Subscribe to DeepL Pro to translate larger documents.

Visit www.DeepL.com/pro for more information.

Dept. of Economics and

Business
FURNACE OF ALMERIA

Luis J. Belmonte Ureña (coordinator. GD A-B, WG A)

Ana Batlles de la Fuente (WG B1 and B2)
Juan José Tapia León (GD C)
Diego Martínez Navarro (GT C1).
 Dept. of Economics and
Business
FURNACE OF ALMERIA

Objectives and structure of the session

Objectives:
• To find out which have been the stages that have marked
the growth of the world economy in the last 2 centuries.
• What has been the distribution of growth, has there been
convergence, and what transformations have occurred as a
result of growth?
Session structure:
To this end, the following sections will be reviewed:
• Introduction.
• The great stages of the 20th century and the beginning of the 21st
century.
• Growth, inequality and structural change in the
world economy.
• Practice
Bibliography:
• Alonso, J.A. (2021): Lessons in world economics. 10ª
edition. Thomson Reuters. Lesson 2.
edition. Thomson Reuters. Lesson 2.
• Alonso, J.A. (2023): Lessons in world economics. 11ª
 Dept. of Economics and
Introduction Business
FURNACE OF ALMERIA
Radiography of the 20th
century:
• Significant events: fall of empires, the two great World Wars
(1914-1918 and 1939-45), the Spanish Civil War (1936-
1939), revolutions and independence processes, the Cold
War (1947-1991), the fall of the Berlin Wall (1989), European
integration, etc...
• From the economic, social and productive point of view:
• Multiplication of per capita income and population.
• Industrialization generates the rural exodus and with
it the urbanization of cities.
• Changes in the international structure of production that
have generated new centers of gravity (regional trade
blocs) in an increasingly globalized world.
• Unprecedented technological development.
• Negative aspect:
• The globalization of trade, as the most representative
aspect, has accentuated the inequality between rich and
poor.
 Dept. of Economics and
Introduction Business
FURNACE OF ALMERIA

Production line

French cannery. XIX Century

Assembly line (Fordism) of the 20th century.

 Dept. of Economics and
Introduction Business
FURNACE OF ALMERIA
 Dept. of Economics and
The great stages of the 20th century Business
FURNACE OF ALMERIA
and the beginning of the 21st century
Financially...
1. 1870-1913 (IGM). End of cosmopolitanism.
• Gold standard and fixed exchange rates, as an international
payment system.
• Tariff protectionism in Europe, but a migratory boom to the new world
(America).
• Major industrial and technological advances in Western
countries: replacement of steam by the internal combustion
engine, and coal by electricity and oil (2nd Industrial Revolution).
• Organization of production around large companies, trusts and
cartels, due to the concentration of capital and the birth of new
industries (automobile, oil, electricity, etc.).
• The US is the new world power, especially in technology, displacing
the UK, but Europe still dominated international trade at this stage.
• ������🡺 During this period, the average cumulative growth rate of
per capita income amounted to 1.4%, compared to 0.5% in the
previous year.
the last half of the 19th century.
 Dept. of Economics and
The great stages of the 20th century Business
FURNACE OF ALMERIA
and the beginning of the 21st century
Financially...
2. 1914-1950 (World War I and II and post-war II). The Great Depression.
• With the First World War, the Gold Standard is suspended, a period of
uncertainty
inflation and commercial disorder due to the conflict.
• The stock market crash of '29 spreads rapidly, as many
countries depended on the flow of money from the US.
• Public indebtedness, state interventionism, control of foreign trade
("beggar-thy-neighbor policy" through domestic production and
reduction of imports, with high tariffs, and competitive devaluations
to export more).
• Results🡺
• International migrations stop.
• World trade was reduced by 70% (1929-1933).
• During this period, the average cumulative growth rate of per
capita income fell to 0.8%.
 The great stages of the 20th century and the Dept. of Economics and
Business
FURNACE OF ALMERIA

beginning of the 21st century

Financially...
3. 1950-1973. "Golden Age" of growth.
• From post-World War II to the oil crisis.
• It has been the longest period of growth and with the highest growth rates.
• Two important milestones:
• Exchange rate stability, with a system of fixed but adjustable
exchange rates (1944 - Bretton Woods - the dollar would become
the reference currency and would be convertible into gold until 1971.
The World Bank and the IMF were created).
• Greater trade liberalization, with the disappearance of direct control
over foreign trade and the progressive reduction of tariffs (General
Agreement on Tariffs and Trade - GATT - 1948).
• The U.S. established itself as a world leader in all areas: industrial,
technological, monetary and became a vital support for old Europe
(Marshall Plan - 1948 to 1952).
• Regional free trade zones are created (EEC - Treaty of Rome).
1957)-
• of industrial
Trade goods.
in manufactured goods is gaining ground over trade in raw materials:
exchange
 Dept. of Economics and
The great stages of the 20th century Business
FURNACE OF ALMERIA
and the beginning of the 21st century
Financially...
3. 1950-1973. "Golden Age" of growth.
• Results🡺
• World per capita income growth of 3%.
• Strong increase in world population.
• Corporate gigantism: dominating transnational cartels
world production.
• Instability at the end of the phase due to currency imbalances
and conflict in the Middle East.

4. 1973-2016. The Age of Global Capitalism.

• Last quarter of the XX century until the beginning of the XXI century.
• Oil crisis, war conflict, price hikes and collapse of the Bretton
Woods agreement: end of exchange rate stability.
• Protectionism (barriers to trade) reappears.
• The price of oil multiplies by 4 (1973-1974) and by 3 in 1979...
industrial recession was inevitable 🡺 stagnation and unemployment,
but with inflation: stagflation.
 Dept. of Economics and
The great stages of the 20th century Business
FURNACE OF ALMERIA
and the beginning of the 21st century
4. 1973-2016. The Age of Global Capitalism.
• Decades of the 80's and 90's.
• Recovery phase, with oil declining in price.
• Financial markets gain prominence, while authorities are unable
to control their evolution 🡺 financial crises of the 80's, 90's
• 2008 subprime crisis - ���������🡺 Great recession.
• Major regional cooperation projects: Economic and Monetary Union,
finalized in 1999, Mercosur, Nafta, but discord arises in the EU: Brexit (2016)

• Results:
• World per capita income growth of 1.6%, although
disparate (1973-2016).
• Major technological transformations: Internet.
• Trade liberalization stage in a scenario of full globalization
(1995 - WTO).
• A governed globalization is needed (Stiglitz and Krugman).
 Dept. of Economics and
Growth, inequalities and change Business
FURNACE OF ALMERIA
structural in the world economy
ECONOMIC GROWTH (1870-2016):
• Per capita income growth has increased tenfold.
• Parallel growth in population, which has multiplied by 7.
• 🡺 productivity gains (+70 times) and increase in world trade
(+100 times).
• 🡺 uneven growth:

Source. p. 66 basic manual.

 Dept. of Economics and
Growth, inequalities and change Business
FURNACE OF ALMERIA
structural in the world economy
ECONOMIC GROWTH (1870-2016) continued:
• Lack of uniformity in growth and welfare:

At the beginning of the

21st century, neither
Africa, Asia nor parts
of Latin America
exceeded the per
capita income of the
West 100 years
earlier.

Source. p. 65 basic manual.

 Dept. of Economics and
Growth, inequalities and change Business
FURNACE OF ALMERIA
structural in the world economy
INCOME INEQUALITIES (1870-2016):
• There has not been a total convergence, but rather a convergence of
partial, of approaching the levels of the most developed countries.
advanced. Source. p. 66 basic manual (2019).

15% of the
population,
enjoys more
than 50% of
the...
1st Infra third world, homogeneous
(South Asia and sub-Saharan Africa).
1/3 ����������🡺3� income.

2nd Southeast Asia (Asian tigers or

dragons) managed to rapidly close the
gap with the most advanced countries
(Hong Kong*, South Korea, Singapore
and Taiwan).

3º Income improvement in the most

populated countries explains the
reduction in inequality from 1970 to
2008.

4th Improvement by MDGs, now SDGs.


Growth, inequalities and change
structural in the world economy
INCOME INEQUALITIES (1990-2021):
Dept. of Economics and
Business
FURNACE OF ALMERIA
 Dept. of Economics and
Growth, inequalities and change Business
FURNACE OF ALMERIA
structural in the world economy
STRUCTURAL CHANGE: population, productive structure, trade and state
(1870-2016):
1. Sustained increase in world population.
• Although it has not been evenly distributed. High birth rate in
developing countries.
• Average cumulative growth rate of 1.4%, compared to 0.5% for
the period 1820-1900.
• Accompanied by a doubling of life expectancy (+65 years).
• The Malthusian brakes on population of previous centuries
have been mitigated: famine, wars and epidemics.

2. New production structure.

• From agriculture, to industry, and from both to services.
• At the beginning of the 20th century:
• Agriculture employed 50% of the world's population.
• Low productivity and generated only 5% of world GVA.
• Incipient and unequal industry by country.
• Services, with marginal representation.
Growth, inequality and structural Dept. of Economics and
Business
FURNACE OF ALMERIA
change in the world economy
STRUCTURAL CHANGE: population, productive structure, commerce and
State (1870-2016):
2. New production structure (continued):
• End of the XX century:
• Agriculture employed 5% of the population.
• Industry becomes the vehicle for progress
technological.
• Tertiarization of the economy, as it begins to dominate in
the most advanced countries.
3. Globalization of the economy.
• Increase in trade flows, even if truncated by the
wars, depressions and protectionist ups and downs.
• Since 1980, the increase in commercial exchanges has given rise
to globalization (commercial and communications).
• Economic integration has led to a change in the type of goods
traded: from primary products (agricultural and mining) to
manufacturing and services with a high technological content
(financial, transportation, etc.).
• Trade concentrated in a few countries: intra-industry.
Growth, inequality and structural Dept. of Economics and
Business
FURNACE OF ALMERIA
change in the world economy
STRUCTURAL CHANGE: population, productive structure, commerce and
State (1870-2016):
4. The weight and growing role of the State.
• Although in the last decades of the twentieth century and the
beginning of the twenty-first century, the State has lost its
leading role in the economy.
• Before World War I (1914), public spending represented 10-15% of
the total.
of the GDP of Western countries and contained hardly any social
spending.
• In 2016 it accounts for more than 50% of GDP, except in Japan
and the USA, with a large weight of social benefits and
collective services.
• Today, the presence of the State in the economy is the
guarantee of the Welfare State and the best remedy to recent
economic crises (2008 - subprime crisis), which justifies certain
interventionist responses at the international level.

Glossary of terms (page: 75 - Manual of 2021)

End of topic 2 summary