I. Over the past three thousand years, the world has changed its main centre of economic activity many times. The world economy was once centered around Mediterranean, where Egypt, Greece and Rome based their prosperous economies on seafaring trade.
With European expansion into the New World, following Columbus's voyage of 1492 - and with the rise of the great trading nations of England, Holland, Spain and Portugal - the Atlantic became the centre for international trade and commerce.
After World War II the United States, Canada, Australia, Japan, South Korea, Taiwan, Hong Kong and Singapore became major trading nations, all located on the Pacific Rim. By the end of the 1980s these countries produced a large part of the world's output of goods and services.
The rapid economic growth of such countries as Japan, Hong Kong, South Korea and Taiwan was based essentially on exports. South Korea, for example, decided to concentrate its economic production on consumer goods, such as televisions and VCRs that could be sold to rich consumers in Europe and North America. The success of this export-led economic growth was based on a hard-working, low-wage work force, combined with rapid technological advances and improved access to world trade.
The rapid economic growth of such countries as Japan, Hong Kong, South Korea and Taiwan was based essentially on exports. South Korea, for example, decided to concentrate its economic production on consumer goods, such as televisions and VCRs that could be sold to rich consumers in Europe and North America. The success of this export-led economic growth was based on a hard-working, low-wage work force, combined with rapid technological advances and improved access to world trade.
II. Europe has been divided by sturdy political and ethnic barriers that defied every attempt at unification. Switzerland has tried to preserve their independence and neutrality at all costs. But by the end of 1950s some countries of Europe decided that the best way to encourage trade and economic growth was to remove economic barriers between countries. In 1957 six countries - Belgium, France, the Netherlands, Italy, Luxembourg, and the West Germany - signed the Treaty of Rome to form the European Economic Community (EEC). As the EEC grew during the 1970s and 1980s to include Britain, Ireland, Denmark, Greece, Spain and Portugal, it became known as European Community or EC (now the European Union).
III. The Communist countries of Eastern Europe - the U.S.S.R., Poland, Hungary, East Germany. Bulgaria, Romania and Czechoslovakia - saw their modest post-war growth. The failure to "deliver goods" led to the fall of most Communist governments by the end of the 1980s. But the eagerly awaited prosperity of free-market systems that replaced them was a long time coming. Their transition from communism to capitalism was often hindered by a crumbling infrastructure, rising unemployment, hyperinflation and internal dissension.
IV. The developing and relatively poor countries are said to make up the Third World. The term "Third World" was based on the idea that the "first" and "second" worlds were made up of the free-market and centrally planned countries with advanced industrial economies. Although the Third World comprises three quarters of the world's population and 90% of the world's population growth, it provides only 20% of the world's economic production.
The developing countries had risked money in the 1970s and borrowed billions of dollars from Japanese and Western banks, hoping to grow their way out of poverty. But they failed. By the 1980s, the debtor countries of the Third World found themselves confronted with soaring interest rates and an economic slump in the developed countries. The prices of commodities such as coffee and sugar fell sharply, reducing many developing countries' export earnings. Debtor countries were forced to borrow even more money to pay for the increased cost of oil and debt payments.
Although some of the original loans had been used to line the pockets of government officials and businessmen, much of the money was actually spent on valuable infrastructure projects like electricity systems and railroads.
III. The Communist countries of Eastern Europe - the U.S.S.R., Poland, Hungary, East Germany. Bulgaria, Romania and Czechoslovakia - saw their modest post-war growth. The failure to "deliver goods" led to the fall of most Communist governments by the end of the 1980s. But the eagerly awaited prosperity of free-market systems that replaced them was a long time coming. Their transition from communism to capitalism was often hindered by a crumbling infrastructure, rising unemployment, hyperinflation and internal dissension.
IV. The developing and relatively poor countries are said to make up the Third World. The term "Third World" was based on the idea that the "first" and "second" worlds were made up of the free-market and centrally planned countries with advanced industrial economies. Although the Third World comprises three quarters of the world's population and 90% of the world's population growth, it provides only 20% of the world's economic production.
The developing countries had risked money in the 1970s and borrowed billions of dollars from Japanese and Western banks, hoping to grow their way out of poverty. But they failed. By the 1980s, the debtor countries of the Third World found themselves confronted with soaring interest rates and an economic slump in the developed countries. The prices of commodities such as coffee and sugar fell sharply, reducing many developing countries' export earnings. Debtor countries were forced to borrow even more money to pay for the increased cost of oil and debt payments.
Although some of the original loans had been used to line the pockets of government officials and businessmen, much of the money was actually spent on valuable infrastructure projects like electricity systems and railroads.
