Unit V - Trade, First Globalisation Origins, Export-Led Growth Model, Inequality and Conflict

Question 1

What is the main outcome of trade according to Williamson (2011)?

Answer 1

Trade benefited both industrial and non-industrial nations, but industrial countries benefit more than others.

This is referred to as the Win-Win Policy, but it also highlights Relative Divergence.

Question 2

What did the historical context of the 1910s focus on in Europe?

Answer 2

Efforts centered on war, with no capacity to export industrial goods.

Question 3

What economic event occurred in 1929?

Answer 3

The price of US stocks collapses, leading to capital flight back to the US looking for safety.

Question 4

What was a significant impact of the Great Depression on luxury household consumption?

Answer 4

Demand for luxury household consumption drops in both the US and Europe.

Question 5

True or False: After World War I, protectionism rose worldwide.

Answer 5

True

Question 6

What happened to global trade as a percentage of GDP during the 1930s?

Answer 6

Trade (% GDP) falls by 100%, from 12-14% to 6-7%.

Question 7

What caused the collapse of the Gold Standard?

Answer 7

Capital flights back home looking for safety and rising economic nationalism.

Question 8

What was the effect of the Tocqueville Effect?

Answer 8

Economic progress leads to new demands for change in social aspects such as education and institutions.

Question 9

Fill in the blank: The Colombian ‘Violence’ period began in the ______ century.

Answer 9

19th

Question 10

What was the overall impact of the Great Depression on Latin America?

Answer 10

Destabilized the macroeconomic and trade environment, leading to a collapse in international order.

Question 11

What were the internal causes of the export-led crisis?

Answer 11

The export-led growth model failed to answer new demands from rising social classes.

Question 12

What was the average tariff rise from the 1920s to the 1930s?

Answer 12

From 10% in the 1920s to 40% in the 1930s.

Question 13

What was the effect of the Great Default in 1931?

Answer 13

All except Argentina experienced a default.

Question 14

What was a significant consequence of macroeconomic shocks post-1929?

Answer 14

Collapse of tax revenues dependent on trade.

Question 15

What is the relationship between trade deficits and the gold flow according to the Automatic Adjustment?

Answer 15

If a country experiences a trade deficit, gold flows out of the country.

Question 16

Fill in the blank: The value of a country’s currency was linked to a fixed quantity of ______.

Answer 16

gold

Question 17

What was the effect of the Gold Standard on inflation in Latin America?

Answer 17

It acted as a brake on inflation and excessive borrowing.

Question 18

What did the Gold Standard limit regarding government actions?

Answer 18

It limited the flexibility to run deficits or fund expansive policies through borrowing.

Question 19

What were the prospects for growth in Latin America after 1929?

Answer 19

Falling international demand and trade disruptions/barriers.

Question 20

What was the result of the macro effects of the crisis in Latin America?

Answer 20

Macro imbalances led to incapacity to sustain imports and pay rising public debt.

Question 21

What social change was inspired by rising organized labor in the 1910s?

Answer 21

Demand for social change inspired by social gains in Europe, the US, and Russia.

Question 22

What was the impact of external dependence on Latin American economies?

Answer 22

It led to volatility due to macroeconomic shocks.

Question 23

What did the gold standard act as a brake on?

Answer 23

Inflation and excess borrowing in Latin America

The gold standard limited the money supply to gold reserves, which helped control inflation.

Question 24

What was a limitation of the gold standard?

Answer 24

It limited economic responses to shocks and crises

Question 25

Which countries in Latin America were affected worse by macro shocks?

Answer 25

Chile and Argentina ## Footnote These countries had less diversified economies compared to Brazil and Mexico.

Question 26

What major international event caused a banking crisis in the 1930s?

Answer 26

The Great Default: 1931-1935

Question 27

What were some responses of Latin American governments during the 1930s crisis?

Answer 27

* Exchange controls * Freeze of public investment * Repress imports (through tariffs) * Restore exports (via subsidies/price valorization)

Question 28

What was the state’s role in stimulating the economy during the 1930s crisis?

Answer 28

States played a bigger role to stimulate demand and investment

Question 29

What significant political change occurred in Brazil in 1930?

Answer 29

The Revolution of 1930 led to the end of the Old Republic and the rise of Getúlio Vargas

Question 30

What was the price of coffee in 1929 and its price in 1931?

Answer 30

22.5 cents in 1929 and plummeted to 8 cents in 1931

Question 31

What action did the state take to support coffee planters during the crisis?

Answer 31

Purchased excess coffee and destroyed some of it

Question 32

What was the average tariff trend in Latin America during the 1920-30s?

Answer 32

Latin America raised average tariffs to repress imports

Question 33

What was the purpose of the public housing program initiated by President Pedro Aguirre Cerda?

Answer 33

To address urban housing shortages exacerbated by the Depression

Question 34

What did the Ministry of Education and Public Health Building reflect?

Answer 34

Vargas’s commitment to modernization

Question 35

What was the effect of new policies in Latin America by the mid/late 1930s?

Answer 35

Fast economic recovery

Question 36

What was the growth focus of Latin America after the 1930s crisis?

Answer 36

State-led industrialization and internal demand

Question 37

What was CORFO established for in Chile?

Answer 37

To promote industrialization

Question 38

What was the inward-looking shift in Latin America characterized by?

Answer 38

State-led industrialization as a pragmatic necessity

Question 39

What were the consequences of the macro shocks on Latin American economies?

Answer 39

* Drop in trade * Capital flight * Increased exposure to international demand

Question 40

What was the nature of the transition to a new development model in Latin America?

Answer 40

A succession of macroeconomic shocks with pragmatic government responses

Question 41

What was the trend of economic growth in Latin America after state-led industrialization?

Answer 41

Latin America grew more than before and initially outperformed most of the world

Question 42

What was a caveat regarding the new growth model after the 1950s?

Answer 42

The model started losing steam in Latin America and the region fell behind