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The World Economy Takes Shape

The world economy changed profoundly during the nineteenth century. The economists identify three types of ‘movements’ or ‘flows’ within international economic exchanges. The first is the flow of trade which in the nineteenth century referred largely to trade in goods like cloth or wheat. The second is the flow of labour—the migration of people in search of employment. The third is the movement of capital for short term or long term investments over long distances.

During the nineteenth century, Britain witnessed a rise in population. This increase in population created demand for food grains. The demand for agricultural products pushed up food grain prices. Under pressure from landed groups, the government restricted the import of corn under the ‘Corn Laws’.

The Corn Laws were scrapped because of the pressure of industrialists and urban dwellers. Food became cheaper and British agriculture was unable to compete with the imports. As a result, vast land was left uncultivated. Thousands of men and women migrated overseas or to other cities.

Around the world in eastern Europe, Russia, America and Australia, lands were cleared and food production was expanded to meet the British demand. Capital flowed from financial centres like London to America and Australia. New settlements were created in Australia and America, the two countries were to meet the demand of food shortage in Britain. Thus by 1890, a global agricultural economy had taken shape accompanied by labour movements, capital flows, ecologies and technology.

The Canal Colonies were introduced by the British Indian government in India in the western parts of Punjab. They built a network of irrigation canals and transformed semi-desert wastes into fertile agricultural lands to grow wheat and cotton for export.

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