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A Report

Effect of Globalization on World Wars

Introduction to Globalisation
HSS F317
Done By
Archit Saxena
Shivam Arora


Birla Institute Of Technology And Science






This project studies the effect of World War-I and World War-II on Globalization, and the effect
they have on each other. It gives an insight into how the reduction in transport costs due to
technological progress has increased the International trade. It also talks about how the capital
market integration led to improved capital flows. It also talks about the reasons of increased
Slave migration and free people migration in the late 19th century, and hence resulting in
improved Globalization. It discusses the impact of Imperialism on improved diffusion of
technologies and exchange of intellectual exchanges. Hence, this project studies about the
collective effect of all these factors stated above due to the World Wars on Globalisation. In the
end we would analyze globalisation before ww 1 and how it led to the 2 devastating wars. Data
has been collected from websites, books and papers as given in the bibliography.


H1 Americanization had started in 1800s.

H2 Globalization and integration of various Euporean economies culminated into World War I.
H3 Various Indrustries were establised with the purpose of supporting the warfare (
Aviation, electronics and scientific Industries)
H4- After World War II, USA started dominating teh social, political and economic
scenario of the world and thus becoming centre of Globalization of the world.
H5-The interference of America in the matters of national interest of other states is

Globalization before World War 1 (1870-1914)

The period from 1870 to 1914(1870 represented the end of Napoleonic and Prussian wars)
represented the high water mark of 19th century globalization. Nineteenth century globalization
involved increasing transfers of commodities, people, capital and ideas between and within
continents. According to professor Matthias Morys (University of Oxford) there are various
parameters that could be used to account for the globalization happening during this period .Lets
discuss a few of his points here:
1. Trade
Transport costs have long been seen as the main driver of trade growth during this period. The
opening of the Suez Canal in 1869 allowed their usage in Euro-Asian trade, and implied a
dramatic shift in favour of steam and against sail (since sailing ships could not be used on the
Canal route).

Painting of suez canal in 1870

Freight rates declined steadily, as a result of constant technical improvements, while the
reduction of internal transport costs through the development of railways linked inland producers
and consumers to ports, and hence to other countries and continents. For example, based on
Harley (1980, 1990), we can divide the cost of transporting wheat from Chicago to Liverpool
into the Chicago to New York City cost, and the New York to Liverpool cost. Between 1866 and
1870 theformer was equivalent to 17.2% of the Chicago wheat price, and the latter to just 11.6%
of the Chicago price. By 1909-13, these freight factors had declined to 5.5% and 4.7%
respectively(Findlay and ORourke 2007, p. 382). In addition, peace between the main powers

between 1871 and 1914 promoted trade (Jacks2006). The development of European formal and
informal empires increased extra-European tradethrough the reduction of trade barriers, the
inclusion of colonies in currency unions, and the better
protection of (European) property rights (Mitchener and Weidenmier 2007).

Wheat being loaded into railroad in Chicago which will ultimately be shipped to liverpool
The major force operating in the opposite direction was trade policy, and in particular the antiglobalization backlash. Notwithstanding this trend, intra-European and extra-European trade
grew rapidly during the 19th century. In most sectors, it reached a high point in 1913. European
trade roughly quadrupled in real terms between 1870 and 1913, with the increase being slightly
higher in Eastern than in Western Europe. The export to GDP ratio of France, Germany and the
United Kingdom (in 1990 prices) increased by approximately 50 %, while the Spanish ratio more
than doubled
2.Capital flows
International capital market integration was also extremely impressive during this period.Europe
was the worlds banker (Feis 1930), and those regions with good access to European capital such
as the US, Canada, Argentina and Australia prospered most between 1870 and 1913. For the UK,
by far the most important capital exporter, Edelstein (2004, p. 193) estimates that 32% of net
national wealth was held overseas in 1913. In 1914,England (42%), France (20%) and Germany
(13%) combined accounted for 75% of total foreign Investment.
It is in the area of migration that the late 19th century was most impressively globalized, even
compared with today. t the beginning of the century, intercontinental migration was still
dominated by slavery: during the 1820s, free immigration into the Americas averaged only
15,380 per annum, about a quarter of the annual slave inflow. Twenty years later, the free inflow

was more than four times as high as the slave flow, at 178,530 per annum (Chiswick and Hatton
2003, p.68), and thenumbers rose to more than a million per annum after 1900 (Figure 1). Some
of the country-specific migration rates were enormous: during the 1880s, the decadal emigration
rate per thousand was 141.7 in Ireland, and 95.2 in
Norway, while an emigration rate of 107.7 per thousand was recorded in Italy in the first decade
of the 20th century. The causes of this mass migration are by now well understood, thanks in
particular to the work of Hatton and Williamson (1998, 2005). On one level, the causes are
obvious: the New World was endowed with a higher land-labour ratio than Europe, and hence
American and Australian workers earned higher wages than their European counterparts. For
example, British real wages in 1870 were less than 60% of wages in the New World destinations
relevant to British workers, whereas the equivalent figure for Irish workers was just 44%, and for
Norwegian workers was just 26% (Hatton and Williamson 2005, p. 55). The gains from
migration were thus potentially enormous, and once the new steam technologies had lowered the
cost of travel sufficiently, mass emigration became inevitable(Figure 2).

4. Trade in knowledge
Globalization is not simply about the movement of goods or factors of production. It also
includes technological transfers and the deepening of other intellectual exchanges. Several new
factors increased the speed and the reach of technological transfers. Migration was easier.
Imperialism allowed European entrepreneurs to invest overseas, taking advantage of low wages,
with no fear of expropriation by hostile governments. The decline in transport and
communication costs helped the diffusion of ideas, new goods and machines , several firms set
up production in foreign countries and transformed themselves into multinationals during this
period. Ericsson, a Swedish firm, and Western Electrics, an American firm, both had to establish
overseas branch plants in order to win telephone contracts in various European countries. The
diffusion of technologies was also helped by the creation of international scientific and technical
organizations. Besides straightforward military applications, academic activity was used a
diplomatic weapon. Inviting foreign scientists and participating in scientific congress was part
and parcel of the rivalry between France and Germany, as each hoped to tighten their links with
allied and neutral countries, especially the United States. Besides straightforward military
applications, academic activity was used a diplomatic weapon. Inviting foreign scientists and
participating in scientific congress was part and parcel of the rivalry between France and
Germany, as each hoped to tighten their links with allied and neutral countries, especially the
United States . The issue of nationalist .


cultural identity gained in importance in the second half of the 19th century, leading to the
fragmentation of cultural activities as they become more popular. The formalization of cultural
and scientific discourse can be seen both as a weak attempt to stem the rise of nationalism, and
as a way to accommodate the inclusion of more diverse actors into the high spheres of European
society and culture. In the end, of course, it was too fragile to stand against the forces of
nationalism. This culminated in 1914 to world war 1.

WORLD WAR 1(1914-1918)

(The following article has been cited from wiki)
World War I (WWI or WW1 or World War One), also known as the First World War or
the Great War, was a global war centered in Europe that began on 28 July 1914 and lasted
until 11 November 1918. More than 9 million combats and 7 million civilians died.

(Trenches on the Western Front German Albatros D.III biplane fighters of Jasta 11 at Douai,
France Vickers machine gun crew with gas masks British Mark V tanks British battleship HMS
By the end of the war, four major imperial powersthe German, Russian, Austro-Hungarian and
Ottoman empiresceased to exist and ended in Treaty of VERSAILLES.

AFTERMATH OF WORLD WAR 2:Collapse of globalization

(the following article has been cited from wikipedia)
The first phase of "modern globalization" began to break down at the beginning of the 20th
century, with World War I. The European-dominated network were increasingly confronted with
images and stories of others, thus, then took it upon themselves to take the role of worlds
guardians of universal law and morality. Racist and unequal practices became also part of their
practices in search of materials and resources that from other regions of the world. The increase
of world trade before beginning in 1850 right before World War 1 broke out in 1914 were
incentives for bases of direct colonial rule in the global South. Since other European currencies
were becoming quite largely circulated, the need to own resource bases became imperative. The
novelist VM Yeates criticised the financial forces of globalization as a factor in creating World
War I. Financial forces as a factor for creating World War 1 seem to be partly responsible. An
example of this would be Frances colonial rule over most of Africa during the 20th century.
Before the World War One broke out there was no specific aims for the wars in Africa from the
French, which left Africans in a lost state. Military potential of Africa was first to be
emphasized unlike its economic potentialat least at first. Frances interest in the military
potential of French Africa took a while to be accepted. Africans in the French army were treated
with feelings of inferiority from the French. As for the economic incentive for colonial rule came
in 1917 when Frances was faced with a crisis of food supply. This coming after the outbreak of


the war which had left France without the ability to support itself agriculturally since France had
a shortage of fertilizers and machinery in 1917.Germanys economy had totally faltered in

1923)owing to the great depression that struck USA.

(germanys hyperinflation in 1923. A man carrying a cart of paper money to buy a loaf of bread)

Globalization And WORLD WAR II

(reffered from http://www.americanforeignrelations.com/E-N/Globalization-A-world-divided1940-1950.html)
World War II further threatened Anglo-American-style globalization. The Axis powersa loose
coalition of Germany, Italy, and Japanresorted to military force to overthrow the postVersailles world order and to establish closed, regional systems dominated from Berlin, Rome,
and Tokyo. The conflict afforded the United States a second chance to provide leadership and to
promote its vision of a peaceful, prosperous, and united world. This is the whole concept of
Americanization In joining technology with national security, the war forged an enduring
In effect, scientists and their laboratories, with government funding and direction, contributed in
a major way to the success of the war effort, and in the process they developed many new
products that had commercial applications which would transform the postwar world. Atomic
energy, for instance, had many peaceful applications, particularly as a source of electrical power.
The mass production of penicillin transformed the treatment of disease. Also, radar provided the
basis for microwave cooking. The first computers appeared during World War II to assist the
military with code breaking and long-distance ballistics calculations. ENIAC, one of the first,


was a huge machine, occupying 1,800 square feet and using 18,000 bulky vacuum tubes. Not
until the development of transistors and the microchips that resulted from them could cheap and
reliable computing power be loaded into desktop and portable units. The transistor, which was
developed in 1947 and 1948, grew out of wartime research on silicon and germanium at Bell
Telephone Laboratories in New Jersey.

(1947: John Bardeen and Walter Brattain, with support from colleague William Shockley,
demonstrate the transistor at Bell Laboratories in Murray Hill)
No industry benefited more from wartime cooperation and federal contracts than aviation. At the
outbreak of war the Boeing Company of Seattle, renowned for its seaplanes and engineering
skills, had fewer than two thousand employees and was on the verge of bankruptcy. From this
inauspicious beginning the company flourished on the strength of its bombers (the B-17 Flying
Fortress and the B-29 Superfortress). Employment rose to nearly forty-five thousand. At the end
of the war Boeing, on the strength of its experience and reputation in military aircraft production,
turned its attention to the civilian market, using the B-29 as the basis of the luxurious
377 Stratocruiser that Pan American used on Atlantic routes.

Growth was also in order for consumer goods, which were also foundations for later
globalization. Robert W. Woodruff, who had taken over the Coca-Cola Company in 1923, aimed
to make his beverage an ordinary, everyday item for Americans and people around the world. He
built on his foreign operations, particularly in Europe, during World War II by having Coke
accompany the military overseas. Soldiers not only identified with Woodruff's product during
and after the war but heroes requested itas did an American pilot who crashed in Scotland and
asked, upon regaining consciousness, for a Coke. The beverage was so pervasive that the Nazis


and Japanese denounced it as a disease of American society. By war's end the company ran
sixty-three bottling plants across the globe, on every continent. Its net profits in 1948 soared to
$35.6 million, elevating it to near-universal acceptance as the world's beverage of choice.



The protracted Cold War struggle that divided the world into two spheres of influenceone led
from Washington, the other from Moscowprompted national security considerations, rather
than invisible market forces, to define international relationships. Governments continued to
regulate trade and financial exchanges, despite efforts to lower barriers and promote commerce.
But America's technological advantage, adaptable production processes, and access to resources,
so decisive in the struggle against Axis aggressors, helped win the conflict. Also, a new
generation of U.S. political and corporate leaders, familiar with mistakes made at the end of
World War I when the United States shunned overseas responsibilities, chose to accept this
second opportunity to guide the world. Furthermore, as it turned out, these internationalists were
also better salesmen than Soviet leader Joseph Stalin and his heirs, who presided over a decrepit,
controlled Soviet economy unable to satisfy basic consumer wants. Aware that a troubled world
had an insatiable appetite for American values, goods, and services, U.S. leaders exploited their


comparative advantage in communications and marketing to advance the American dream of

democracy, mass consumption, and individual enterprise.
Had the USSR won the Cold War, Soviet-directed expansion would have been far differentfar
more capricious, authoritarian, and state-managedthan the American-led alternative based on
the rule of law, democratic elections, open markets, and the relentless energy of technology and
entrepreneurship. Thus, the era of globalization that began near century's end evolved, ironically,

Thus the American dream of Americanization got complete after world war 2 !!!!!.



Figure 1(emmigration patterns )

Source: Hatton and Williamson (1994, p. 542).

Figure 2. Wages relative to Britain, 1870-1913





ORourke and Williamson (1997)


The project is intended to study the viz a viz relationship between globalization and the various
world wars tracking back from 1850s. Globalization as a movement began in 1850s with the
industrial revolution. Great Britain was the origin of industrial revolution and became the first
world superpower in the 19th century. Industrial revolution spread throughout Europe and
transformed Europe politically, culturally, socially and placed them ahead of other continents.
There was a grapple between among European countries for colonies ashore in Africa and asia.
Europe was also the banker of the world before 1914. All the financial resources of the world
were controlled by Europe. Major players were England, france, germany and Netherlands. USA
was not a prominent country till 1914. There was a large scale immigration from Europe to the
new world( USA, Canada and Spanish colonies during that period. People left for the new world
as it provided them better lifestyle and wages. Slavery that was the height in 19th century
declined followed by free immigration at the start of 20th century. USA received the greatest
immigrants from all continents of the world.various industries mainly in the field of aviation,
science and technology , electronics were established during this time to serve the war that was
coming which would become in later times(TNCs) and serve the civilians.
A spirit of nationalism and racism started building up in Europe in 19s which lead to the onset of
world war 1 in 1914. It ended in 1918 with complete destruction of Europe economically and
socially. USA gained the most from the world war and became economically the ost powerful
country and americanisation thus started. the economy started getting integrated as can be seen
from the great depression and wall street collapse in 1930s which effected the global economy.
The social destruction caused during world war 1 and the economic destruction due to wall street
collapse gave rise to fascist ideas in Europe , thus leaders like hitler and mussoloni were born.
USA was not watching over the world after world war 1 and didnt care about the events
happening in europe after 1914 as it had lot to do internally also(to recover from the great
depression). The fascist versus the democratic ideals led to world war 2 in 1939. World war 2
resulted in complete destruction of Europe and created a bipolar world(with Russia and USA and
its two poles). USA remembering the fault of its post world war 1 policies changed completely
its post world war 2 policies. The Bretton Woods meet in 1943 , the leniency towards post world
war 2 germans and promoting democracy all over the world became its agenda so that the world
doesnt get drawn toward world war 3. Thus it started controlling the world socially, economicall
an culturally leading to americanistaion.



Globalization, 1870-1914Guillaume Daudin University of Edinburgh and OFCE Matthias Morys



Done By
Atul Anand
Sujata Sharma
Ravina Goyal
Gaurav Adwani