Lecture 05 - webnotes - Introduction World War I:...

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Lecture 5: The disintegration of the world economy, 1914 to 1939 AD Introduction World War I: chronology and effects The 1920s: dealing with the aftermath The Great Depression: causes, transmission, and consequences
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Introduction From heights of 1913, the world economy essentially flat-lined over the next forty years…but with a lot of variation in between. Marks the only documented disintegration of the world economy. What we’ll explore in this lecture is the trauma induced by WWI, the slow recovery post-WWI, and the Great Depression.
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World War I All starts one beautiful day, June 28, 1914…
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World War I And all ends like this… 20 million (60 with flu) deaths & a loss of
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World War I The alignment of powers during the “first industrialized war”
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World War I Obvious detriment to the free trade, immigration, and capital flows prior to 1913. Exports for 18 countries (millions of 1990 USD), 1900-1920 0 25000 50000 75000 100000 125000 150000 175000 200000 225000 1900 1905 1910 1915 1920
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World War I But trade was booming in between NA and the allies/neutrals while sputtering between NA and the Central Powers. Exports from NA to Germany and the UK (millions of 1990 USD), 1900-1920 0 2500 5000 7500 10000 12500 15000 17500 20000 22500 25000 27500 30000 1900 1905 1910 1915 1920
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World War I At the same time, the United States displaced European trade in Latin America… “greatest business proposition of all time”. Japan which sided with the Entente powers did the same in E/SE Asia. Japanese real exports from 1913 to 1918
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World War I With the close of WWI, these trade flows become very important for two reasons: 1.) it created massive levels of indebtedness to the US on a global scale; rise of NY 2.) blocks a source of desperately needed
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World War I Apart from the trade response, WWI also resulted in strong supply responses: 1.) increases in supplies of commodities in response to high prices 2.) increase in European industrial capacity in response to “total war” 3.) increase in periphery industrial capacity in response to trade bust (20%, India;
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World War I There were also big political effects: 1.) the creation of new nation-states 2.) the rise of organized labor and nominal wage rigidity 3.) the Russian revolution in 1917; 99.9% drop in exports—provides a model of autarkic economic development throughout the century
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1920s spent dealing with the aftermath of WWI and (for most countries) getting back to the pre-war Belle Epoque . But they were faced with new constraints:
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This note was uploaded on 09/13/2009 for the course ECONOMICS Econ 382 taught by Professor Davidjack during the Spring '09 term at Simon Fraser.

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Lecture 05 - webnotes - Introduction World War I:...

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