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The first Globalization 1880-1914 (free trade and protectionism (1880 to…
The first Globalization 1880-1914
transport and communication
transport
steamships
railways
telecommunications
telegraph
wireless telegraphy
already important part in ocean navigation when Titanic sank in 1912
telephone
international from 1890s
intercontinental from 1920s
interurban dimension from 1880
international capital flows
types of foreign investments
foreign direct investment
free standing companies (mostly in Britain)
big company in industrialized country creating production in other countries
multi-national companies
portfolio investment
government bonds
railway stock
international migration
free trade and protectionism
globalization did not go hand in hand with the free trade (abolition of trade barriers)
1860 Anglo-French free trade agreement
1880 to 1914 return to protectionism
return to protectionism did not lead to any slowdown in trade
foreign trade grew dramatically in the 19th century
Paradox: foreign trade increased more during the protectionism than during the free trade
reason: economic growth was stronger
international finance
international monetary system
gold standard
1868 : Britain and satellite countries
currencies convertible at a fixed price into gold
credibility of the system
assumed to have enabled price stability and automatic adjustment of balance of payment
advantages
facilitates commercial transactions (no more exchange rates and transaction cost)
constraints
impossible trinity: not autonomous monetary policy (it has to stick to the parity can't decide on the interest rate)