden100133148Swiss100125131Britain100106114The US100165179Industry production index for main capitalist countries (1948=100)1938194619481954US4658100120Britain8687100129France9074100139West Germany150100282Italy101100176Japan228641002813. reasons for economic recovery in Europe and Japan4. successful transition for the US economy high-speed growth of world economy (1953-1973)1. characteristics of high-speed growthGDP growth rate for main countries1953-19621963-1972Australia4.35.5Austria6.35.2Belgium3.64.9Canada4.25.5Denmark4.14.7Finland5.24.9France5.15.5United Germany6.84.6Italy5.84.7Japan8.710.4Netherlands4.55.4Norway3.64.3Sweden4.63.7Swiss5.24.2Britain2.72.8US2.84.0Total 4.8 5.02.reasons for the high growth ratea. third scientific and technological revolutionb. adjustment of production relations: monopoly capitalism national monopoly capitalismfinancial oligarchystagflation (1973-1982)1. characteristics of stagflationaverage GDP growth rate for capitalist countries(%)country1965-19731974-1983Spain6.41.8Ireland5.03.2Italy5.22.2New Zealand3.70.8Belgium5.21.8US2.81.1Austria5.52.8Netherlands5.51.5Japan9.84.3France5.52.5Finland5.32.7Germany4.62.1Australia5.62.4Denmark3.91.8Canada5.22.3Sweden3.61.3Norway4.03.7US3.22.3Swiss4.20.7total4,72.4Annual average growth rate of consumer price index (%)1951-19731974-1981US2.79.4Japan5.29.1Germany2.74.9France5.011.4Britain4.315.4Italy3.915.9Canada2.89.7Swiss3.04.3total3.49.9Unemployment number (10 thonsand) and unemployment rate(%)196019651970197519801982USpopulation385.2336.6408.8783.0744.91067.8U of R6.55.25.59.37.69.7Japanpopulation36.559.259.0100.0114.0136.0U of R1.52.51.82.72.82.4Germanypopulation27.114.714.9107.488.4183.3U of R1.30.70.74.93.97.5Francepopulation13.014.226.244.0145.1200.8U of R1.01.01.64.77.8Britainpopulation36.833.961.897.8166.8279.3U of R1.61.42.74.16.912.0Italypopulation83.672.188.8110.7169.8206.8U of R6.45.76.57.510.39.12. reasons for stagflationdeficit finance; debt increase; monetary supply increase; increasing petroleum price; surplus production capability; international facorseconomic readjustment and reform period (1983)measures taken in this period:1. reduce government expenditure.2. lower tax rate3. reduce monetary supply4. enterprise privately owned5. industrial structure readjustmentThe component of world economy National economy of different countries or regions 1 .over 200 countries and regions capitalist economy- socialist economy developed /developing /transition economyWhat are the characteristics of these economies? 2. focus on the economies of the most important countries World market and all kinds of economic links World market: the total of international exchange activities around the world. international commodity market; capital market; labor market; technology market etc. Laws and major issues in the world economy technology progress spurs world economyeconomic globalizationregional economic integrationimbalance in world economy developmentinteraction of world economy and politicsworld economic cycle and crisissustainable development of world economyestablishment of new international political and economic orderEvolution of world economy after World War II United States as number one in world economy during the period after World War II 1. economic situation in Europe before World War II advanced industry, technology and economic power; by means of colonial control and international trade; establishment of world economic system with European countries in the centre and other countries on the peripheryWith the development of American and Japanese capitalist economy, European position was challenged, but European countries position in world economy was not changed until World War II.2. situation in and after World War IIdefeated countries-victorious countriesUnited States: far from the war, make profit by supplying arms and ammunition and surplus agricultural productsDuring the war, industrial production capacity increased, export of tangible goods increased by 2 times, import increased by 20%, capital investment increased by 34.1%.In 1945, proportion of United States industrial output in world output of all the capitalist countries 60%, international trade ratio 32.5%, gold reserve59%3. United States constructed world economic system after World War II.In international finance, United States established international currency system with American dollar playing an important role.Bretton Woods system: foreign exchange liberalization, capital liberalization and trade liberalisationin July, 1944 ,44 countries participated in international currency and financial conference- Bretton Woods Conferenceat the end of 1945, established IMF(International Monetary Fund) and IBRD (International Bank for Reconstruction and Development)convertible freely between American dollar and gold; fixed foreign exchange rate between American dollar and other currency,After World War II, people said with some exaggeration that the world was in fact on a dollar standard. The American dollar was the key currency in terms of which international trade and finance were carried on. Private and governmental reserves were kept largely in the form of dollar balances (i.e., in cash, bank deposits, and liquid short-term dollar securities). Where before 1914 the pound had been king, by 1945 the dollar was established as the key currency.In international trade, the US gave impetus to trade liberalization. In 1947, established GATT (General Agreement on Tariffs and Trade)aimed at lowering trade barriers to export American goods and occupy market share in world market.USs policy towards West European countries and Japan:Marshall Plan for European recovery: proposed by Secretary of State Marshall when giving a speech in Harvard University in 1947until June of 1952, $ 1.315 billion foreign aid, 10% of the total by loanfor Japan: Relief Fund and Rehabilitation Fund for occupied regions, $2.4 billion to meet the immediate postwar emergency needs, and forced Japan to open its market to the USthe Point Four Program:new colonialism toward less developed countries in Asia, Africa and Latin Americato help them acquire the technical know-how to enable them to increase their levels of productivity and living standards-this is known as the Point Four program because it was first enunciated as the fourth point in the 1949 inaugural address of President Truman. fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of undeveloped areas.I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life.We invite other countries to pool their technological resources in this.worldwide effort for the achievement of peace, plenty, and freedomForeign aid to other countries:shifted toward grants to the North Atlantic Treaty Organization(NATO) and other military alliances.(Thus, the Truman Doctrine brought financial aid to Greece when that country was threatened by communism. Even Yugoslavia has received aid.)The motive for many of these programs was the fear of the spread of communism.Policy toward socialist countries:economic and technical blockadesocialist camp with the leader of Soviet Union, different national profit and ideology from capitalist countries not join in IMF, IBRD and GATT, refused to get the loans from the US and Marshall Plan signed trade agreement and bilateral treaty among socialist countriesstrategic material embargo to socialist countries in 1947 by the US;strictly control export to socialist countries with 15 other western countries ( Britain , France, Italy etc.) isolated economic relation from each other.What is the result of the situation?Summary of world economy in this period:Stable world economic environment development of technology productivity improvement unprecedented golden age for high economic growth in 1950s and 1960s Characteristics: lasting for long, widely spread, fast growth rateannual growth rate of GDP of the world 5.1% 1955-1970( calculated by WB) the US，EU and Japan as the main actors in world economy in 1970s turbulent period of world economy with low growth rate1. big problems in international financial system from dollar shortage to dollar glutreasons for U.S. chronic international deficit:too much inflation at home;overgenerosity in the aid and military programs;lack of trust in the dollar;the rapid growth of productivity abroad;high investment abroad by American firms;quadrupled price of OPEC oil2. energy crisis caused by the conflict of the developing countries3. great changes in the economic condition of the developed countries(stagflation) fierce competition among the three regional economic groups:EUNAFTAAPECForms for integration organizationFree trade areaCustoms unionCommon marketEconomic unionComplete economic integration Reasons for eatablishing international economic integration organizationsEconomic reasons;political reasons;geographical reasons;economic profit static effects for international economic integration organizations trade creation-trade diversion dynamic effectsmarket effect;competition effect;investment inflow effect;expansion and deepening effectEuropean Economic Integration Brief introduction of EUECSC (European Coal and Steel Community)France, Germany, Italy, Luxemburg, Netherland and Belgium1952EEC(European Economic Community) and Euratom (European Atomic Energy Community)the six countries 1958Incorporated into EC(European Community) in 1967EU (European Union)Nov. 1st 1993Five enlargements:Great Britain, Denmark and Ireland in 1973;(9)Greece in 1981;(10th)Portugal and Spain in 1986;(12)Austria,Sweden and Finland in 1995;(15)Poland,Hungary,Czech,Slovakia,Slovenia,Cyprus,Malta,Estonia,Latvia etc(25)-the most ambitious one total population (0.45 billion)similar economic scale with that of t