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THE WORLD ECONOMY. EXCHANGES, CAPTIALISM, COLONIALISM, AND EMPIRE BUILDING. CHINESE RECONNAISSANCE. Ming China Expel Mongols, reestablish traditional Chinese institutions Reestablish Chinese tributary system; reestablish East Asian trade Resurrects Chinese fleet

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The world economy



Chinese reconnaissance

  • Ming China

    • Expel Mongols, reestablish traditional Chinese institutions

      • Reestablish Chinese tributary system; reestablish East Asian trade

      • Resurrects Chinese fleet

    • 2nd Ming Emperor seizes control from nephew

      • Nephew flees abroad

      • Emperor sends fleet to find nephew, reestablish Chinese influence, trade, tribute

  • The Chinese reconnaissance of the Indian Ocean basin

    • Zheng He's expeditions

      • Ming emperor permitted foreigners to trade at Quanzhou and Guangzhou

      • Refurbished the navy and sent seven large expeditions to the Indian Ocean basin

      • Purposes: to control foreign trade and impress foreign peoples

      • Admiral Zheng He's ships were the largest marine crafts in the world

      • Visited southeast Asia, India, Ceylon, Arabia, and east Africa

    • Chinese naval power

      • Zheng He's voyages diplomatic: exchanged gifts, envoys

      • Used force to impress foreign powers, for example, against coastal pirates

      • Expeditions enhanced Chinese reputation in the Indian Ocean basin

  • End of the voyages, 1433

    • Confucian ministers mistrusted foreign alliances

    • Resources redirected to agriculture and defense of northern borders

    • Technology of building large ships was forgotten, nautical charts destroyed

European exploration

  • European exploration in the Atlantic and Indian Oceans

    • Portuguese exploration

      • European goals: to expand Christianity and commercial opportunities

      • Portuguese mariners emerged as the early leaders

      • Prince Henry of Portugal determined to increase Portuguese influence

      • Seized Moroccan city of Ceuta in 1415

    • Colonization of the Atlantic Islands

      • Portuguese ventured into the Atlantic, colonized Madeiras, Azores, other islands

      • Italian investors, Portuguese landowners cultivated sugarcane on the islands

    • Slave trade expanded fifteenth century

      • Portuguese traders ventured down west coast of Africa

      • Traded guns, textiles for gold and slaves

      • Thousands of slaves delivered to Atlantic island plantations

  • Indian Ocean trade

    • Portuguese searched for sea route to Asian markets without Muslim intermediaries

    • Portuguese mariners dominated trade between Europe and Asia, sixteenth century

    • Portuguese ships with cannons launched European imperialism in Asia

  • Christopher Columbus hoped to reach Asia by sailing west

    • Plan rejected by Portuguese king but sponsored by king and queen of Spain

    • 1492, led three ships to the Caribbean Sea, believed he was near Japan

    • Other mariners soon followed Columbus and explored American continents

Motives for exploration

  • Portugal searched for fresh resources

    • Resource poor country block from expanding on land

    • 13th to 15th century they ventured out onto Atlantic

    • Established sugar plantations in Azores, Madiera

  • Direct trade without Muslim intermediaries

    • Bypass Italian trade monopolies with Ottomans

    • Asian spice trade

    • African gold, ivory, and slaves

  • Missionary efforts of European Christians

    • Christians urged to spread the faith throughout the world

    • Crusades and holy wars against Muslims in early centuries

    • Reconquista of Spain inspired Iberian crusaders

  • Motives

    • Gold, glory, God

    • Combined and reinforced each other

Influence of technology

  • New technologies help Europeans travel offshore

    • Sternpost rudder

    • Two types of sails

    • New types of ships

    • Advance, sail against wind

  • Navigational instruments

    • Magnetic compass

    • Astrolabe (and cross and back staffs)

  • Knowledge of winds and currents

    • Enabled Europeans to travel reliably

    • Trade winds north and south of the equator

    • Regular monsoons in Indian Ocean basin

    • The volta do mar

Voyages of exploration

  • Henrique, King of Portugal

    • Encouraged exploration of west Africa

    • Portuguese conquered Ceuta in north Africa in 1415

    • Established trading posts at Sao Jorge da Mina, west Africa

    • Dias rounded the Cape of Good Hope, entered Indian Ocean, 1488

  • Vasco da Gama of Portugal

    • Crossed Indian Ocean; reached India, 1497

    • Brought back huge profit

    • Portuguese merchants built a trading post at Calicut, 1500

  • Christopher Columbus, Genoese mariner

    • Proposed sailing to Asian markets by a western route

    • Sponsored by Catholic kings of Spain; sailed to Bahamas in 1492

  • Columbus's voyage inspired others

    • England, France, Holland begin to explore

    • Spain, Portugal sent out more expeditions, conquistadors

Other voyages

  • Ferdinand Magellan, Portuguese navigator, in service of Spain

    • Crossed both the Atlantic and Pacific Oceans 1519-1522

    • One ship out of five completed the circumnavigation of the world

    • Magellan died in conflict in a Philippine island on the way home

  • Exploration of the Pacific took three centuries to complete

    • Trade route between the Philippines and Mexico, by Spanish merchants

    • Other European mariners searched for a northwest passage from Europe to Asia

  • The English, French, Dutch

    • France: Explored Northern North America, Settled Canada, exploited furs

    • English

      • Atlantic seaboard of North America, Hudson Bay area

      • English East India Company opened Indian Ocean to English trade

    • Dutch

      • Tended to prey on Spanish, Portuguese existing holdings

      • Won independence from Spain, seized control on much of Indian Ocean

      • Dutch East India company established to exploit Indian possessions

  • By 18TH century, Europeans had accurate knowledge of the world

Global exchanges

  • Biological exchanges between Old and New Worlds

    • Columbian Exchange

      • Global diffusion of plants, food crops, animals, human populations, diseases

      • Columbus's voyages began and explorations furthered exchange

      • All continents effected

    • Permanently altered the earth's environment

  • Epidemic diseases

    • Smallpox, measles, diphtheria, whooping cough, and influenza

    • Led to staggering population losses

    • Smallpox reduced Aztec population by 95 percent in one century

    • Contagious diseases had same horrifying effects in the Pacific islands

    • Between 1500/1800, 100 million people died of imported diseases

  • New foods and domestic animals

    • Wheat, horses, cattle, sheep, goats, and chickens went to Americas

    • American crops included maize, potatoes, beans, tomatoes, peppers, peanuts

  • Growth of world population: from 425 million in 1500 to 900 million in 1800

  • Migration of human populations

  • Enslaved Africans were largest group of migrants from 1500 to 1800

  • Sizable migration from Europe to the Americas

Origins of european trade

  • European intermediaries

    • Comparative Advantage

      • Country can do many things but it will excel in some over others

      • Countries develop trade based on comparative advantage

        • Advantage is based on where the nation has greatest advantage

        • Concentrate economic resources in that area

      • European advantage was to act as middle men and shipping for others

    • Absolute Advantage

      • One country has natural advantage in producing certain goods, services

      • Absolute advantage is often a natural monopoly

      • Asians produced spices, goods, which Europeans could not

      • Europeans began by trading with silver, gold

    • European establish monopolies

      • Europeans establish chock points at areas where all trade had to pass

      • Seized lands where spices grown, destroy competition, create monopoly

  • Transoceanic trade

    • European merchants created global trading system

    • Based on supply and demand; linked ports of the world

  • Manila galleons

    • Heavily armed ships sailed between Manila, Mexico

    • Asian luxury goods to Mexico; Silver from Mexico to China

    • East Asia became dependent on American silver

World trade

  • Terms of Trade

    • Agreements on what will be exchanged

    • Agreements on payments, amounts to be exchanged

    • Bilateral is when two nations negotiate equally

      • Europeans had to negotiate with China, Japan, Muslims, Russia (too powerful)

      • Only allowed to trade though one port

        • Canton (Guangzou) in China

        • Nagasaki in Japan

    • Unilateral is when one nation dictates terms of trade

  • Composition of Trade

    • Europe and Trade

      • Europeans traded finished goods, especially manufactured( Guns, cloths)

      • Europeans purchased unfinished goods to trade (Silver, sugar)

      • Europeans sought luxuries, spices, slaves, gems, silks, porcelain

    • World and Trade

      • Low-cost goods: gold, silver; sugar, spice, tobacco, cotton; slaves

      • Africa, Latin America became one commodity exporters

      • E. Europe sold commodities through W. Europe (grains, timber, tar, fish)

      • E. Asia, S. Asia, S.E. Asia, S.W. Asia: balanced agreements of trade

  • Balance of Trade

    • Amount to the profit or loss involved in trade

    • Europeans had an enormous surplus or positive balance of trade

International inequalities

  • International Inequality

    • Center or Core of world trade was Western Europe

      • Most of world in an unequal relationship to Europe

      • Most countries did not control own economies

    • Local trading elites often grew rich trading

      • Worked with Western Europeans on seas, coasts

      • Controlled their own interior economies

    • Most of locals not involved in world economy

      • Population existed at subsistence level

      • Contacts limited to coasts, ports

  • Coercive Labor

    • Most of world labor was unfree

    • Slavery differed little from serfdom, caste slavery, peasants

    • Profits often depended on keeping labor cheap

    • Europeans often established plantations with cheap labor

Was there a world economy c 1600

  • Yes

    • Western Europe

      • European Atlantic Seaboard

      • Colonial possessions in North America, South America

    • Poland and Russia

    • Coasts of West, East Africa

    • Coasts of India, S.E. Asia, E. Asia

    • Muslim S.W. Asia

  • No

    • European areas of Ottoman Empire

    • Interior of Africa

    • Interior (steppes, deserts) of Eurasia

    • Interior of South Asia

    • Indochina

    • Australia and New Zealand

    • Interior of North and South America

    • Pacific islands of Micronesia, Polynesia, Melanesia

East asia

  • Benefited from global trade

    • Allowed Limited Contacts

      • Strong government disincentives to trade

      • Used Chinese navy to keep pirates, Europeans out

      • Tended towards official isolation

      • Japan, Korea equally apprehensive

    • Chinese manufacturing better than Europeans

      • Tended towards luxury goods

      • Chinese demanded silver in payment

    • Not active participants on scale of Europe

  • China failed to appreciate European threat

    • Neo-Confucianism clouded understanding

    • Technology considered beneath Chinese

    • Profits, trade considered inferior occupations

  • Japan understood impact of Europeans

    • Most troubled by European firearms as un-samurai

    • Eventually limited trade to one yearly ship at Nagasaki

    • Officially closed Japan until 1854

Other parts of world

  • Muslim World: Mughal India, Ottomans, Safavids

    • Interested in trade, cooperated to a degree

    • Allowed small port colonies to arise

    • External trade often handled by ethnic minorities

    • Exchanged goods for silver, luxuries, processed goods

    • Eventually became dependent on European manufactured goods

    • Internal expansion, development over external trade

  • Russia

    • Agricultural economy

    • More concerned with steppe nomads, internal problems

    • Not involved until 18th century

  • Africa

    • Except for coasts, Cape Colony generally outside world economy

    • Diseases, climate kept Europeans out of Africa

    • Contacts limited to coastal states

Colonial expansion

  • The Americas

    • Spain: Began with control of Caribbean, Invaded Mexico 1521, Peru 1531

    • Portugal: Cabral visit coast of Brazil; Treaty of Tordesillas granted Brazil

    • Colonies developed

      • By small band land hungry conquistadors, colonial rulers exploit Indians

      • Only later did formal Iberian rule replace corrupt conquistators

    • Direct Rule

      • Colonial administrators sent out from Spain, Portugal

      • Established agricultural (ranching or plantation) colonies

      • Colonial societies with Europeans at top created rarely had European majorities

      • Missionaries sent out to covert Indians

  • English, French, Dutch create smaller empires on fringes

    • Caribbean holdings more profitable than North American colonies

    • Caribbean islands and Southern American colonies

      • Export sugar, rice, tobacco, cotton, indigo rice

      • Dominated by slaves, plantations; relied on importation of Africans for labor

    • Atlantic Seaboard: settler colonies for Europeans (called Neo-Europes)

      • Land grants made to encourage colonization

      • European populations surpassed native Indians

      • European society, economic systems reestablished; mini copies of Western European

      • Europeans displaced, drove off most Indians and converted land to agriculture

Trading post empires

  • No attempt to create empires but control trade, wealth

  • Portuguese built 50+ posts between west Africa and east Asia

    • Alfonso d'Albuquerque

      • 16TH century Portuguese commander in Indian Ocean

      • Seized Hormuz in 1508, Goa in 1510, and Melaka in 1511

      • Forced all merchant ships to purchase safe-conduct passes

    • Portuguese hegemony grew weak by the late sixteenth century

  • English, Dutch established trading posts in Asian coasts

    • English in India, the Dutch at Cape Town and Indonesia

    • Created efficient commercial organization

      • Joint-stock company

        • Shares could be bought by anyone with money

        • % of shares correspond to percentage of profit due

        • Allowed for larger, richer entities to operate

        • Limited risk of any one participant to cost of the stock purchased

        • Privileges, terms often guaranteed by government, which often also owned stock

      • Insurance

        • Companies arose which insured ventures

        • Lloyds of London is the oldest in world

  • Formation of powerful, profitable joint-stock companies

    • English East India Company, founded in 1600

    • United East India Company (VOC), Dutch, founded in 1602

    • Private enterprises, enjoyed government support, little oversight

Europeans in indian ocean

  • Posts were commercial ventures not areas of colonization

  • Portuguese controlled area initially

    • Established ports in India, dominated trade to, from India

      • Goa was capital for Indian Ocean Portuguese Empire

      • Conquered Sri Lanka, several other ports with permission of Mughals

      • Introduced Catholic missionaries to Indian Ocean

    • Seized port of Malacca on Malay peninsula to do same as in India

      • Traded with locals for spice

      • Later conquered parts of Spice Islands

  • Spanish conquest of the Philippines

    • Manila, bustling port city, became Spanish capital; Spanish tended to live in cities

    • Islands divided into plantations to grow sugar

    • Spanish, Filipinos massacred Chinese merchants

    • Christianity spread by Dominicans throughout archipelago

    • Muslim resistance on southern island of Mindanao

  • Conquest of Java by the Dutch

    • Began with VOC trading city of Batavia in 1619

    • Drove Portuguese out, seized their possessions

    • Policy: secure VOC monopoly over spice production, trade

    • Enormous monopoly profit led to prosperity of Netherlands

    • Forced locals to grow rich, coffee in place of regular crops

  • English arrive 17th century to attack Portugal, later displaced Dutch

    • Establish British East India Company

    • Relied heavily on Royal backing, Royal navy, and acquisition of Indian lands

Commerical rivalries

  • Global competition and conflict

    • Dutch forces expelled most Portuguese merchants from southeast Asia

    • Conflict between English and French merchants over control of India

      • Began as rivalry with Portuguese

      • Each side made alliances with local rulers to establish trading rights

      • Cotton and tea from Ceylon, early eighteenth century

    • Competition in the Americas among English, French, and Spanish forces

  • Anglo-Dutch Wars (1640s to 1670s)

    • English and Dutch fight three wars for control of seas

    • English win and take New Netherlands (New York); Dutch reduced in world role

  • War of Spanish Succession (1704-1714)

    • Hapsburg family has no heirs to Spanish throne

    • France set to inherit empire; England, Dutch, Austrians oppose

  • The Seven Years' War (1756-1763)

    • In Europe: British and Prussia against France, Austria, and Russia

    • In India: fighting between British and French forces, each with local allies

    • In the Caribbean: Spanish and French united to limit British expansion

    • In North America: fights between British and French forces

  • Outcome of All: British hegemony

    • British gained control of India, Canada, Florida

    • Dutch allowed to retain Ceylon, South Africa, Indonesia as English allies

    • In Europe, Prussian armies held off massive armies of the enemies

    • War paved the way for the British empire in the nineteenth century

    • British influence paramount in Latin America

Early capitalism

  • First arose in Italian city-states, Dutch controlled Netherlands

  • Early capitalism and proto-industrialization

    • Capitalism is use of capital, money, investments to create industry, profit

      • Relies on freedom to invest capital in most profitable venture

      • Relies on minimal government regulation and right of investors to make a profit

    • The nature of capitalism

      • Private parties sought to take advantage of free market conditions

      • Economic decisions by private parties, not by governments or nobility

      • Forces of supply and demand determined price

    • Supply and demand

      • Merchants built efficient transportation and communication networks

      • New institutions and services: banks, insurance, stock exchanges

    • Joint-stock companies like EEIC and VOC organized commerce on a new scale

    • Capitalism actively supported by governments, especially England, Netherlands

      • Protected rights of private property, upheld contracts, settled disputes

      • Chartered joint-stock companies authorized to explore, conquer, and colonize distant lands

    • The putting-out system of seventeenth and eighteenth centuries

      • Entrepreneurs bypassed guilds, moved production to countryside

      • Rural labor cheap, cloth production highly profitable

  • Mercantilism is government supported national capitalism

    • Nations should not important products from outside its own empire

    • Goods should be shipped only on national ships

    • National tariffs, taxes discourage importation, stimulate local production

    • Economic health reflected in positive balance of trade

    • Wealth measured in positive amounts of gold, silver earned

    • All currencies backed by gold, silver

Early capitalist societies

  • Mindset about capitalism

    • Profits and ethics

      • Medieval theologians saw profit making as selfish and sinful

      • Renaissance altered concepts of wealth, profit

    • Reformation

      • Protestants saw success as vindication of God’s favor

      • Many Protestants in upper middle class, Protestant states supported capitalism

  • Population growth and urbanization

    • Population growth

      • American food crops improved Europeans' nutrition and diets

      • Increased resistance to epidemic diseases after the mid-seventeenth century

      • European population increased from 81 million in 1500 to 180 million in 1800

    • Urbanization

      • Rapid growth of major cities (Paris from 130,000 in 1550 to 500,000 in 1650)

      • Cities increasingly important as administrative and commercial centers

  • Social change in early modern Europe

    • Early capitalism altered rural society

      • Societies became monetary based and not barter

      • Improved material standards if grains sold for high profits

        • Increased financial independence of rural workers

        • Society would prosper as individuals pursued their own interests

        • New propertied classes, especially urban middle classes began to appear

      • Capitalism created problems

        • Generated deep social strains

        • Aristocrats, peasants on fixed incomes, payment of wealth in kind hurt

        • Crime associated with wealth, poverty arose

        • Massive importation of gold, silver led to massive inflation

    • The nuclear family strengthened by capitalism

      • Families more independent economically, socially, and emotionally

      • Love between men and women, parents and children became more important

European impacts

  • Western Europe

    • Commercial impacts

      • Beginning of Commercial Revolution, Capital Revolution, Price Revolution

      • Incredible wealth generated

      • Wealth funds European internal development

      • New products, foods imported

    • Diplomatic impacts

      • European trans-Atlantic empires created

      • Colonial rivalries

      • War for colonies

    • Social Impact

      • Rise of groups with wealth based on money not land

      • Rise of cities, urban groups

      • Commercialization made new products available

      • Dependence on agriculture reduced

    • Intellectual Impact

      • European ideas, religions, philosophies began to spread abroad

      • Europeans began to borrow foreign ideas if it suited their needs

      • Contacts with the world challenged traditional European beliefs

New world order

  • All continents eventually connected by trade

    • American silver, foodstuffs spread throughout world

    • Terms of trade tend to favor Western Europeans for first time

    • Commerce generateS wealth which only agriculture had in past

    • Europeans began to dominate world trade

    • Increase of unfree labor systems to support commercialization

      • Rise of Atlantic Slave trade

      • Spread of serfdom in Russia

  • Changes in non-European social classes

    • Non-European landowners in Asia make money from trade, too

    • Muslim merchants largely replaced by European merchants

    • Rise of African slave trading states, kings who made great wealth