The Making of a Global World Class 10 History Notes

The Making of a Global World Class 10 History Notes are given here with proper sequential headings as per the textbook. These notes comprehensive and well designed with key points so that students are able to understand and prepare well for their exams.

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The Making of a Global World Notes for Class 10 History CBSE


Theme: The Making of a Global World

  • The Pre-modern world
  • The Nineteenth Century (1815-1914)
  • The Inter war Economy
  • Rebuilding a World Economy: The Post-War Era

Learning Objectives

  • Show that globalization has a long history and point to the shifts within the process.
  • Analyse the implication of globalization for local economies.
  • Discuss how globalization is experienced differently by different social groups.

1. The Pre-Modern World

How Was the World Connected in The Pre-modern Times?

Global interconnection

  • The movement of people, goods and services across nations has been termed as globalisation.
  • From ancient times, people have moved or migrated from one nation to another – as travellers to discover new routes or countries, as priests and pilgrims, as traders, to escape persecution, to spread religion, to obtain knowledge and for better employment opportunities 
  • They carried goods, money, values, skills, ideas, inventions and even germs and diseases from one place to another.
  • Remains from Indus Valley Civilisation dating to 3000 BC reflect active coastal trade links with West Asia. 
  • Cowries, used as a form of currency in India, have been found in China and East Africa pointing to active trade links.

The Silk Route and Its Importance

The silk routes are good examples of vibrant pre-modern era trade and cultural links between distant parts of the world.

  • The silk routes are known to have existed since before the Christian Era and thrived almost till the 15th Century.
  • The name ‘silk routes’ points to the significance of the West-bound Chinese silk cargoes.
  • Historians have identified several silk routes that linked Asia with Europe and northern Africa.
  • These routes were used by traders to trade goods from one country to another like the Chinese used it to export silk to other countries
  • Chinese pottery, Indian textiles and spices travelled to Europe while silver and gold came from Europe to Asia.
  • Trade and cultural exchange always went hand in hand.
    • Buddhism, which originated in eastern India, spread in different directions through intersecting points on the silk routes.
    • Early Christian missionaries and Muslim preachers used the Silk route to reach Asia.

Travel of Spaghetti and Potato

  • Until five centuries ago, many of our common foods such as potatoes, soya, groundnuts, maize and tomatoes were not known to our ancestors.
  • Travellers and traders introduced new crops to the land where they went.
  • It is believed that noodles travelled West from China to become spaghetti.
  • The Arab traders took pasta to 5th century Sicily, an island in Italy.
  • Many of our common foods came from America’s original inhabitants as that continent was discovered by Columbus who came from Spain.  

Discovery of America

i. Christopher Columbus accidentally discovered a continent that came to be called Americas, which opened the new land to the old world.

ii. America’s original inhabitants, the American Indians, used to produce food items like sweet potatoes, maize, chillies, soya, groundnuts, tomatoes and potatoes.

iii. The discovery of America by Europeans led to these food items being transported to Europe and Asia where they became an integral part of local lifestyles.

Irish Potato Famine

i. Introduction of new crops brought drastic changes in Europe.

ii. Potato made the difference between life and death for the poor in Europe.

iii. With the introduction of potato, the poor began to eat better and live longer.

iv. The Irish farmers became so dependent on potatoes that they suffered starvation and died when a disease destroyed the potato crop in the mid-1840s.

How Did Trade, Conquests and Natural Calamities Help in Interconnecting the World?

Discovery of new sea trade routes

  • The Indian Ocean was known for its bustling trade with goods, people, knowledge, customs, etc crisscrossing its waters.
  • European sailors discovered the sea route to Asia and successfully crossed the western ocean to reach America. This brought the pre-modern world closer.
  • Before the discovery of the sea routes, America had been cut off from regular contact with the rest of the world for centuries.
  • The traders and travellers started transferring the rich resources of America to everywhere.
  • America’s vast lands, minerals and crops played a vital role in developing trade and changing lives from 16th century onwards.
  • European wealth increased and its trade with Asia was financed with the help of precious metals like silver from the mines of Mexico and Peru.
  • Many expeditions set off in search of EI Dorado, the fabled city of gold.  

Colonisation of America through small pox

  • European powers started controlling parts of America in the mid-sixteenth century.
  • By mid-16th century, Portugal and Spain were the dominating countries with strong firepower and army. Their conquest as well as colonisation of America was in progress.
  • The powerful weapon used by Spanish conquerors to colonise was the germs of small pox carried on their persons.
  • These germs were more dangerous as compared to guns and firearms because guns could be bought or captured but there was no escape from these germs.
  • The spread of Small Pox proved fatal to the American native community as America’s original inhabitants, due to long years of isolation, lacked immunity against these diseases that came from Europe. Small pox killed several original American communities leading to conquest of it by the European powers.

Europe—becoming centre of world trade

i. Poverty and hunger were common in Europe until the 19th century. European cities were crowded, diseases were rampant.

Religious conflicts were common, and religious dissenters were persecuted.

ii.  By 18th century, slaves captured from Africa were growing cotton and sugar in American plantations for European markets.

iii. India and China were among the world’s richest nations until well into the 18th century.

iv. China’s reduced role and the rising importance of America gradually moved the centre of world trade westwards. Europe emerged as the centre of world trade.

2. Global Changes in the Nineteenth Century – (1815-1914)

How Did Technology and Economy Shape the World from the 19th Century Onwards?

The world changed profoundly in the 19th century as economic, political, social, cultural and technological factors, interacted in complex ways to transform societies and reshape external relations.

The three flows

Economists have identified three types of flows: flow of trade (e.g., cloth or wheat), flow of labour (migration of people in search of jobs) and movement of capital for short term and long-term investments. The three flows were closely related and impacted people’s lives.

  • The Flow of Trade The flow of trade refers to large trade in goods, e.g., England started exporting machine made cotton pieces to Asian countries, especially to India.
  • The Flow of Labour Migration of workers in search of employment refers to the flow of labour. This flow also included the indentured labourers who were employed in plantations, mines and in road or railway construction projects.
  • The Flow of Capital This includes movement of capital for short term or long-term investments over long distances. All three flows were closely inter-connected and affected people’s lives more deeply now than ever before. 

Corn Laws

i.  In 19th century Britain, self-sufficiency in food meant social conflict and lower living standards.

ii. The expansion of urban centres and growth in industries led to an increase in demand for agricultural goods, leading to an increase in the prices of food grains.

iii. The government restricted the import of corn due to pressure from landowner groups. The laws that allowed the government to do this were called Corn Laws. Industrialists and urban dwellers opposed these laws and forced the government to abolish them.

Scrapping of the Corn Laws

  • Industrialists and urban dwellers opposed these laws and forced the government to abolish them.
  • There was a very poor harvest in 1816. This caused food prices to increase rapidly.
  • Industrial workers started demanding higher wages due to higher food prices.
  • There were food riots all over Britain.  

Impact of Scrapping the Corn Laws

  • After the abolition of the corn laws, food could be imported into Britain more cheaply than it could be produced within the country. British agriculturists were unable to compete with imports.
  • Vast areas of land were now left uncultivated and thousands of men and women were thrown out of work. They flocked to the cities or migrated overseas.
  • Due to a fall in prices, consumption of food grains in Britain rose.
  • Many countries of the world like Russia, America and Australia and some Eastern European countries started exporting food grains to Britain. 

Shaping of global agricultural economy

  • Industrial growth in Britain led to higher incomes and more food imports. Food production was expanded and lands were cleared in Eastern Europe, America, Australia and Russia to meet British demand.
  • Capital flowed from financial centres such as London.
  • Railways linked the agricultural regions to ports and new harbours were built while old ones were expanded to ship more cargoes.
  • The food and other products were being transported by railways, built for that very purpose, and by ships.
  • Nearly 60% of the trade comprised of ‘primary products’ i.e., agricultural products and minerals.  
  • Demand for labour, especially in America and Australia, led to more migration. Nearly 50 million Europeans migrated to America and Australia in search of better opportunities.
  • The British Indian Government built a network of irrigation canals to transform semi-desert wastes into fertile agricultural lands.
  • A global agricultural economy took shape, followed by complex changes in labour movement patterns, technology, capital flows and ecologies by 1890.

Canal colonies

i. In west Punjab in India, the British government built a network of irrigation canals that converted semi-desert wastes into fertile agricultural lands that could grow cotton and wheat for export.

ii. These areas were called Canal Colonies.

iii. Peasants from other parts of Punjab inhabited the Canal Colonies.

Role of technology

i. Steamships, railways and telegraph were important inventions that transformed the 19th century world. They transported goods from one place to another more cheaply and faster.

ii. The development of refrigerated ships enabled transportation of perishable items like meat over long distances. The invention of the refrigerated ship had the following advantages

  • This reduced shipping costs and lowered meat prices in Europe.
  • The poor in Europe could now consume a more varied diet.
  • To the monotony of bread and potatoes, now many, though not all, could add meat, butter and eggs to their diet.

iii. Better living conditions led to promotion of a peaceful environment in the country and provided an impetus to imperialism i.e. colonisation of Asian and African countries.

Impact of Colonialism: Globalisation Led to Colonialism

Most of the colonies lost their political freedom. The continent of Africa was divided on paper in conference halls in Europe. It brought about many painful economic, social and ecological changes. Belgium and Germany become new colonial powers. 

Scramble for Africa

i. Trade and expansion of markets in the late 19th century led to the loss of livelihood in many parts of the world.

ii. The boundaries of several African countries are straight lines because rival European powers in Africa drew the borders to demarcate their respective territories.

iii. Major European powers gathered in Berlin in 1885 to complete the scramble for Africa.

iv. France and Britain were major colonial powers while Belgium and Germany too entered the race for colonies.

(v) USA entered the race for colonies in 1890s when it took over a few colonies that were held by Spain.

Europe’s interest in Africa

European colonial powers were interested in Africa because of vast natural resources but they faced problem of shortage of labour willing to work on wages. They adopted several coercing methods to force the Africans to work on wages. nature also played havoc as the spread of Rinderpest, an animal disease, destroyed the livestock wealth of Africans forcing them work as labourers on wages.

i. When Europeans arrived in Africa, they found that people were not ready to work as labourers because Land and livestock were available in abundance in Africa while the population was smaller. They were satisfied with their economic life.

ii. Europeans were attracted to the vast African land and resources and came to Africa hoping to establish plantations and mines, but they faced shortage of labour willing to work for wages.

iii. Employers used several methods to coerce Africans to work for them.

  • Heavy taxes were imposed which could be paid only by working for wages on plantations and mines.
  • Inheritance laws were changed so that peasants were displaced from land.
  • Mine workers were enclosed in compounds and not allowed to move about freely

Spread of Rinderpest and its impact

  • In Africa, in the 1890’s Rinderpest, a fast-spreading disease of cattle plague, transformed the people’s life.
  • Rinderpest reached Africa in the late 1880s and was carried by infected cattle imported from British Asia to feed Italian soldiers who were invading Eritrea in East Africa.
  • Rinderpest entered eastern Africa and spread like wildfire. This disease killed 90% of the cattle which were the main wealth of the African people.
  • The destruction of cattle impacted African livelihoods and enabled European colonisers to conquer and subdue Africa. 

3. Global Economy

How did colonisation of India change the world?

Indentured labour means bonded labourers who are under contract to work under an employer for a specific time period.

Two sides of Indentured Labour System

(i) On one side economic growth and high income for some while there was misery and poverty for others.

(ii) Technological advances in some areas while new forms of coercion in others.

Indentured labour from India

(i) Thousands of Indian and Chinese labourers were hired under contracts to work in the mines, plantations and construction projects of Imperial Britain.

(ii) Most Indian indentured workers were from the present-day regions of Bihar, Central India, eastern Uttar Pradesh and Tamil Nadu for a period of five years to work on plantations.

(iii) The destinations of Indian indentured migrants were Fiji, Mauritius and Caribbean islands.

(iv) Many indentured labourers agreed to take up work in order to escape poverty and oppression in their villages.

(v) In the mid-19th century due to the arrival of Britishers these regions experienced many changes which forced the people to migrate in search of work. The various reasons for this indentured labour from India were

  • Due to industrialisation the cottage industries had declined.
  • Due to commercialisation of agriculture, land rents rose.
  • There was shortage of land as lands were cleared for mines and plantations.

(vi) Writer V S Naipaul and cricketers Shivnarine Chanderpaul and Ramnaresh Sarwan are descendants of indentured labour migrants from India.

Exploitation by Recruiting Agents

  • The recruitment of the indentured labourers was not done directly. It was through the agents
    engaged by the employers for which the agents were paid a small commission.
  • Most of the indentured workers migrated in the hope of a bright future but they were exploited by the recruiting agents and by the employers.
  • The agents provided false information regarding their work place, working conditions and facilities.
  • Sometimes agents even forcibly abducted less willing migrants.

Indentured labour – New System of Slavery

In the 19th century, indenture had been described as a ‘new system of slavery’ because of the following reasons

  • The agents used to provide false information to the migrants regarding the place of work, nature of work, living and working conditions and the modes of travel.
  • Living and working conditions were harsh.
  • Workers had few legal rights.
  • They were paid less wages.
  • They were treated as slaves. If the workers tried to escape and were caught, they had to face severe punishment.

Fusion of Culture – Adopting ways of survival

The indentured labourers had to live in a newer cultural atmosphere at their work place. They evolved their own ways of expressing themselves. It was cultural fusion in which things and people from different places get mixed and blended with different cultures. Such a fusions brings a new culture which is a mix of traits of the local culture and the people’s native original culture.

  • There were many workers who escaped into the wilds for survival. They were put to severe punishment when caught.
  • Other workers adopted new ways of self-expressions (lifestyle) blending different cultural forms, old and new.
  • For example:
    • The annual Muharram procession in Trinidad called Hosay which means for Imam Hussain. The workers of all the races and religions joined in this carnival.
    • Another example of cultural fusion is the protest religion of Rastafarianism which was made famous by the Jamaican reggae star Bob Marley which reflects the social and cultural links of Indian migrants and the Caribbean.
    • Indentured labourers started creating their own way of enjoyment like chutney music.

Abolition of Indentured Labour System

The Indian nationalist leaders opposed this cruel and abusive system of indentured labour system and hence it was abolished in the year 1921.

Indian entrepreneurs, bankers and traders

i. Bankers like Shikaripuri Shroffs and Nattukottai Chettiars financed export-oriented agriculture in Central and southeast Asia. They used a sophisticated money transfer system and even developed forms of corporate organisations.

ii. Indian traders and moneylenders also followed European colonisers into Africa.

iii. Sindhi traders from Hyderabad (in today’s Pakistan) sold local and imported curios to tourists across the world.

Indian trade and colonialism

(i) Earlier, India was the main exporter of fine cotton to Britain and Europe.

(ii) When the British cotton industries began to expand after the industrialisation, they put pressure on the government to restrict the import of cotton to Britain.

(ii) As a result, tariffs were imposed on the import of cotton cloth from India. This led to a decline in the Indian cotton export to Britain.

(iii) India also faced stiff competition in other international markets. The figures show a decline in share of textiles export from some 30% around 1800 to 3% by 1870s.

(iv) Export of manufactures declined but the export of raw materials and indigo which was used for dyeing the cloth rose equally fast.

(v) To finance the tea and other imports from China, the British grew opium in India and shipped it to China. During 1820s India was the single largest exporter of opium.

(vi) The value of British imports was less than the value of British exports. Thus, Britain had a ‘trade surplus’ with India which was used to balance its trade deficits with other nations. This type of settling the balance was called multilateral settlement system.

(vii) Thus, India played a crucial role in the late-19th-century world economy by helping Britain to settle its trade deficits, home charges like the private remittances home by British officials and traders, paying the external debt interests and pensions to the British officials.

4. The Inter-war Economy

How did the global economy function during and after the First World War?

Major Characteristics of the World War I.

  • A World War: The fighting involved the world’s leading industrial nations, who now harnessed the vast powers of modern industry.
    • The First World War was fought from 1914-1918.
    • On one side were the Allies-Britain, France and Russia.
    • On other side were the central European powers of Germany, Australia-Hungary and Ottoman Turkey
  • Modern Industrial War: It saw the use of machine guns, tanks, aircrafts, submarines, chemical weapons, etc.
  • Reduction in the Workforce: These deaths and injuries reduced the able-bodies workforce in Europe.
  • New Social Setup: The war was responsible for reorganising the whole society and economy.
  • Emergence of America as a Super World Power: American companies and the American people had floated huge loans to the Allies during the war.  US became the international creditor from being international debtor because, to finance the war, Britain borrowed huge sums of money from the US banks and US public

Impact of First World War

i. Europe was the nerve centre of the First World War, but the impact was felt around the world.

ii. WWI was the first modern industrial war that saw the use of tanks, chemical weapons, machine guns aircraft and other equipment on a large scale.

iii. Societies were reorganised for war as men went to fight in the battle, women undertook jobs that only men were expected to do earlier.

iv. Britain borrowed huge amounts of money from US banks as well as the US public. Thus, the war transformed the US to an international creditor after having been an international debtor.

Post – War Recovery

Before the First World War, Britain was the world’s leading economy but after the war Britain was over burdened with external debts. unemployment rose high. Britain was not able to gain its pre-war economic status.

(i) Economic recovery was difficult after the war. Britain, which was economically prosperous in the pre-war period, faced prolonged crisis after the war.

(ii) While Britain was preoccupied with war, industries had developed in India and Japan. Britain found it difficult to compete with Japan as well as recapture the earlier dominant position in India.

(iii) Britain was burdened with huge external debts after the war. To finance war expenditure, Britain had borrowed liberally from the USA.

(iv) During the war, there was an economic boom, which means an increase in demand, production and employment.

(v) Agricultural economies also suffered. For instance, wheat production in America, Canada and Australia increased dramatically. After the war, production in eastern Europe revived with expectations of rise in prices causing farmers to fall into debt due to fall in income.

(vi) After the war government also controlled its expenditure which further led to fall in production, a huge loss of jobs and low income for workers. In the year 1921, there was huge job losses, almost 1/5th of the British workers was out of job.

Mass production and consumption

The war gave a big blow to the economy of Britain but the US economic recovery was quicker.

i. USA recovered quickly from the war, and in 1920s, resumed its strong growth with mass production that became a characteristic feature of industrial production in the US.

ii. Henry Ford, a well-known car manufacturer, adapted the assembly line of a Chicago slaughterhouse to his new car plant located in Detroit.

iii. He realised that the ‘assembly line’ method was a faster and cheaper method of producing vehicles.

Assembly line and workers

i. On the assembly line, workers repeated a single task mechanically. They could not take a break or have a friendly chat with a colleague. Henry Ford’s cars came off the assembly line at a faster pace. The T-Model Ford became the world’s first mass-produced car.

ii. Work pressure and stress forced many workers to quit.

iii. Henry Ford doubled the wages and banned trade unions from functioning in his plants.

iv. He considered his decision to double the worker’s daily wage as the ‘best cost-cutting decision’.

The Assembly Line Advantages

(i) It increased the output per worker by speeding up the pace of work.

(ii) It led to mass production i.e., a car came off the assembly line at three minutes intervals.

(iii) Under this, a worker could not afford to delay the work because his work was linked to all other workers.

(iv) It helped in job specialisation. (v) Now workers were getting higher wages i.e., $ 5 per day. 

Impact of Fordist Industrial practices

  • Fordist industrial practices became famous in the US and were copied in Europe in the 1920s. Mass production reduced costs and prices of engineered goods.
  • Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars, refrigerators, washing machines, radios, gramophone players.
  • The economic boom in housing and consumer durables became the basis for prosperity in the US.
  • Investments in housing and household goods created higher employment and incomes, rising consumption demand, more investment, more employment and incomes.
  • In 1923, the US resumed the export of capital and became the largest overseas lender.
  • The economic prosperity lasted a short period of time, and by 1929, the world plunged into economic depression.

5. The Great Depression & Its Impact

  • The Great Depression (1929 to mid 1930s) was a period when the world experienced drastic reduction in employment, production, incomes and trade.
  • The impact and timing varied across nations and agricultural regions and communities were worst affected because the fall in agricultural prices was greater than the prices of industrial products. .
  • Though the economic depression started in the United States of America but it engulfed the entire world; hence it is known as great depression.
  • By 1935, economic recovery was on its way but its impact on politics, international relations, society and people’s minds was more enduring.

Causes of the Great Depression

(i). Decline in War time Industrial demands

  • There was an immense industrial expansion in view of the increased demands of goods related to the army during the First World War.
  • After the war the industries produced at the same speed.
  • However, the sharp decrease in demand for military and war products gave birth to economic depression.

(ii). Agricultural overproduction

  • Agricultural overproduction was another major factor responsible for the depression.
  • As the prices slumped and agricultural income declined, farmers tried to expand production and bring a larger, volume of produce to the market to maintain their overall income.
  • This worsened the glut in the market, pushing down prices even further. The farm produce rotted for lack of buyers.

(iii). Shortage of loans

  • In the mid-1920s, many nations used US loans to finance their investment.
  • US overseas loan amounted to more than $1 billion in the first half of 1928 which became a quarter in 1929
  • The US overseas lenders panicked at the first sign of trouble and shrank and the nations that depended on US for loans faced acute crisis of loans.

(iv). The withdrawal of US loans

  • The withdrawal of US loans led to the failure of major banks and the collapse of currencies such as British pound sterling in Europe.
  • In Latin America, it intensified the fall in agricultural and raw material prices.

(v). The USA’s attempt to protect its economy

  • US attempts to revive economy by doubling import duties during depression was a severe blow to the world trade.
  • The increased import duties reduced export to America from other countries.

(vi). Impact of depression on US economy

  • US banks slashed domestic lending and called back loans that severely affected the consumers. Farmers failed to sell their produce. Households suffered and business collapsed.
  • Consumerist prosperity of 1920s was gone as people who were unable to repay loans were forced to give up their homes, cars and other consumer durables.
  • Unemployment soared high people and walked long distances in search of ay work.
  • Ultimately the US banking system collapsed because they were unable to recover loans and repay depositors.

Recovery from economic depression

By 1935, economic recovery had begun on a moderate scale but its impact on politics, international relations, society and people’s minds was more enduring i.e. people were unable to recover from the sock and experience of economic depression.

Impact of Great Depression on India

In an integrated global econmoy the tremors of econpmic troubles affect the other economies also. This interconnectedness of global economy could be understood from the impact of the depression on India.

  • The depression impacted Indian trade as imports and exports halved between 1928 and 1934. wheat prices fell by 50%.
  • The colonial government did not reduce the revenue demand and farmers producing for the world market were severely hit.
  • In the depression years, India became an exporter of precious metals like gold. According to Keynes the Indian gold exports promoted global economic recovery including Britain.
  • Rural India which was the worst affected seethed with discontent when M.K Gandhi launched Civil Disobedience Movement at the peak of Depression in 1931.

Impact of Great Depression on Indian Farmers

(i) Peasants’ indebtedness increased.

(ii) They used up their savings, mortgaged lands and sold whatever jewellery and precious metals they had to meet their expenses.

(iv) Indian jute producers were the worst affected. The decline in export demand of gunny bags brought in fall of raw jute prices by 60%.

Depression in urban India

i. The depression was less grim for urban India.

ii. Town dwelling landowners receiving rents and the middle-class salaried employees were better off as everything cost less to buy.

iii. Industrial investment also grew due to government extension of tariff protection to industries under pressure from nationalist opinions.

6. Global Economy After the Second World War

What initial efforts were made in the Post-World War period to rebuild the world economy?

Impact of Second World War

  • The Second World War, which lasted six years, was fought between the Axis powers (Nazi Germany, Italy and Japan) and the Allies (Soviet Union, US, Britain and France).
  • It was a war waged for six years on many fronts, in many places, over land, on sea and in the air. 
  • Millions of people were killed directly or indirectly because of the war and most of the deaths were of civilians.
  • The Second World War caused massive economic destruction and social disturbance.
  • Two major factors shaped the post-war reconstruction. The first was the US’s emergence as a dominant military, economic and political power in the world, and the second was the dominance of the Soviet Union.

Post-war Settlement

(i). Economists and politicians drew two key lessons from inter-war economic experiences.

  • Mass consumption is necessary for the economic stability of an industrial society that is based on mass production.
  • Mass consumption happens when the masses have high and stable incomes. To ensure stable incomes, steady and full employment are essential.

(ii). Government interference is necessary. Economic stability could be ensured only through the intervention of the government. The goal of full employment could only be achieved if governments had the power to control flows of goods, capital and labour.

Bretton Woods system

Post-war international economic system aimed at preserving economic stability and full employment in the industrial world. The framework or model of such an international economic system was designed and agreed upon at the United Nations Monetary and Financial commission in July 1944 in New Hampshire, USA.

i. The United Nations Monetary and Financial Conference was held in July 1944 at Bretton Woods in New Hampshire, USA.

ii. The International Monetary Fund (IMF) was established at Bretton Woods Conference to deal with external surpluses and deficits of member countries.

iii. The International Bank for Reconstruction and Development (World Bank) was established to finance post-war reconstruction.

iv. USA has veto power over key decisions taken by World Bank and IMF.

v. The Bretton Woods system was based on fixed exchange rates.

Post-war Developments

i. The Bretton Woods system brought an era of immense growth of trade and incomes for western industrialised countries and Japan.

The growth was also mostly stable, without large fluctuations. The world trade grew annually at over 8% between 1950 and 1970 and incomes at nearly 5%.

ii. There was worldwide spread of technology and enterprise.

iii. Developing nations also tried to capture growth and invested vast amounts of capital and imported industrial plants and equipment with modern technology.

How has the world changed from the rise of new nations to the globalisation?

Decolonization and independence

(i). Many countries in the world were under European rule when the Second World War ended.

(ii). In the next two decades, most African and Asian colonies became independent, but they were overburdened by poverty and lack of resources due to log periods of colonial rule.

(iii). The World Bank and IMF were created for industrial nations and were not equipped to deal with the challenge of poverty faced by ex-colonies.

(iv). But with Europe and Japan rebuilding their economies, they became less dependent on these institutions. From late 1950s, these institutions shifted their attention to developing nations.

(v). It was ironical that even after getting freedom many developing countries were under the control of western empires. They were guided by international agencies to lift their populations out of poverty. This gave an opportunity to colonial powers to exploit the resources of former colonies.

(vi). Large Corporations of Powerful Countries like the US also often managed to secure rights to exploit natural resources of developing countries.

New International Economic Order (NIEO) & G-77

i. Many developing nations did not benefit from the fast growth experienced by western economies in the 1950s and 1960s.

ii. Therefore, they formed a group – Group of 77 (G-77) — to demand a new international economic order – NIEO.

iii. NIEO aimed at providing the ex-colonies real control over their resources, fairer price for raw materials, more development assistance and better access for their manufactured goods to the markets of developed countries.

End of Bretton Woods system

Decline of US currency domination

  • From the 1960s increasing costs of overseas involvement weakened the US’s financial dominance.
  • The US dollar could not maintain its strength or its value in relation to gold. This led to the fall of the system of fixed exchange rates and the introduction of a system of floating exchange rates.

Rising role of Western Commercial Banks

Initially, developing countries took loans and development assistance from international institutions, but they were forced to borrow from western commercial banks and leading institutions, which led to periodic debts and poverty in the countries of Latin America and Africa.


In industrial nations, unemployment that began rising from the mid 1970’s remained high until the early 1990’s. 

MNCs relocating industry to low-age Asian countries

  • New economic policies in China and collapse of Soviet Union and communism Eastern Europe brought many countries into the network of world economy.
  • MNCs compete to capture world market and to reduce their production cost. From the late 1970s MNCs began shifting production operations to low-wage Asian countries like China, India and Brazil.

Rise in Globalization

i. From the late 1970s, many MNCs shifted their production operations to low-wage Asian nations.

ii. The fall of communism in Soviet Russia and Eastern Europe as well as the economic policies of China brought these nations into the fold of world economy.

iii. The relocation of industry to low-wage countries stimulated trade and capital flows across nations boosting globalisation.

iv. India, Brazil and China underwent rapid economic transformation in the last two decades.

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This Post Has 11 Comments

  1. shreyas goyal

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    1. Sirji

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      1. shreyas goyal

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  2. Akash

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  3. Shrey

    Sir need pdf of the chapter

  4. dont

    hateeeeeeeeeeeeeee it cnat even copy to take a print out for notes

    1. Sirji

      You can convert the notes into pdf with the link given in the end. If you face any issue then please contact us.

  5. Shadow of stranger

    Very useful notes.aimple understandable english make studies easy thanks a lot realy ought to you

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