Global Economic History – Vocabulary Flashcards

A comprehensive set of key terms and definitions covering major concepts, people, events, and theories from the lecture series on Global Economic History.

Great Divergence

The widening gap in economic growth and living standards between Western Europe/ North America and the rest of the world after about 1820.

Industrial Revolution

Long-term shift to mechanized, factory-based production powered by new General Purpose Technologies, raising productivity and transforming society.

Economic globalization

Growing cross-border interdependence through trade, capital flows, migration, and rapid technology diffusion.

Early modern globalization

1500–1800 wave of maritime, colonial-based world trade in luxury goods, silver, and slaves.

Triangular transatlantic economy

16th–19th-century trade circuit: European goods to Africa, enslaved Africans to the Americas, American raw materials to Europe.

Neoliberal globalization

Post-1980 phase marked by deregulation, lower trade barriers, and liberalized capital markets.

De-globalization

1914–1945 retreat from global integration caused by wars, protectionism, and the 1929 crisis.

First global economy

1850–1914 period of unprecedented trade, capital and migration flows under the gold standard.

Eurocentrism

World-view that treats European history and values as inherently superior and normative.

Kenneth Pomeranz

Historian who argues Europe’s rise was contingent on coal and colonies, challenging Eurocentric narratives.

Malthusian Trap

Pre-industrial situation where population growth outpaces food and energy, keeping incomes stagnant.

European Marriage Pattern

North-western European norm of late marriage and low fertility that limited population growth and raised wages.

Enclosure

Privatization of common lands in England that created a rural wage-labor force.

Joint-stock company

Early corporate form that pools large capital through share ownership; key to long-distance trade and industry.

Douglass North

Economist who emphasized institutions—property rights, contracts—as drivers of economic performance.

Max Weber

Sociologist linking the Protestant ethic of hard work and thrift to capitalist development.

General Purpose Technology (GPT)

Innovation usable across many sectors that triggers broad productivity gains (e.g., steam, electricity, digital tech).

Invention

Original scientific or technical discovery (e.g., Faraday’s work on electricity).

Innovation

First commercial application of an invention (e.g., Edison’s light bulb).

Creative destruction

Schumpeter’s concept of new technologies displacing old ones, fostering growth but causing disruption.

First Industrial Revolution

c. 1750–1850 British phase driven by textiles and steam power, shifting energy from wood to coal.

Second Industrial Revolution

c. 1870–1914 wave centered on electricity, steel, chemicals, and the internal-combustion engine.

Third Industrial Revolution

1945–1980 era of electronics, plastics, nuclear power, computers, and early digital networks.

High Wage Hypothesis

Robert Allen’s idea that Britain’s relatively high labor costs incentivized labor-saving inventions.

Taylorism

‘Scientific management’ method that times and standardizes tasks to boost factory efficiency.

Fordism

Mass-production system using assembly lines, standardized products, and high wages to spur mass consumption.

Industrialization

Broader process by which countries adopt mechanized production, whether or not they originate new GPTs.

Standard Model of Industrialization

Allen’s four-pillar strategy: national markets, protective tariffs, large banks, and mass education.

Imitation Theory

Marx-era idea that latecomer nations will copy Britain’s industrial trajectory over time.

Walt Rostow

Economist who proposed five linear ‘stages of growth’ culminating in mass consumption.

Gerschenkron’s Theory of Relative Backwardness

Argument that late industrializers substitute missing market institutions with banks or the state and can grow faster.

National market creation

Removal of internal trade barriers and investment in transport to unify domestic markets.

Protective tariff

Import tax designed to shield nascent industries from foreign competition.

Mass education

State-led expansion of schooling to supply literate, numerate industrial workers.

Lieven Bauwens

Belgian entrepreneur who smuggled the mule jenny from Britain to Ghent in 1800.

William Cockerill

English mechanic who introduced textile and steel machinery to Belgium (Verviers 1799; Seraing 1817).

Matthew Perry

U.S. commodore who forced Japan to open to trade in 1853, ending Sakoku isolation.

Meiji Reforms

Post-1868 Japanese modernization program featuring centralization, railways, education, and industrial policy.

Resource Curse

Paradox where resource-rich countries often suffer slow growth, corruption, and volatility.

Terms of Trade

Ratio of export to import prices; declining ToT hurt primary-goods exporters.

Dutch Disease

Currency appreciation from resource booms that undermines manufacturing competitiveness.

Import Substitution Industrialization (ISI)

Strategy of replacing imports with domestically produced goods behind high tariff walls.

Big Push Industrialization

Large, coordinated state effort to industrialize rapidly (e.g., Stalin’s USSR, post-war Japan).

Minimum Efficient Scale (MES)

Smallest output level at which a plant achieves lowest average cost (e.g., 7 M-ton steel mill).

Great Specialization

19th-century global division: industrial North exported manufactures; South exported raw materials.

Deindustrialization (Global South)

Loss of manufacturing share in colonies as cheap European machine goods displaced local artisans.

Sovereign Wealth Fund

State-owned investment fund that channels resource revenues into diversified assets (e.g., Norway).

Triangular trade

Atlantic exchange of European manufactures, African slaves, and American commodities.

Law of One Price

Theory that identical goods should sell for the same price in fully integrated markets, barring transport costs.

Absolute advantage

Adam Smith’s idea that countries gain by specializing in goods they produce most efficiently.

Comparative advantage

Ricardo’s principle that trade is beneficial even when one country is less efficient in all goods, as long as relative costs differ.

Mercantilism

Pre-1800 doctrine viewing trade as zero-sum; sought export surpluses and hoarded bullion.

Gold Standard

Monetary system (c. 1870–1914) where currencies were convertible into fixed amounts of gold.

Bretton Woods system

Post-1944 framework with IMF, World Bank, and fixed but adjustable exchange rates pegged to the U.S. dollar.

GATT

General Agreement on Tariffs and Trade (1947) that organized successive rounds of tariff reductions.

WTO

World Trade Organization (1995) overseeing trade rules, services, IP, and a binding dispute mechanism.

TRIPS Agreement

WTO accord setting minimum global standards for intellectual-property protection (patents, copyrights, trademarks).

Tariff

Customs duty levied on imports to raise revenue or protect domestic producers.

Non-tariff barrier

Quota, standard, or regulation that restricts imports without using tariffs.

Foreign Direct Investment (FDI)

Cross-border investment giving the investor managerial control over foreign assets.

Portfolio investment

Cross-border purchase of securities without management control, aimed at financial returns.

Ownership advantage

Firm-specific asset—technology, brand, management—that offsets the ‘liability of foreignness.’

Location advantage

Host-country characteristic—resources, market size, low costs—that attracts foreign investors.

Internalization

Decision to keep transactions within the firm when market contracts are costly or risky.

OLI Paradigm

Dunning’s framework stating FDI occurs when Ownership, Location, and Internalization advantages coincide.

Resource-seeking FDI

Investment aimed at accessing raw materials, low-cost labor or specialized R&D.

Market-seeking FDI

Establishing production abroad to serve or protect local and regional markets.

Efficiency-seeking FDI

Global reallocation of production to exploit cost differences and economies of scale.

Proto-multinational

Early chartered company with overseas assets and quasi-sovereign powers (e.g., VOC).

Nationalization

Government takeover of foreign or domestic private assets, often in mining and utilities.

Dragon Multinational

Rapidly expanding MNC from an emerging economy, building capabilities through aggressive FDI.

Corporate Social Responsibility (CSR)

Voluntary corporate commitments to ethical, social, and environmental standards.

Gini coefficient

Statistical measure of income or wealth inequality ranging from 0 (equality) to 1 (max inequality).

Lorenz curve

Graph showing cumulative income share by population percentile; deviation from diagonal indicates inequality.

Inequality extraction ratio

Actual inequality divided by the maximum feasible inequality a society could sustain.

Kuznets Curve

Hypothesis that inequality rises then falls as a country industrializes and matures.

Proletarization

Shift of workers from self-employed, subsistence activities into wage labor.

Trade union

Organization of workers that bargains collectively over wages and working conditions.

Welfare state

Government system providing extensive social security, healthcare, and income redistribution.

Progressive taxation

Tax structure in which the rate increases with income or wealth level.

TARP

U.S. Troubled Asset Relief Program (2008) that bought or insured troubled bank assets.

Quantitative easing

Central-bank policy of purchasing financial assets to inject liquidity and lower interest rates.

Austerity

Policy of cutting public spending and/or raising taxes to reduce fiscal deficits, often during crises.

Hyman Minsky

Economist who developed the Financial Instability Hypothesis of boom-euphoria-crash cycles.

Minsky cycle

Sequence of boom, speculative euphoria, and crisis driven by rising leverage and asset bubbles.

Kondratiev cycle

Long (40–60-year) waves of economic expansion and decline linked to clusters of innovations.

Joseph Schumpeter

Economist who coined ‘creative destruction’ and emphasized entrepreneurship and innovation waves.

Glass–Steagall Act

1933 U.S. law separating commercial and investment banking; partly repealed in 1999.

Mortgage-backed security (MBS)

Asset whose cash flows are pools of home-loan payments; central to the 2007–08 crisis.

Subprime lending

Issuing mortgages to borrowers with poor credit, typically at higher interest rates.

International Monetary Fund (IMF)

Bretton Woods institution offering balance-of-payments loans in exchange for policy conditions.

World Bank

Global lender providing long-term development financing and poverty-reduction programs.

Sovereignty vs. supranationality

Tension between national control over policy and adherence to binding international rules.

New International Economic Order (NIEO)

1974 UN initiative by developing countries seeking fairer trade, finance, and technology terms.

ICSID

World-Bank-affiliated tribunal for resolving investor–state disputes, participation is voluntary.

Bilateral Investment Treaty (BIT)

Agreement granting foreign investors protections such as fair treatment and compensation for expropriation.

Realism (IR theory)

View that international organizations mainly reflect the interests of powerful states.

Functionalism (IR theory)

Idea that technical cooperation in limited areas can spill over into broader integration.

Constructivism (IR theory)

Approach emphasizing that international norms and identities shape state behavior and institutions.

European Coal and Steel Community (ECSC)

1951 supranational body pooling Franco-German coal and steel, precursor to the EU.