Topic 9 - Globalisation, Growth and Development

Question 1

Define economic globalisation.

Answer 1

A sustained reduction in barriers that allows goods, services, capital, labour and ideas to cross borders more freely, integrating markets and encouraging price‐ and wage‐convergence.

Question 2

What years mark the ‘first great wave’ of globalisation?

Answer 2

Circa 1850–1914.

Question 3

Which two twin forces drove the 19th‑century surge in globalisation?

Answer 3

Falling transport costs (technology) and liberal trade policies.

Question 4

Give two examples of 19th‑century transport innovations that cut freight costs.

Answer 4

Ocean‑going steamships and transcontinental railways (plus canals and refrigeration).

Question 5

What was the British policy reform of 1846 that signalled trade liberalisation?

Answer 5

Repeal of the Corn Laws.

Question 6

Name the 1860 commercial treaty that spread MFN clauses in Europe.

Answer 6

Cobden–Chevalier Treaty (UK–France, 1860).

Question 7

State the basic prediction of the Heckscher‑Ohlin model (1919/1933).

Answer 7

Countries export goods that intensively use their abundant factors and import goods using their scarce factors.

Question 8

According to Heckscher‑Ohlin, what was Europe’s comparative advantage circa 1870?

Answer 8

Manufactures (capital- and labour-intensive goods) because Europe was land‑scarce but labour‑abundant.

Question 9

Which two prices converged most dramatically between Britain and the US 1870‑1914?

Answer 9

Wheat prices and unskilled real wages.

Question 10

What is Factor Price Equalisation and who formalised it?

Answer 10

Under free trade and identical technology, factor prices (wages, rents) will equalise across countries; formalised by Paul Samuelson, 1948.

Question 11

Explain the Stolper‑Samuelson theorem (1941).

Answer 11

Trade benefits the abundant factor and harms the scarce factor within each country by altering relative goods prices.

Question 12

Which group in late‑19th‑century America opposed mass European immigration, and why?

Answer 12

Unskilled native workers; immigration depressed their wages.

Question 13

Which US tariffs reflected industrial opposition to British competition in the 1890s?

Answer 13

The McKinley Tariff (1890) and the Dingley Tariff (1897).

Question 14

What labour‑market institution spread in Europe partly as a pro‑globalisation ‘labour compact’?

Answer 14

The welfare state / social insurance (e.g., Bismarckian programmes).

Question 15

Name the economist who argued that openness was compatible with big government (the ‘compensation hypothesis’).

Answer 15

Dani Rodrik, 1998.

Question 16

Which catastrophic event ended the first globalisation era?

Answer 16

World War I (1914–18).

Question 17

What inter‑war US tariff exemplified the retreat into protectionism?

Answer 17

Smoot‑Hawley Tariff Act, 1930.

Question 18

Define the Gold Standard and its role in 19th‑century globalisation.

Answer 18

A monetary system where currencies were convertible into a fixed quantity of gold, lowering exchange‑rate risk and facilitating capital flows.

Question 19

Who proposed the Gravity Model of trade and in what year?

Answer 19

Jan Tinbergen, 1962.

Question 20

What does the Prebisch–Singer thesis (1950) claim about primary‑commodity terms of trade?

Answer 20

That they exhibit a long‑run decline, disadvantaging developing exporters.

Question 21

Give two critiques of the Heckscher‑Ohlin model in historical context.

Answer 21

Assumes identical technology; neglects scale economies and intra‑industry trade; empirical ‘Leontief paradox’.

Question 23

Which economist highlighted the ‘Great Divergence’ in incomes despite globalisation?

Answer 23

Kenneth Pomeranz (2000) ; or Jeffrey Williamson showed delayed convergence for the Global South.

Question 24

What does the ‘Rodrik trilemma’ (2000) state?

Answer 24

Countries can choose at most two of: deep globalisation, national sovereignty, and mass politics/democracy.

Question 25

Identify one benefit and one cost of mass migration 1870‑1914 for sending countries.

Answer 25

Benefit: higher real wages via labour‑supply reduction; Cost: brain drain and demographic hollowing.

Question 26

Who coined the term 'hyperglobalisation' and what does it imply?

Answer 26

Dani Rodrik (2011); a depth of integration that constrains domestic policy autonomy.

Question 27

How did European grain tariffs in the 1880s reflect Stolper‑Samuelson politics?

Answer 27

Landowners (scarce factor) lobbied for protection against cheap New World grain to defend rents.

Question 28

Name a Latin American country that adopted outward foreign borrowing to fund railways 1870‑1914.

Answer 28

Argentina (also Brazil or Mexico).

Question 29

Explain the concept of 'commodity‑price convergence'.

Answer 29

The narrowing of price gaps for homogeneous goods across regions as trade costs fall.

Question 30

Which 19th‑century economist saw international capital flows as a 'leak' that could hinder domestic investment?

Answer 30

John Maynard Keynes, notably in early 20th‑century writings on Indian currency and capital exports.

Question 31

State Polanyi's (1944) central critique of liberal market globalisation.

Answer 31

That self‑regulating markets disembed the economy from society, provoking social protection movements.

Question 32

What were 'most‑favoured‑nation' clauses designed to achieve?

Answer 32

Automatic extension of the lowest tariff rate negotiated with one partner to all other signatories, preventing discrimination.

Question 33

Give an example of technological change that enabled trade in perishables.

Answer 33

Mechanical refrigeration (1870s) allowing shipment of chilled beef from Argentina/Australia to Europe.

Question 34

Which theory predicts capital should flow from rich to poor countries and who formalised it?

Answer 34

Neoclassical marginal‑product theory; formalised by Robert Solow (1956) and applied by Lucas (1990 'Why Doesn't Capital Flow...').

Question 35

What puzzle did Robert Lucas (1990) highlight about global capital flows?

Answer 35

Capital does not flow in large quantities to poor countries despite high marginal returns predicted.

Question 36

What is 'terms‑of‑trade' and why does it matter for developing countries?

Answer 36

Ratio of export prices to import prices; deterioration reduces real income from exports.

Question 37

Identify one policy instrument used post‑1945 to rebuild multilateral trade.

Answer 37

General Agreement on Tariffs and Trade (GATT, 1947) tariff‑cutting rounds.

Question 38

Which index measures openness by dividing total trade by GDP?

Answer 38

Trade‑to‑GDP ratio (Openness index).

Question 39

Explain 'path dependence' in the context of late‑comer industrialisation.

Answer 39

Historical accidents and initial conditions can lock countries into certain development trajectories, as argued by Gerschenkron (1962).

Question 40

Which author emphasised that trade integration could exacerbate within‑country inequality?

Answer 40

Anthony B. Atkinson and Thomas Piketty (various; but lecture likely references Williamson, 1997 or Milanovic).