Quick questions on Globalisation and financial integration explained: H2 History

One major driver was technological change. Continuing advances in transport, building on earlier innovations like containerised shipping, kept the cost of moving goods low. More importantly, revolutions in communications and computing dramatically reduced the cost of moving information and money across the world, almost to nothing and almost instantly. This made it feasible to coordinate production across many countries, to manage globally dispersed operations, and above all to move capital around the world at great speed.

The other major driver was political choice. Technology made deeper integration possible, but it was deliberate policy that turned possibility into reality. Governments progressively reduced barriers to trade through successive rounds of liberalisation. Crucially, after the collapse of the Bretton Woods system of fixed exchange rates and capital controls, many countries freed up cross-border capital flows, allowing money to move far more freely than under the postwar order.

The consequences of globalisation are genuinely double-edged. On the positive side, deeper integration is associated with strong aggregate growth in the world economy and with dramatic poverty reduction, especially in those parts of Asia that integrated successfully into global trade and investment. Access to world markets, foreign investment and technology allowed some developing economies to grow rapidly and to lift hundreds of millions out of poverty. For these economies, integration into the global economy was a powerful engine of development, and the optimistic interpretation rightly stresses these gains.

Explain how technology drove late twentieth-century globalisation. [4 marks]

Explain why financial integration increased after the 1970s. [12 marks]

"Globalisation did more to spread instability than to spread prosperity." How far do you agree? [20 marks]