HISTORY OF MODERN DAY GLOBAL ECONOMY

John Maynard Keynes, 1919 

"The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth... and reasonably expect their early delivery upon his doorstep." 

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global economy

The represents the integration of national economies through various channels: 

• Trade — exchange of goods and services across borders 

• Investment — capital flows between countries 

• Technology — sharing of innovations and knowledge 

• Finance — interconnected banking and financial systems 

EARLY FOUNDATIONS OF THE GLOBAL ECONOMY 

EARLY FOUNDATIONS OF THE GLOBAL ECONOMY 

01. Mercantilism and Colonial Trade (16th–18th Centuries) 

02. Rise of Nation-States and Early Capitalism 

03. Beginning of International Commerce 

04. Foundation for Modern Systems 

THE INDUSTRIAL REVOLUTION (1760-1840) 

marked a fundamental transformation of production and society: 

Mechanization 

• Shift from hand tools to machine-based manufacturing 

Birth of Factories and Urbanization 

• Creation of factories as centers of production 

• Mass production became possible 

Catalyst for Modern Capitalism 

• Fueled sustained global economic growth 

Capitalism

became the prevailing economic system with these key features: 

• Private Ownership 

• Market-Driven Allocation 

• Profit Motive & Competition 

• Global Trade & Industry 

SOCIALIST & COMMUNIST SYSTEMS 

These systems emerged as reactions to industrial capitalism's inequalities: 

Historical Context 

• Reaction to inequality — workers faced exploitation under early factory conditions 

• Response to harsh working conditions and social disruption 

• Alternative vision for economic organization 

Core Principles 

• Collective ownership

• Centrally planned economies

• Replaces market-driven systems

MIXED ECONOMIES & WELFARE STATES 

combine market mechanisms with government intervention: 

• Government Intervention 

• Social Safety Nets 

THE GOLD STANDARD ERA (1870-1914) 

Fixed Currency Values 

Benefits 

• Facilitated stable international trade 

• Enabled cross-border investment 

• Supported sustained economic growth 

• Created predictable business environment 

Limitations 

• Exposed by World War I — unable to maintain system during crisis 

• Led to eventual collapse of the gold standard 

THE GREAT DEPRESSION (1929) 

• Stock Market Crash 

• Shift to Keynesian Policies 

• Government intervention advocated by John Maynard Keynes 

 

BRETTON WOODS SYSTEM (1944) 

Creation of International Institutions 

• IMF (International Monetary Fund) established 

• World Bank created for development financing 

• Foundation for post-war economic cooperation 

• Fixed Exchange Rates 

• International Cooperation 

GLOBALIZATION WAVE 1: POST-WAR RECONSTRUCTION (1950S-70S) 

Marshall Plan & Rebuilding 

Growth of Multinational Corporations 

Expansion of International Trade 

• GATT (General Agreement on Tariffs and Trade) frameworks 

GLOBALIZATION WAVE 2: NEOLIBERALISM (1980S-2000S) 

Core Policies 

• Deregulation

• Privatization

• Market liberalization

Key Developments 

• Rise of global supply chains 

• Expansion of international financial markets 

• Growth of global capital flows 

Institutional Framework 

• Role of WTO — global trade regulation 

• International trade agreements expanded 

THE DIGITAL REVOLUTION & ECONOMY 

Internet & Information Technology (1990s-2010s) 

• Proliferation of internet connectivity 

• Global connectivity driving commerce 

• Information technology transforming business 

New Business Models 

• E-commerce — online retail replacing traditional stores 

• Platform economies — digital platforms connecting buyers and sellers 

• Cloud computing — remote data storage and processing 

• Industries completely reshaped 

Impact on Labor & Productivity 

• Automation — machines replacing human labor 

• Remote work — work from anywhere 

• Digital skills demand — new workforce requirements 

• Transformation of the workforce