What were the implications of WWI for the history of the international economy in the 20th?

Résumé du document

The Great War (1914-1918), which occurred because of political and geopolitical issues in Europe, came as an exogenous shock to the international trade. Indeed, the world never had been so well integrated than before the outbreak of this major conflict. The Great War engaged the twentieth century on the path of disintegration while the international economy had successfully reached a fine level of integration throughout the 19th century. It put an end to a prosperous period for the international economy and would affect its course over the 20th century.

The conflict changed to a great extent the forms and the dynamics of globalization as a process. It goes without saying that a "world war" would have global impacts. Even though the Great War's theater was mainly Europe, it had global economic repercussions. Indeed, how did the World War I impact the international commodity market? The Interwar period that followed faced major economic issues with a second disintegration in the 1930s after a brief period of reintegration. The Great Depression worsened an already affected European economy, which was not saved by flawed policy responses- such as protectionist measures and monetary policies.

However, this time was also an extraordinary opportunity for non-European countries to industrialize and play a different role in the international economy, and thus changing the balance of power. We will try to show throughout this paper that the Great War took the 20th century international economy on a long detour and profoundly affected the evolutionary path of international economy. First, World War I corresponded to the first major breakdown of the international economy and had severe implications for its future.

Extraits

[...] Finally, the monetary policy turmoil of the period had huge costs and led to a greater instability for international economies in the 1920s with high levels of inflation. The effects of returning to the pre-1914 Gold Standard would be disastrous on economies -which eventually opted out from the system with the Great Depression- as we will study further. Finally, interwar commercial policy during war was defined by protectionist measures, both in Europe and in the New World. Governments of countries that played a new role in the international economy such as Latin America countries, India and Australia continued to seek further protection. [...]

[...] Flawed monetary policy responses endangered economies and worsened the situation. The Gold Standard was abandoned during the Great War that had profoundly disrupted it. Since countries wanted to go back to the pre-war monetary system, it was gradually being restored during the interwar period without taking into account that underlying factors had changed. For instance, Germany restored its convertibility in 1924 after a hyperinflation period, Great Britain returned to the Gold Standard in 1925 at its pre-war parity and France reintegrated it in 1928. [...]

[...] The Soviet Union was out of the picture since it backed off from the international economy by building it own communist industrial society. The Great War and its aftermath can help explain why countries chose to implement these trade restrictions measures. As we will see, countries were tied to a gold standard system that was proving its limits. "Had more countries been willing to abandon the gold standard and use monetary policy to counter the slump, fewer would have been driven to impose trade restrictions in a desperate if ultimately futile effort to stem the rise in unemployment"[6]. [...]

[...] As a matter of fact, these two economies were the only exceptions to the closing of world trade during the Great War. Besides, European governments had to intervene in the economy through expenditures, supervision of the private sector, the planning of resources in the context of the war. These changes in production and trade patterns helped non-European countries to industrialize in order to meet demand on the manufactured consumer goods market. It makes sense to differentiate import-substitution trends filling for European markets and industries based on local raw materials. [...]

[...] Export expansion was particularly significant in North America, with an increase of respectively 150 and 200% in national exports for the U.S. and Canada. These two countries also faced a boost in industrial activity. By expanding their export capacity, "countries of recent settlement" contributed to changing the dynamics of international economy, causing downward pressure on commodity prices as well as a supply overhang. Second, Europe completely reorganized industrial production toward war equipment, focusing on steel, iron, aircraft and shipbuilding production and abandoning traditional production such as textile and grain. The U.S. [...]