JC History Tuition Online - What is the Green Revolution - Economic Development - JC History Essay Notes

What is the Green Revolution?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Learn more about the the Norman Borlaug, “Father of the Green Revolution”.

Origins of the Green Revolution: Enter Norman Borlaug
Many countries such as Mexico and India were facing hunger and poverty. Together with a growing population, rice producers could not keep up with the burgeoning demand for food.

After Norman Ernest Borlaug completed his studies at the University of Minnesota, he embarked on his research journey in Mexico. He held the belief that sustainable agriculture could be achieved. In time, Borlaug’s efforts had paid off. It led to the creation of disease-resistant wheat strains that paved the way for the Green Revolution.

In 1964, Borlaug joined the Centro Internacional de Mejoramiento de Maíz y Trigo (CIMMYT) that specialised in the improvement of maize and wheat as well as the Consultative Group for International Agricultural Research (CGIAR). The CGIAR later became the central network for international organisations that engaged in research on food security.

Over the years, Borlaug’s contributions led to the improvement of new crops like barley, sorghum and triticale.

International Rice Research Institute (IRRI)
In 1960, the Philippine Government oversaw the creation of the IRRI. The institute set up its headquarters in Los Baños, Laguna (near Manila). With funding support from the Ford and Rockefeller Foundations, the IRRI aims to reduce poverty and hunger via rice research.

In 1978, the government capitalised on the Green Revolution by launching the Masagana 99 (Rice production programme) to improve credit access to rice farmers and achieve rice self-sufficiency. As a result, the local farmers benefited from the cultivation of high-yielding varieties (HYVs).

Impacts on Southeast Asian economies
The Green Revolution was a boon to many economies in the region. In Thailand, the government increased its investments in fertilisers and high-yielding strains of rice. From the late 1960s to early 1970s, rice production doubled.

In Indonesia, Suharto introduced the BIMAS (agricultural guidance programme) to facilitate the distribution of high-yielding rice varieities. By 1985, poverty was significantly reduced and the country attained self-sufficiency in rice.

“BIMAS is a system of agricultural extension, planned and on a mass scale, that aims to raise agricultural production, and at the same time to increase the propserity of farmers and of society…”

Soedarsono Hadisapoetro, Agriculture Minister (1978-1973)

Conclusion: Was the Green Revolution important?
In view of these developments, it is imperative to consider the significance of the Green Revolution in driving the growth of the economies in independent Southeast Asian states. Its importance has to be understood by analysing the state-guided approaches as well as the outcomes.

What can we learn from this article?
Consider the following question:
– How far do you agree that the economic development of independent Southeast Asian states was largely the result of external factors [to be discussed in class]?

Sign up for our JC History Tuition and find out how you can organise your content for the topic on Paths to Economic Development. Given the wide spectrum of issues to consider, we have derived a condensed set of notes to support your revision.

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JC History Tuition - What is OPEC - Oil Shocks - Global Economy Notes

What is OPEC?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Problems of economic liberalisation

Find out more about the role of the OPEC to understand how its output decisions influence global oil prices.

History of the OPEC
The Organization of the Petroleum Exporting Countries (OPEC) was formed in September 1960. Its five founding members comprised of Saudi Arabia, Kuwait, Iran, Iraq and Venezuela. The OPEC was established with a central aim of price stabilization for oil producers through discussions.

Before OPEC, seven multinational corporations dominated the petroleum industry since the mid-1940s. They were commonly known as the “Seven Sisters”, which consisted of

  • Anglo-Persian Oil Company [British Petroleum]
  • Gulf Oil
  • Standard Oil for California [Chevron]
  • Texaco
  • Royal Dutch Shell
  • Standard Oil Company for New Jersey [Exxon]
  • Standard Oil Company for New York [Mobil]

Ever since its establishment, the OPEC membership continued to grow (such as Algeria, Nigeria, Ecuador and Gabon). As of 2019, the OPEC has 14 members.

The “Black Gold”: Energy Crisis of the 1970s
In 1973, the OPEC members reduced oil output and caused a spike in the oil prices. Its consequences were devastating to many oil-dependent economies since it is an essential resource for industrialization. In 1979, the oil price surged extensively in the wake of the Iranian Revolution. By 1980, global oil price had peaked over US$35 per barrel.

Examine the trends to understand the volatility of oil prices, especially the 1970s and 1980s
[Chart taken from the World Economic Forum]

Even the economic giant, USA, was not spared from this unilateral action by the OPEC. The unprecedented impacts included stagflation (high inflation rates and economic stagnation) that forced households to conserve oil consumption for the first time in U.S. history.

Petrodollar Recycling
OPEC members benefited tremendously from this oil spike. With the increased in earning from oil exports (also known as ‘petrodollars’), these oil exporters engaged in petrodollar recycling, in which their money was loaned to the International Monetary Fund (IMF). Then, the IMF used these loans to finance the balance of payment deficits by oil-importing countries.

However, these non-oil exporting countries were disadvantaged, especially for the Latin American nations in the 1970s. Over time, these borrowing nations had growing debts that later gave rise to the Third World Debt Crisis in the 1980s.

The Oil Glut of 1986
By mid-1980s, some countries had reduced their dependence on oil to sustain economic development. For instance, advanced economies like USA and France explored alternative energy. Likewise, Japanese auto firms engaged in innovation to produce fuel-efficient automobiles. These developments led to the falling demand for oil in the global petroleum industry.

On the other hand, there were emerging oil producers that did not belong to the OPEC that engaged in oil extraction. In 1980, the Canadian Government introduced the National Energy Program to promote self-sufficiency for oil. As such, the increase in supply from these alternative sources had diminished the share of the OPEC members.

OPEC went for a last-ditch attempt to maintain high oil prices by decreasing oil production from 1980 to 1986. However, these efforts were unsuccessful. In 1986, oil price plunged from $27 to nearly above $10 per barrel.

Recent Developments
In view of the COVID-2019, the decreased economic activities (such as airline flights) led to the fall in demand for oil. OPEC has held online meetings to contemplate on the decrease in oil production. However, some countries are hesitant to follow through as Saudi Arabia takes the lead.

On 20 April 2020, the US crude oil (West Texas intermediate crude, WTI) plunged from US$17.85 a barrel to negative US$37.63 a barrel. This is a typical scenario in which oil glut combined with falling demand results in falling oil prices, such that there is negative crude oil price.

Negative oil prices for US WTI on 20 April 2020
[Published on BBC; Source: Bloomberg]

What can we learn from this article?
Consider the following question:
– Assess the economic impacts of volatile oil prices in affecting the development of the global economy from 1945 to 2000 [to be discussed in class].

Join our JC History Tuition and learn how to organise your learning materials to do well for the essay writing component at the A Level examination. Our online lessons feature content discussion and class practices to review knowledge application.

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JC History Tuition Bishan Singapore - What were the twin deficits of USA - Global Economy Notes

What were the twin deficits of USA?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Problems of economic liberalisation

Find out what it means for USA to experience a trade deficit to understand this contributing factor that led to the decline of the US economic dominance in the 1970s – Video by Peterson Institute for International Economics

Why was the “Golden Age of Capitalism” unsustainable?
In the first two decades of the post-WWII period were characterised by the miraculous economic recovery and expansion of many countries, such as Japan and Western Europe.

USA, as the major advocate of trade liberalisation, also benefited from this sustained period of economic progress, as observed by its wide-reaching influences through the deployment of American multi-national corporations (MNCs). Host countries gained from influx of foreign investment as well as job creation.

However, this economic exuberance did not last by the 1960s. USA experienced a severe economic problem known as the “twin deficits”. Furthermore, the energy crises (oil shocks) of the 1970s further exacerbated the problem as it gave rise to stagflation in the USA.

What are the “twin deficits”?
The “twin deficits” refer to the onset of fiscal deficit and current account deficit.

1. Fiscal Deficit: Overspending
By definition, fiscal deficit occurs when the government expenditure exceeds its revenues. This is more commonly known as a ‘budget deficit’. In the case of the post-war years, countries encounter a fiscal deficit when the government spend large sums of money to rebuild their infrastructure. Similarly, this form of deficit can also be seen when governments are trying to recover from a recession.

Fiscal Deficit - Problems of Economic Liberalisation
Understand the fiscal deficit of the USA to recognise its impacts on the economy.

The causes of fiscal deficit in USA were largely linked to two notable areas: US President Lyndon Johnson’s “Great Society” programme and the Vietnam War.

In 1964, Johnson introduced the welfare programme to eliminate poverty (War on Poverty) and improve the socioeconomic conditions of the American people.

However, as the American troops were increasingly deployed in Vietnam to fight the Cold War proxy conflict, the US President had to divert his funds from the above-mentioned welfare programme to sustain the war effort.

According to The New York Times, the American government spent approximately $141 billion in Vietnam over the course of 14 years. It was reported that the Vietnam War cost the USA nearly $2 billion per month.

Therefore, the US government directed the Federal Reserve to increase money supply by printing more US dollars (USD). Later, this created an oversupply issue that caused the collapse of the Gold-Dollar fixed exchange rate system in 1971.

2. Current Account Deficit: Trade Imbalances
The second type of deficit is more closely related to the condition whereby the import expenditure exceeds the export revenue. This is a problematic condition as the government has to finance the trade deficit.

US Trade Deficit - Problems of Economic Liberalisation
Examine the trends of the US trade deficit to understand how it hampered the economy.

This trade deficit can be explained by the increased trade competition with Western Europe and Japan. In the post-war years, USA tolerated the protectionist measures of these two growing economies so that they can become new markets for trade.

However, after these economies achieved pre-war industrial levels of production, many firms competed with American counterparts. In particular, West Germany and Japan became the key competitors that outpaced USA in the global markets.

For example, Japanese automobiles were highly sought-after due to its fuel efficiency and affordability. In fact, some of the top ten automobiles originated from Japan, such as Nissan and Toyota.

As a result of the loss of export competitiveness, USA experienced severe trade imbalances vis-à-vis West Germany and Japan. By 1980, US trade deficit rose to $40 billion. In response, USA reversed its trade liberalisation policy and engaged in protectionism, as seen by its imposition of the Voluntary Export Restraint (VER) towards Japan autos in May 1981 to mitigate the adverse effects of trade imbalances.

What can we learn from this article?
Consider the following question:
– How far do you agree that the twin deficits of USA were the most important cause for the decline of American economic dominance in the 1970s [to be discussed in class]?

Join our JC History Tuition and discover the essentials of essay writing for the topic of the Global Economy. We also offer H1 History Tuition for students who are in need of guidance. We provide summary notes, essay outlines and source based case study practice questions to raise the productivity of your revision.

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JC History Tuition Bishan Singapore - What caused Japan's Economic Miracle - Global Economy Notes

What caused Japan’s economic miracle?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Reasons for growth of the global economy

Find out what happened the Japan after World War Two to understand its rapid economic transformation – Video by Economics Explained

Historical Context: What is the “Japanese Economic Miracle”?
It refers to the period from 1945 to 1991 where Japan experienced rapid economic growth. Following the end of World War Two (WWII), Japan’s infrastructure was severely devastated by the bombing campaigns. Millions were unemployed. There was high inflation. However, USA chose to oversee the post-war recovery of Japan.

Under the auspices of the Supreme Commander of the Allied Powers (SCAP), General Douglas MacArthur, Japan received substantial financial aid and assistance to rebuild its economy. This was carried out after the signing of the Treaty of Peace with Japan (also known as the Treaty of San Francisco) on 8 September 1951 that marked the end of Japan’s imperialism and the start of a US-Japan allied relationship.

1. Role of the USA: Dodge Line, foreign aid and the rise of Keiretsu
The president of Detroit Bank Joseph Dodge introduced economic stabilisation plans to lower inflation rates in Japan. This was known as the “Dodge Line” stabilisation in 1949. One of the key points in the policy was to fix the exchange rate to 1 USD to 360 Yen. With stable exchange rates, Japanese export prices could be kept low and competitive.

Following the start of the Korean War on 25 June 1950, USA launched the “direct procurement” program that enabled the US forces to purchase wartime supplies from Japan directly. For instance, the US army bought processed food, disinfectants and medical syringes from Japan. Industrialised firms like Toyota also gained from this favourable climate as it exported trucks to support the American military efforts in Korea.

Another US-guided reform was the breakup of the Zaibatsu, which were big businesses (Sumitomo, Mitsubishi and Mitsui) that supported Japanese militarism during WWII. Instead, these companies became a new form of firms, known as the keiretsu. It refers to a group of companies that have interlocking business relationships. In the subsequent years, these companies became the key pillar of the Japanese economic miracle.

2. Role of the Japanese Government: MITI and EOI
In addition to the support provided by USA, the Japanese government established the Ministry of International Trade and Industry (MITI) in May 1949. Its purpose was oversee the conduct of industrial policies through cross-agency coordination.

The MITI identified sectors that yield large economic potential and channel state resources to nurture the relevant industries. The government then implemented protectionism (use of artificial trade barriers to limit the inflow of foreign goods) to accelerate the growth of domestic firms. Over time, the government facilitated the dominance of the keiretsu.

Under the leadership of Japanese Prime Minister Hayato Ikeda, the early 1960s marked the start of the export-oriented industrialisation (EOI). By 1970, Japan was one of the world’s largest producers of ships and cars.

3. Significance of Culture: Industriousness and Frugality
Similar to South Korea, the Japanese were known for their high level of self-discipline. Due to their willingness to work and support their employers, many firms benefited from the increased labour productivity. This hard work ethic can be traced to the shared hardship experienced by the citizens during wartime. Therefore, the Japanese firms maintained strong employer-employee relations.

Additionally, many households in Japan had large domestic savings. This meant that banks had greater sources of financing to support the business activities of firms. The government capitalised in this frugal nature of the citizens by offering lower interest rates so that firms were incentivised to take loans and support the growth of the economy.

What can we learn from this article?
Consider the following question:
– Assess the importance of the government in causing the Japanese economic miracle [to be discussed in class].

Sign up for our JC History Tuition and learn how to consolidate your knowledge for effective essay writing. Our online learning programme also features essay discussion and class practices. Through a step-by-step learning approach, you will be more aware of the critical steps to take in analysing and answering questions for GCE A Level History examinations.

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