Classical Globalisation 1870-1914

Question 1

Para 1 Point:

Answer 1

Cheaper shipping led to convergence

Question 2

Para 1 Facts:

Answer 2

• prices in Liverpool were higher than New York but then the transport costs fell making it cheaper and closer to New York’s prices
• this made long distance trade now a viable option
• this lowered food prices in Britain, grain was cheaper, lowering the cost of living and raising real wages
• farmers now earnt closer to world market prices.
• as the global demand for grain rose, land rents and farm profits boomed in US Midwest and Argentina.
• this then led to increased railroad construction.
• closing the income gap between rich Europe and agricultural exporters.

Question 3

Para 1 Historian:

Answer 3

Offer, Britain also had a “cheap-food” policy, no tariffs on grain, magnifying real wage gains.

Question 4

Para 2 Point:

Answer 4

Mass migration shifted workers to where they were most valuable.

Question 5

Para 2 Facts:

Answer 5

• over 45 million Europeans emigrated west (mainly to the U.S, Canada, Argentina and Brazil).
• reducing Europes labour supply workforce growth slowed to 0.8% per year. Which drove up wages.
• the influx of migrants increased the labour supply, pulling wages lower and narrowing the gap between high income and low income regions.
• migrants sent back huge remittances funnelling income into poorer economies and reinforcing this income convergence.
• there was some political backlash such as the Chinese exclusion act 1882 in the US.

Question 6

Para 2 Historian:

Answer 6

Taylor, remittances acted as “invisible capital flows” linking poor and rich regions.

Question 7

Para 2 Evaluation:

Answer 7

Clemens, points out that wages in 1913 were still much higher in southern Europe arguing full convergence was never met.

However, it is the converging trend that matters, and the wage comparisons using nominal values narrowed the gaps further.

Question 8

Para 3 point:

Answer 8

Capital flows into less developed countries.

Question 9

Para 3 Facts:

Answer 9

• European investors exported 5% of GDP each year and by 1914 Britain alone held around half of the world’s foreign assets.
• Argentina, expanded their railways massively 1860 onwards.
• Grain exports also quadrupled, and GDP per capita rose helping to close the income gap.
• even in smaller European economies such as Denmark benefitted from British loans to fund dairy co-ops and exports docks
• shows it wasn’t just the new world that gained.

Question 11

Para 3 Historian:

Answer 11

Taylor, researched Argentina extensively, showing how capital deepening (more tools and infrastructure) led to a faster catch up. These poorer countries was just missing capital to build the infrastructure that could develop them.

Question 12

Para 3 Evaluation:

Answer 12

These did impose financial vulnerabilities as there was a huge reliance on foreign capital such as the later Baring crisis in Argentina.

However, temporary shock in a broader pattern of transformative growth, and all developing countries experience finance volatility.