The history of globalisation is not a new story of the late twentieth century; it has been unfolding for centuries. The movement of people, goods, capital and ideas across the world has connected distant regions in a complex web of exchange. This chapter traces the making of the global world from the pre-modern period, when silk routes and sea trade carried goods across continents, to the nineteenth century, when industrialisation and colonial empires created the first truly integrated global economy. It then examines how the world economy broke down in the inter-war years and how it was rebuilt after the Second World War.
Students will study how global connections have been accompanied by conquest, disease and exploitation as much as by prosperity and exchange. The chapter explores the role of trade in food grains, the migration of indentured labour, the global movement of capital, and the impact of two world wars and the Great Depression. The story of the global world is also the story of the poor, the colonised and the migrant, who were often forced into these global movements. Understanding this history helps us see that globalisation is neither entirely new nor entirely benign.
For the board examination, key concepts include the silk routes, the Indentured labour system, the Great Depression of 1929-1933, the Bretton Woods system, the IMF and the World Bank, and the changes in the late twentieth century. Students should also know the role of the Indian economy in the global world, from the pre-colonial trade in textiles to the period of deindustrialisation under colonial rule. The chapter demands an ability to link economic history with political history, and to see the connections between trade, migration and empire.
Human societies have long been connected through networks of trade. Traders of many kinds were among the most important people to link distant parts of the world. The silk routes, a network of routes linking the vast region of Asia with Europe and Northern Africa, are a good example of vibrant pre-modern trade. These routes were named after the most important cargo transported on them, the Chinese silk, but many other goods were also traded, including textiles, spices, gold and precious stones.
The silk routes also transmitted ideas, cultures and religions. Buddhism spread from India through the silk routes to East Asia, and the Christian missionaries travelled to various parts of Asia along these routes. The flow of goods and ideas along these routes continued for centuries and integrated distant regions of the world. Even when trade was disrupted by war and conflict, it was often renewed through new sea routes. The discovery of the sea routes to Asia and America in the fifteenth and sixteenth centuries by European navigators was a major step in expanding and intensifying these exchanges.
The pre-modern world was thus already a connected world, though the scale of connection was limited by the technology of transport and communication. The entry of the Europeans into the Atlantic and Indian Ocean trade in the sixteenth century began the process by which European nations established trading companies and, later, colonial empires. The trade in food grains such as rice and wheat, and in slaves, would later create the modern global economy in a form shaped by European dominance.
The nineteenth century saw the emergence of the modern world economy, driven by three major developments: the industrial revolution in Europe, which created a new demand for raw materials and a supply of manufactured goods; the transportation revolution, marked by the building of railways, steamships and telegraph; and the great migration of people across the world. Trade expanded enormously, and by the end of the nineteenth century, a large part of the world was joined together through the exchange of goods, labour and capital.
The world economy of the nineteenth century was also a colonial economy. Colonised countries were transformed into producers of raw materials for the industrial economies of Europe, and markets for European manufactured goods. Britain, for example, imposed its policies on India, and the Indian economy was subordinated to the needs of the British economy. The expansion of railways in India, for instance, was justified as a means of civilising the country, but the real motives were to move goods quickly and to facilitate the export of food grains and raw materials from India to Britain.
The transport of food grains, such as wheat, from distant regions to Europe was a feature of this period. The development of refrigerated ships allowed the transport of perishable goods like meat and dairy products across the oceans. This period also saw the growth of vast plantations in the colonies, where cash crops such as tea, coffee, rubber and indigo were grown for export. The lives of the people who worked on these plantations, often as indentured labourers, were shaped by the demands of the global economy.
The nineteenth century saw the migration of millions of people, including large numbers of Indians, who moved to different parts of the world as indentured labourers. Indenture was a system of bonded labour that promised a long-term contract to work in plantations and mines, in exchange for a passage, food, shelter and a small wage. The Indian indentured labourers were taken to the Caribbean, Guyana, Trinidad, Surinam, Mauritius, Fiji and Ceylon, where they worked on sugar, tea, coffee and rubber plantations.
The demand for indenture came from the abolition of slavery in the British Empire in 1833, which left the plantations in need of cheap labour. Recruitment was done through agents, who often misled the poor and landless peasants into signing contracts. The life of the indentured labourer was harsh: they faced harsh working conditions, little freedom and often abuse. Yet, over time, they created their own culture and communities in the new lands, celebrating festivals such as Holi and Diwali, and their descendants now form a significant part of the populations of these countries.
The most famous movement of the indentured labourers was the diaspora that resulted. Indian culture, food habits and religious practices travelled with these migrants, and the 'coolie' identity evolved into a vibrant Creole culture. The indenture system was abolished only in the early twentieth century, and the Indian National Congress, led by Gandhi, campaigned against it. Gandhi himself had experienced racial discrimination in South Africa, where many Indians had gone as indentured workers, and this experience shaped his understanding of racism and injustice.
The First World War (1914-1918) marked a watershed in the history of the world economy. The war was fought between the two leading blocs of the world, and it had a devastating effect on the economies of the world. The war demanded the production of weapons, food and clothing for the armies, and it transformed the economies of the countries involved. After the war, the world economy was in a state of crisis, and many countries faced economic and political instability.
The Great Depression, beginning in the United States in 1929, was the most severe economic crisis of the twentieth century. It began with the crash of the US stock market in October 1929, which caused a financial panic that spread across the world. Banks collapsed, businesses closed, and unemployment rose sharply. The depression had a severe impact on economies that were linked to the US economy, including those of Latin America, Germany, and many Asian countries. The Indian economy, which was linked to the British economy, was also deeply affected.
In India, the Great Depression led to a sharp decline in agricultural prices. Farmers who had taken loans to buy seeds and tools were unable to repay them, and many lost their lands and their livelihood. Peasants and grain merchants became poorer, while urban workers were also affected. The depression revealed how deeply the world economy was connected: a stock market crash in New York could destroy the livelihood of a peasant in India. The inter-war years, therefore, were a period of both economic crisis and political upheaval, and they ultimately prepared the ground for the Second World War.
The Second World War (1939-1945) destroyed the world economy once again, and the two wartime allies, the United States and Britain, decided to rebuild it on a new basis. The Bretton Woods conference of July 1944, held in New Hampshire, USA, established a framework for the post-war world economy. It created the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, commonly known as the World Bank, to deal with balance of payments problems and to finance post-war reconstruction.
The post-war system was designed to make the US dollar the anchor of the world economy, since the USA was the world's dominant economic and political power. The IMF and the World Bank were institutions dominated by the industrial countries, and they were intended to manage the financial affairs of the world economy. However, the benefits of this system were unequally distributed. Developing countries, many of them newly independent, found that the institutions did not give them an equal voice, and they often had to accept conditions that hurt their economies.
The late twentieth century saw a new era of globalisation, with the expansion of the flow of goods, capital and information. New technologies of communication, such as satellite television, the internet and mobile phones, connected the world as never before. Multinational corporations (MNCs) grew in power, and a world economy emerged in which production was organised across borders. Yet, this globalisation has not been without its costs, and it has raised new questions about inequality, environment and the distribution of benefits between the rich and the poor nations.
| Period | Development | Feature |
|---|---|---|
| Pre-modern era | Silk routes | Trade in silk, spices, gold; spread of Buddhism and ideas |
| 15th-16th century | Sea routes discovered | Europeans entered Atlantic and Indian Ocean trade |
| 19th century | Modern world economy | Industrial revolution, transport revolution, mass migration |
| 1833 | Abolition of slavery in British Empire | Created demand for indentured labour |
| 1929 | Great Depression begins | US stock market crash; global economic crisis |
| 1944 | Bretton Woods conference | Created IMF and World Bank |
| Late 20th century | New globalisation | MNCs, satellite, internet, fast capital flows |
| Institution/Event | Year | Purpose/Role |
|---|---|---|
| International Monetary Fund (IMF) | 1944 (established) | Deal with balance of payments problems |
| World Bank (IBRD) | 1944 (established) | Finance post-war reconstruction |
| Silk Routes | Ancient to 15th century | Linked Asia, Europe and Northern Africa through trade |
| Indentured labour system | 19th to early 20th century | Bonded labour on plantations; abolished in early 20th century |
| Great Depression | 1929-1933 | Severe global economic crisis |
| G-77 | 1964 | Group of developing countries demanding fairer treatment in world trade |
The making of the global world is a long history of exchange, movement and interconnection that began long before modern globalisation. The silk routes, the voyages of discovery, industrialisation and colonial empires together created a world economy in which distant regions were bound together through trade in goods, labour and capital. Yet this global world was built on inequalities, from the forced migration of indentured labourers to the colonial extraction of raw materials. The inter-war crisis and the Great Depression showed how fragile and destructive this global interdependence could be, while the Bretton Woods system attempted to rebuild it on new institutional foundations. In our own time, a new era of globalisation has connected people as never before, but the central questions remain: who benefits from globalisation, and how can the gains be shared more fairly across the world's peoples and nations.