Economic Developments Essay

The current system of the world economy has emerged as a result of the historical trends and economic developments that occurred in the past particularly during the periods of World War I, World War II and the Cold War. To a significant extent, the current world order and the capitalist and industrial prosperity that is being experienced today are products of historical economic developments. This paper examines the economic developments from 1913 to the present including the history of self-determination in the world economy in relation to the current world economy. Consequently, the role of the United States from being an isolationist to an economic hegemon is analyzed. Economic Developments from 1913-Present The period from Post World War I up to the present can be considered to be a see-saw of economic prosperity and economic crises for most countries. For countries like the United States the war had brought about economic development but it also caused the economic downturn for countries like France and Germany. Capitalism began to ensue and trading had been more active. Hence, the period from 1920-1929 signaled the massive economic progress in the world economy- industries were established and the percentage of industries to agriculture rose. After this massive growth however, the unemployment rate and poverty that ensued from the period of 1929-1941 had led to the Great Depression- interest rates were high, hyperinflation ensued and the rise in debt had led to stock market collapse. The world economy had experienced a systemic recession leading the collapse of markets worldwide. In this era, the GDP and GNP of nations dropped and poverty ensued as world trade had been inactive. After the Great Depression, the World War II had created another economic era- post World War II had been considered to be a golden era for capitalism worldwide. This is because of the rapid rise in industries, the technological advancement, the prospering and stabilization of world trade, domestic and international institutions had been established in order to facilitate the world economy. Consequently, the World Trade Organization, the World Bank and the IMF were established in order to aid countries needing economic lift in order to aid in their industrialization. Backed by capitalism and foreign direct investments, this era can be considered the time when the world economy had boomed. However, after this period the time between 1970s-1980s, inflation and interest rates grew up and the fixed interest rates were deregulated in order to let the world economy repair itself. This era had however, contributed in terms of the massive plan to reorganize domestic economies through fiscal policies. The post Cold War on the other hand, marked the era when the US became the sole hegemon after the downfall of Russia. Before the Cold War, democratic countries can only trade with democratic countries and communist countries are only limited to trade with communist countries- the downfall of Russia opened the doors for all countries to be participants in the world economy. Hence, during the period of 1990 and up to the present times, despite some economic fluctuations, the world economy can be considered as stable and progressive. While there are ups and downs, the stability of the world economy in the present times cannot easily succumb to another depression. Self-Determination and in the World Economy Self-determination started after the World War I as a result of the Treaty of Versailles- it declared that the sovereignty of the states should take charge of the whole population. World War I led to the breakup of the Hapsburg and Ottoman empires and the birth of a new generation of nation-states. At Versailles, U. S. President Woodrow Wilson’s famous Fourteen Points–the fifth of which declared that sovereignty should take full account of the interests of the populations concerned–formed the basis for the treaty ending the war. After World Wars One and Two, self-determination inspired the demolition of empires and the formation of new sovereign states; the concept being thus extended in the 1940s and 1950s to apply in the context of the decolonisation process. In the 1960s and 1970s, the principle of self-determination clashes with the principle of territorial integrity and global leaders are increasingly seeing this angle to the problem. In fact, even the UN resolution 1514 adopted in 1960 which elevated the status of self-determination, had also emphasized territorial integrity: any attempt aimed at the partial or total disruption of national unity and territorial integrity of a country is incompatible with the Purposes and Principles of the Charter of the United Nations. The international system was caught up in the contradiction and had exhibited some degree of ambivalence at least after the post-war decolonisation. It can be observed that the further extension of the principle today, as it inspires the surge of ethnic politics and threatens the break-up of the established post-colonial order. The United States as the World’s Political and Economic Hegemon The United States before World War I cannot be considered to be an economic or a political superpower, it derived its wealth from World War I from selling ammunitions and exploiting the economic opportunities caused by the war. However, in World War II, the US emerged as one of the more powerful countries not only in terms of technology but also politically and economically after surviving the Great Depression. The Post World War II established the United States from a country in the middle to that of a global hegemon. For one, post World War I saw the US to be involved in trade, the importation and exportation of goods as well as in searching for new territories to expand its power and industries. Post World War II saw the United States cementing its economic and political hegemony- it had established itself as one of the most prosperous and progressive countries not only through its GDP and GNP but also in terms of its ability to impose upon other countries. The United States during this time served as one of the economic powers together with countries in Europe, Japan and the USSR. Upon entering the Cold War, the world became a division of the US and the USSR or democracy versus communism. During this era, the United States served as an international role model for democracies as well as the patron of democratic countries. The fall of the USSR catapulted the US to its role today as a global hegemon- except for North Korea, there had been no real threat to the supremacy of democracy and hence, the United States. During this time until the present times, the United States had been a major player in sanctioning countries that do not abide by international laws and regulations as well as being a forerunner in providing foreign aids as well as regulating trade activities. To be a partner with the US would be tantamount to economic growth. The power held by the US both politically and economically can be considered to spawn countries even in Asia and Third World countries. Needless to say, the United States can be considered to be the most important international player today.