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23 Cards in this Set
- Front
- Back
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commodity price convergence
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convergence of prices across market. law of one price says globalization/perfect should lead to price convergence. iron is iron. degree of convergence or lack of it, shows degree of globalization that is achieved. durable goods like cars aren't subject to same principles, as ford is different price than Ferrari.
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wizard of Oz
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metaphor for america in 1890s. dorothy is traditional farm values, scarecrow are shrewd farmers who seem dumb but know what is happening, knew gold standard harmed them. cowardly lion= william j bryan. wicket witch of east= NY bakers, intl merchants. munchkns= people of east, wizard= mcKinley/marcus hanna, republican party chair. toto= teetotaler party. poppy fields= opium. yellow brick road= gold standard. oz= ounce of gold. slippers were originally silver.
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Cobden -Chevalier Treaty of 1860
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free trade treaty between UK and france. landmark of free trade movement in Europe. repeal of corn laws, UK starts to spread gospel of free trade. bilateral tariff reduction in french luxury goods for UK manufactured goods. worked in favor of both, CA! other bilateral tariff reductions triggered immediately.
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mass produciton
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large amounts of standardized products, applies to many products. assembled in lines. most successful idea of industrial revolution more efficient.
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infant industry protection
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emerging domestic industries should be protected until stable/mature. proponents argue that gov should use tariffs/quotas/duty taxes to keep intl competitors from ruining infant. US is good example of this policy. proponents responsible for increased protectionism prior to WWI, barrier to globalization.
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Gold Standard
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fixed exchange rate. each country pledged to exchange currencies on gold with certain ER. early 19C few had gold based currency. most adopted it before 1910. important to globalization BC reduced ER risk and lowered cost of foreign trade/investment. also improved credit/worthiness of countries that aggreed to it. controversial BC national price levels were arbitrarily determined and no room for domestic monetary policy. issue during great depression.
prices fell during 1880-1896, widespread distress. fixed after 1896, new discoveries of gold in alaska and africa. BOP adjustment was automatic. gold required no intervention in FOREX market. David Hume calle dit automatic process, Price Specie Flow mechanism. didn't require policies but didn't allow them either. |
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railroads
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infrastructure that lowered costs of internal transport. contributed to globalization by linking port cities with resource rich lands. cheaper to trade. doesn't cost as much to ship.
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Great Depression of 1873-1896
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recession, severe in europe and US. which experienced strong economic growth due to second industrial revolution in decade after civil war. was the great depression until the great depression inthe 1930s, long depression was caused by gold standard fixed rate. appreciate of value of gold cased deflation world wide. hurt agricultural interests and depressed economic activity until new god was found. shows drawbacks to fixed regimes.
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William jennings Bryan
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leading US politician. democratic party, three time presidential nominee, was on congress. devout presbyterian, supported silver standard. hated gold as well as banks and railroads. great orator, called the great commoner.
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mathan Mayer ROthschild
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london financier, one of five kids. father was a banker sent all kids to different industrial and financial sectors. est rothschild banking dynasty.
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international division of labor
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outcome of globalizaiton. occurs when proces of production isn't confined to national ecnomies, leads to global industrial shift. production processes are relocated to developing countries rather than developed ones. companies search for cheapest locations to produce. 1953-90s industrialized economies share of world manufacturing declined.
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productivity Y/L
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main driver of economic growth. defined by output Y per hour of work L, Y/L. disparity is why some countries are rich and others not. higher productivity needs better tech and capital and with no impediments to that then countries should increase. globalization should spread tech/capital to poor via trade, investments, migration, internet, etc.
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paris international exhibition of 1900
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shows how US and Germany are kicking butt. world fair held in paris from april 15-november 12 1990. celebrates achievements in of past century and accelerates development into next. style present was art nouveau. over 50 million people. showed Eiffel tower, campbell soup, ferris wheel, nesting dolls, etc.
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convergence
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countries integrated into globalized intl economy should catch up to developed nations via industrialization and spread of tech. lower the level of productivity, greater potential for growth. convergence club of 1870-1913 was set of countries that experience covnergence within areas of recent settlement, canada US Australia, etc. and japan. more recent shows little convergence. due to gov restrictions on rest of world. trade barriers, etc. poor institutions as wel, like property rights, absence of rule of law, corruption all create bad vibes so no one wants to invest there.
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Hundred years' peace
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Pax Britannica, peace from 1815-1914. UK empire controlled most of key maritime trade routes and loved the unchallenged sea power. peace due to negotiating feer trade with others. no longer need tariffs to pay for wars. success of globalization in golden age due to this time and promotion of free trade.
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telegraph
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transmits/receives messages over long distance. cheap. by 1900 transatlantic cables connected europe to all commercial and financial centers in west. called victorian internet. with railroad, they allowed specialization in manufactured goods and trade between developing and developed. europe special in manufactured goods while developing in raw materials. decreased comm costs.
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ocean shipping
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primary way to trade before railroad. improvements in iron hull, steam power and refrigeration lowered costs of overseas trade. decreased costs led to greater commodity price convergence and helped globalize.
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most favored nation status
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MFN, treaty that prevents discrimination among MFN partners. allowed spread of free trade among them. 19C free trade spread with interlocking bilateral treaties.
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irish potato famine 1845
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half million starved to death, when potato disease destroyed crops. 2 million emigrated. most to US. result of poor UK governance, failed to react timely and whose corn laws limited emergency food imports. corn laws repealed year later via PM peel and with w support of anti corn law league. showed how domestic crisis exposed to cost of protectionism and prompted trade liberalization within UK. led to freer trade.
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Price specie flow
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David Hume, self balancing nature of gold trade. where quantity of money increases (ex>imports), inflation sets in and price of goods rises while in countries where money supply decreases deflation would occur as prices fell. higher prices rise in countries with positive balance of trade. and exports decrease and imports increase which alters balance to neutral. inversely, countries with negative balance, lower price causes exports to increase and imports to increase, increases balance of trade unti l0 for all countries involved.
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Areas of recent settlement
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locations populated by european settlers and during golden age campital flowed from where it was abundant to where it was scarce, so like from UK to US. UK focuses on the areas of recent settlement and consequently they experienced convergence during golden age. shows developing countries that integrated into intl economy and benefited.
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friedrich list
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19C political economist and activist, early theoretician of industrialization via protection. free trade is ultimate goal but temporary trade protection needed to equalize relations among major powers. for freedom of trade less advanced nations must be raised artificially, promoted idea of infant industry protection. pointed out that no country had industrialized without protective barriers.
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second industrial revolution
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tech revolution, late 19C until WWI. began with bessemer steel in 1860s and ended with production line/mass. rapid industiralized development in west europe and US and japan. followed first industrial revolution in UK late 18C that spread throughout europe and N. america. second revolution was responsible for promoting globalization of goden age and led to commodity price convergence.
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