Chapter 9 Flashcards
(14 cards)
What is the little divergence?
The period when Northern Europe went on to undergo unprecedented growth after the Black Death. Real wages increased in Northern Europe after 1600 whilst they still declined in Southern Europe.
What is convergence
Where the wage level or price come to the same level
What is market integration??
Key mechanism is the price. Smaller markets join together to form larger market so there is convergence.
Relationship between transport costs, commodity price and real wages
- Lower transport costs mean it is more accessible and international food arrives before the expiration date and decrease in commodity prices, and the comparative advantage of international nations can be passed on as the high cost of transport is no longer there.
- Greater employment chances if there is increasing demand for goods
- Increasing specialisation leads to greater wages
- Cheaper good takes up less wages so more disposable income. Improvement in purchasing power.
- Incentive to innovate transport so increasing
- Increasing trade leads to increasing wages
Mass migration and convergence
Mass migration into America (E.g from Ireland) real wages risen in Ireland because there is less people so less competition therefore scarcity leads to labour being valued more. Whilst in America, due to greater competition, there was a reduction in wages leading to a convergence.
Factors that cause convergence:
Improvement in living standards
General investment in poorer countries
Schooling
Competition and specialisation
Winners and losers of globalisation
- British manufacturers - Market size for the manufacturer increases as they can sell internationally
Looses
- Slaves
- European Farmers - Facing competition from the new word grains so now they have access to global products.
Heckscher-Ohlin model:
Pattern of trade driven by comparative advantage
Depends on factor endowments
Price of coal
1840: 8 shillings per ton of coal
1910: 8 shillings per 2 tons of coal
How many slaves weer captured?
12.5 million people
What was the system of agriculture based on?
Gang-agriculture system
Women worked long hours after giving birth
After emancipation, black people were discriminated against
What was the return for lenders between 1897-1909?
UK: 1%
Oversea: 10%
What was the interest rate for borrowers in periphery from 1870 to 1910?
Interest rates converge from 10% more to 3%
Increase in investment rates
Since Japan opened themselves to trade in 1858, what happened to wages?
67%
Rents fell by 80%
