JC History Tuition Online - What is the Generalised System of Preferences - Global Economy Notes

What is the Generalised System of Preferences?

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

Historical context: Disagreements over the MFN
Before the Generalised System of Preferences (GSP) was introduced in 1971, member nations in the developing world had concerns over the “most favoured nation” (MFN) concept. In particular, these countries argued that the MFN disincentivised more advanced counterparts from supporting tariff reductions and eliminations.

The most-favored-nation (MFN) clause embodied in article I of the General Agreement on Tariffs and Trade (GATT) was the defining principle for a system that emerged in the post-World War II era, largely in reaction to the folly of protectionism and managed trade that contributed to the global economic depression of the 1930s.

An excerpt taken from “Trade Preference Erosion: Measurement and Policy Response” by Bernard M. Hoekman, Will Martin and Carlos Alberto Primo Braga.

About the Generalised System of Preferences
In 1971, the GSP was introduced as part of the General Agreement on Tariffs and Trade (GATT). It functions as a system that grants products that came from developing countries lower tariff rates than those enjoyed under the MFN status. Ideally, the GSP was meant to boost export growth of developing countries and thereby advance economic development.

Unlike trading partners under the MFN status, the GSP features preferential tariffs that apply not only to countries with distinct historical and political relationships, but also to developing nations in general. Examples of such relationships can be observed in the case of US pro-trade policies with its Cold War allies in Asia, such as Japan.

Japan’s GSP
On 1 August 1971, Japan established the GSP, a month after the European Community had done so. The GSP scheme featured two regimes, namely the general preferential regime and a special preferential regime. The first type applies to preferential tariffs on import of designated items that originated from GSP beneficiaries. The second type focuses on duty-free treatment granted to import of designated items that came from least developed countries.

In principle, GSP preferences are not granted in the agricultural-fishery sector, given the weak competitiveness of Japan’s domestic industries. Items that are covered under the GSP are enumerated in a Positive List. Safeguards enable the government to suspend preferential treatment for items on the Positive List under certain conditions.

An excerpt taken from “Trade Preference Erosion: Measurement and Policy Response” by Bernard M. Hoekman, Will Martin and Carlos Alberto Primo Braga.

What can we learn from this article?
Consider the following question:
– How far do you agree that the Generalised System of Preferences have worked effectively in promoting trade liberalisation?

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is the steel trigger price mechanism - Global Economy Notes

What is the steel trigger price mechanism of 1978?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 2: Reasons for problems of the global economy

Find out more about the protectionist policies set by past administrations in the USA that affected the steel industry [Video by MarketWatch].

Historical background: Intensified competition
In the post-WWII years since the 1950s, world steel exports have increased tremendously. Yet, the key exporter USA faced a decline. One possible reason raised by steel producers is traced to ‘dumping‘.

According to the Word Trade Organisation (WTO), ‘dumping’ refers to a practice in which the “price of a product when sold in the importing country is less than the price of that product in the market of the exporting country”. It is arguably a destructive policy that undermines the trading partner’s industry-specific interests.

Yet dumping is more often perceived as being harmful to the importing country. At its worst, price discrimination in international trade may be a weapon of economic warfare. An exporter may sell goods cheaply in a foreign market with the intent to drive out competition or to prevent the establishment of a rival industry. After competition has been eliminated, the exporter may raise prices to the detriment of the same consumers who had temporarily benefited from bargain prices.”

An excerpt taken from “The Reinstated Steel Trigger Price Mechanism: Reinforced Barrier to Import Competition” by Garry P. McCormack.

The ‘steel’ problem worsened as the world entered a decade of high oil prices in the 1970s. As a result of the twin oil shocks, inflation contributed to higher steel prices, which forced businesses to explore alternative materials like plastic and aluminum to replace steel in the production of appliances and cars. Consequently, the demand for steel declined.

As early as 1959, the United States imported more steel than it exported. By 1970, the U.S. share of world steel production had plummeted to 20 percent, down from 50 percent in 1945. Steel production then fell from 130 million tons in 1970 to 88 million tons in 1985.

An excerpt taken from “Understanding Globalization: The Social Consequences of Political, Economic, and Environmental Change” by Robert K. Schaeffer.

The Eagle Strikes Back: Steel trigger price mechanism
In response to the American steel industry’s claim that foreign producers were ‘dumping’ steel in the US market, the Carter administration introduced the trigger price mechanism (TPM) in 1978. The TPM sought to identify steel imports sold at unfairly low prices, prompting legal intervention.

There were three aims of the TPM:

  • Support the enforcement of existing anti-dumping laws
  • Promote higher import prices and lower import volume to stimulate the domestic steel industry
  • Avoid the use of undesirable protectionist policies

True enough, the price of imported steel increased by 10% a year later. At the same time, US steel exports rose by 3.1 million tons and employment of steel workers increased by 12400.

Yet, there were shortcomings for the use of the TPM. One such consideration was the legality of selling steel below the trigger price, which led to a large influx of European steel in 1981.

It was legal to sell at less than the trigger price as long as steel was not sold at less than fair value. Apparently, many firms decided to do just that, as shown by the European requests for preclearance. Depreciation of European currencies relative to the U.S. dollar lowered European production costs relative to trigger prices. […] European Economic Community (EEC) steel producers increased their tonnage sold in the United States by 63 percent.

An excerpt taken from “Economic Commentary: The Steel Trigger Price Mechanism” by Gerald H. Anderson.

In January 1982, the Commerce Department processed 132 anti-dumping and countervailing duty cases filed by 7 domestic firms. Subsequently, the TPM was suspended. Notably, US protectionist policies took other forms as well, such as the imposition of steel tariffs under the Reagan administration.

What can we learn from this article?
Consider the following question:
– How far do you agree that the rise of trade protectionism was the result of American policies in the 1970s?

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did the 1973 Oil Crisis affect the United States - Global Economy Notes

How did the 1973 Oil Crisis affect the United States?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 2: Reasons for problems of the global economy

Learn more about the 1973 oil crisis that hit the USA adversely. [Video by WFAA]

Weaponisation of the ‘Black Gold’: Yom Kippur War
During the 1973 Yom Kippur War, the USA launched Operation ‘Nickel Grass’, which was a strategic operation to send military supplies to its ally, Israel. Between October and November 1963, the USA aided Israel to counter a coordinated attack from Egypt and the Syrian Arab Republic. Armed with Soviet weaponry, these two nations fought back after their defeat in the Six-Day War of 1967.

Neither as well known as the Berlin Airlift nor as large as Desert Storm, Operation Nickel Grass airlifted thousands of tons of materiel and restored the balance of power, helping Israel survive the Soviet-backed assault from Egypt and Syria.

[…] The Egyptian Third Army pretended to conduct exercises until the Israelis began to ignore their machinations. Choosing the most holy day in the Jewish calendar, Yom Kippur, the Day of Atonement, in hopes of catching the Israelis off-guard, the Egyptians attacked across the Suez Canal.

An excerpt taken from “Air Warfare: An International Encyclopedia” by Walter J. Boyne.

Viewed as an act of defiance, the oil-exporting Arab nations that were part of the Organisation of Petroleum Exporting Countries (OPEC) imposed an oil embargo on the United States and other countries that helped Israel (such as Britain).

Four days after President Nixon’s authorisation of US aid to Israel, OPEC announced its decision to raise oil price by 70%, which was over $5 per barrel. Later, a total embargo on shipments of oil to the USA caused the oil price hike to $12 per barrel.

Oil shortage
By the summer of 1973, the USA experienced shortages of refined petroleum products, which were used extensively in activities such as refueling of automobiles. In response to the serious problem, the Emergency Petroleum Allocation Act (EPAA) was passed on 27 November 1973. The EPAA oversaw the control of oil prices and even rationing.

The retail prices of gasoline rose by 40% in November 1973. Long lines of cars were a common sight back then during the gas shortage. Gas stations revised their prices multiple times per day. Unfortunate drivers were met with signs that wrote “Sorry, No Gas Today” in the fall months.

On 17 March 1974, the Arab petrostates announced the end of the oil embargo against the USA. However, the economic repercussions were widespread. The 1973 oil crisis has caused prolonged economic stagnation. The American economy shrank by 2.5% and increased unemployment rate.

The American economy was shedding jobs at the fastest rate since the Great Depression. The deficit was climbing. Inflation had roared to life. Consumers were cutting back on spending. The export sector had slumped because of falling demand for American goods overseas. Factories were closing down. A noxious economic phenomenon known as “stagflation”—high levels of unemployment and inflation—had taken root. If relief did not come soon, feared some economists, then a financial catastrophe on a par with the Great Crash of 1929 could not be ruled out.

An excerpt taken from “The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East” by Andrew Scott Cooper.

What can we learn from this article?
Consider the following question:
– Assess the view that the 1973 oil crisis devastated the American economy.

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is the Reverse Course Policy - Global Economy Notes

What is the Reverse Course policy?

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

Historical context
On 15 August 1945, Japan surrendered to the Allied Powers, thus bringing the Second World War to an end. Under the leadership of the Supreme Command for the Allied Powers (SCAP), General Douglas MacArthur, Japan underwent a process of social and political reform. The USA aimed to ensure that Japan would not endanger international peace and security.

For instance, SCAP broke up the business conglomerates, also known as Zaibatsus, which used to support Japan’s warmongering conquests in Asia. In 1947, a new Constitution was established, which included a noteworthy Article 9 that prohibited Japan from maintaining a military force.

The postsurrender instructions given MacArthur recommended dissolution of “large Japanese industrial and banking combines or other large concentrations of private business control.” This concern reflected the fact that some ten zaibatsu families controlled nearly three fourths of Japan’s industrial, commercial, and financial resources. Obviously, any program to curb this power and redistribute the “ownership and means of production and trade” required a tremendous effort and will.

An excerpt taken from “The American Occupation of Japan: The Origins of the Cold War in Asia” by Michael Schaller.

The Red Menace: Cold War tensions in East Asia
However, the rise of Communist China in 1949 as well as the start of the Korean War a year later provoked the USA. Fearing the fall of Japan to Communism, the ‘Reverse Course’ (逆コース, gyaku kōsu) policy was launched, which implied a shift in American policies towards Japan from demilitarisation to economic reconstruction and remilitarisation.

The onset of the Cold War altered U.S. thinking about Japan, which suddenly took on a new strategic significance, and a “reverse course” was initiated in 1947. […] Behind the reverse course were concerns about the spread of communism. Global politics once again conspired to intervene in Japanese politics. The victory of Mao Zedong’s communist forces over the Kuomintang (the nationalists) in 1949, the outbreak of the Korean War in 1950, and the Soviet Union’s grip on Central and Eastern Europe created concern in Washington that communism could spread to a weak Japan.

An excerpt taken from “Comparative Politics: Interests, Identities, and Institutions in a Changing Global Order” by Jeffrey Kopstein, Mark Lichbach and Stephen E. Hanson.

From then on, the Japanese economy recovered and soon became one of the most prominent competitors in the global markets. Its economic miracle was heavily studied by academics.

What can we learn from this article?
Consider the following question:
– How far do you agree that the USA played a paramount role in realising the economic miracle of Japan after World War Two?

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - Golden Age of Capitalism Revisited - Global Economy Notes

Golden Age of Capitalism: Revisited

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

A remarkable phase for the world economy: The Golden Age
Initially, the economic conditions were dire. Critical infrastructure, such as factories, schools and hospitals, were destroyed by bombing campaigns. People starved as food was scarce. Unemployment rates were high, giving rise to strikes in parts of Europe. Governments were in need of monetary assistance to begin their post-war recovery efforts.

Against the Cold War backdrop, the USA stepped up and offered financial aid (e.g. Marshall Plan) to countries affected by WWII. While its financial support to countries was mainly for economic recovery, the USA also capitalised on its economic might to counter the encroaching influence of the Communists led by the Soviet Union.

Between 1945 and 1973, the global economy grew rapidly. Many countries achieved pre-war industrial levels by the 1950s. In addition, the advent of international trade accelerated growth of the world economy.

Between 1950 and 1975 income per person in the developing countries increased on average by 3 per cent p.a., accelerating from 2 per cent in the 1950s to 3.4 per cent in the 1960s. This rate of growth was historically unprecedented for these countries and in excess of that achieved by the developed countries in their period of industrialization.

An excerpt taken from “The Golden Age of Capitalism: Reinterpreting the Postwar Experience” by Stephen A. Marglin and Juliet B. Schor.
Table - Golden Age of Capitalism - Maddison 1982
Table depicting the upward growth trend after World War Two [by Stephen A. Marglin and Juliet B. Schor].

Keep moving: The rise of automobiles
During the ‘Golden Age’, many American households reaped the benefits of post-war economic advancements. It became a norm for each household to own an automobile. Interestingly, Elvis Presley purchased a pink Cadillac in 1955. The Cadillac represented pinnacle of American automobile production.

The 1950s are seen by many as the “golden age” of the automobile in America, with absolute and per capita car sales hitting new heights, styling on a rampage, and the auto becoming a part of every aspect of American life, with drive-in restaurants, movies, churches, and funeral parlors.

[…] The post-World War II period also marks the beginning of a series of studies that attempt to analyze the hierarchical organization and managerial techniques that have been and are being applied in the automotive industry.

An excerpt taken from “The Automobile in American History and Culture: A Reference Guide (American Popular Culture)” by Michael L Berger.

The OECD: Club of the Rich?
On 30 September 1961, the Organisation for Economic Co-operation and Development (OECD) was formed with the aim to promote economic progress and world trade. OECD members were considered advanced economies that occupied most of the world’s Gross Domestic Product (GDP).

However, the growth of the global economy was not entirely smooth sailing. As the post-war allies of the USA recovered, notably West Germany and Japan, the open markets had intensified trade competition. These growing economies then challenged the economic supremacy of the USA in the 1960s.

One of several ironies in these developments was that they were led by Germany and Japan, former enemies of the US and its allies, who are now major challengers to US economic power and serious competitors in world trade. By 1960, Germany and Japan together accounted for only 6.3 percent of world trade, but by 1970, after a decade of unprecedented growth and export expansion, their share of world trade had increased to 18.8 percent. Over the same period the US share of world trade fell from 20 percent to 15 percent, a situation reflected by a rapidly growing deficit on its national trade account.

An excerpt taken from “Empire with Imperialism: The Globalizing Dynamics of Neoliberal Capitalism” by James Petras, Henry Veltmeyer, Luciano Vasapollo and Mauro Casadio.

What can we learn from this article?
Consider the following question:
– Assess the view that the first three decades after the Second World War was truly a ‘Golden Age of Capitalism’.

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is the Monnet Plan - Global Economy Notes

What is the Monnet Plan?

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

Learn more about the ‘Father of Europe’ Jean Monnet [Video by SEAGoRM]

A historical background of the Trente Glorieuses: The French economic miracle
By the end of World War Two, France was badly devastated. Infrastructure such as bridges and railways were destroyed. Industrial output was at 44% of pre-war level. The French had to rely on rationing. Given the urgent need for post-war economic recovery, Charles de Gaulle formed the General Planning Commission on 3 January 1946.

This Commission aimed to raise productivity, improve living standards, restore national production and increase employment. Key sectors were being identified and targeted, namely coal mining, steel, rail transport, electricity, farm machinery and cement. Subsequently, other sectors were included in the Plan, such as fertilisers, oil, shipbuilding and chemicals.

Enter Jean Monnet, who was later known as the ‘Father of Europe’. Monnet was appointed the Commissioner of the French Plan Commission. He came up with the ‘Modernisation and Re-equipment Plan’, which was more commonly known as the ‘Monnet Plan‘.

And the French economic plan became a landmark in the history of postwar Europe, helping to shape the structure of the Marshall Plan, the European Coal and Steel Community, the abortive attempt to construct a European Defense Community, and the Common Market itself. There was a direct line from the Monnet Plan through the Marshall Plan to the Schuman Plan and the Pleven Plan. All of them were, in varying degrees, Monnet Plans.

An excerpt taken from “Jean Monnet: The Path to European Unity” by Douglas G. Brinkley and Clifford Hackett.

A giant leap for France: The Monnet Plan
The Plan aimed to restore France’s production levels to pre-war standards. For instance, Monnet aimed to restore output level that of 1929 by 1948. Notably, the Monnet Plan was not simply a plan to modernise France and bring it back on its feet economically. In addition, the Plan was meant to shape the minds of the French.

The Monnet Plan was integral in accelerating steel production in France. The Monnet Plan aimed to attain an output of 15 million tonnes of steel, which exceeded the peak level in 1929. This ambitious target was to increase France’s international competitiveness, particularly against Germany. In other words, increased French steel exports should replace German steel exports.

The Monnet Plan had become a guideline to French policy towards the reconstruction of Europe as well as to domestic reconstruction. The Ministry of Foreign Affairs had tried to make it so from the outset and to draw out its implications for French national security.

[…] In 1950, at a level of pig-iron output of 7.76 million tonnes the total consumption of coke for all purposes by the French steel industry was 8.14 million tonnes. Of this, 4.66 million tonnes were domestically produced and 3.48 million came from imports. By 1952 pig-iron output had reached 9.77 million tonnes.

An excerpt taken from “The Reconstruction of Western Europe, 1945-51” by Alan S. Milward.

Between 1951 and 1973, France’s growth averaged 5.4% per annum. Compared to West Germany, its economic growth rate was considerably high, thus explaining why its thirty years after World War Two were termed as the ‘Glorious Thirties‘.

What can we learn from this article?
Consider the following question:
– How far do you agree that the post-war reconstruction of Europe can be explained by American aid?

Join our JC History Tuition to learn more about the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What was the Marshall Plan - Cold War Notes

What was the Marshall Plan?

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

Topic of Study [For H2 and H1 History Students]: 
Paper 1: Understanding the Cold War (1945-1991)
Section A: Source-based Case Study
Theme I Chapter 1: Emergence of Bipolarity after the Second World War II

Find out more about the Marshall Plan that supported post-war economic reconstruction of post-war Europe [Video by History]

A crisis like no other: Post-war economic conditions
By the end of the Second World War (WWII), most European nations in no shape to restart industrial production. The devastation wrought by aerial bombardment had destroyed many cities, turning citizens into refugees that were housed in temporary camps. Many turned to the United Nations Relief and Rehabilitation Administration (UNRRA) for aid and assistance, such as food and supplies.

Germany was one of those worst hit in the region. In West Germany, the economy was affected by the population change due to WWII. By 1945, death casualties amounted to 4 million by 1945. Additional millions were killed while in Soviet captivity. Even so, the West German population, which was less than 40 million in June 1939, grew to about 48 million by 1950.

The war had turned Germany into a land of refugees, for immigration from the East was preceded by the mass evacuation of urban dwellers during the Allied bombing campaign. By the end of the war, close to 9 million residents of German cities had taken refuge in the countryside. One- third of them were unable to return until 1947. One million residents had abandoned Berlin alone.

[…] The catastrophic living conditions and the unwelcome presence of refugees and expellees not only invoked social conflict and public distress; the inadequate housing supply was an impediment to economic recovery, too. With the millions displaced by war trapped in rural communities, urban industry could not find sufficient labour to lift production. Much of the working time and energy of the existing urban workforce was diverted to rubble removal and reconstruction efforts, often in the context of administrative work assignments under the command of the occupation authorities.

An excerpt taken from “The Economic Consequences of the War: West Germany’s Growth Miracle after 1945” by Tamás Vonyó.

Rehabilitation and recovery:
In the words of British Prime Minister Sir Winston Churchill, Europe was a “rubble-heap, a charnel house, a breeding ground of pestilence and hate”. In his speech addressed to the audience at the United Europe Committee Meeting in 1947, Churchill called to “promote the cause of united Europe” to “sweep away the horrors and miseries”.

In response to this urgent need for aid, the United States launched the European Recovery Program, which later more commonly known as the Marshall Plan. It was a US-led program named after the Secretary of State George C. Marshall to give aid to Western Europe for post-war reconstruction.

As a four-year plan that ran from 1948 to 1951, recipient nations would have the finances and other forms of support to rebuild their industries and essential infrastructure.

Eventually, sixteen countries accepted the Marshall Plan (Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Sweden, Turkey, the United Kingdom, and West Germany), which totaled $13.2 billion. In today’s dollars, the Plan would have amounted to a staggering $800 billion.

Between 1948 and 1952 (four and a quarter years), the United States transferred $13.2 billion to the sixteen Marshall Plan countries. Accounting for inflation over those years, the total was $14.3 billion (that is, in 1952 dollars). The aid was front-loaded, with 31 percent coming in 1948, 30 percent in 1949, 20 percent in 1950, 12 percent in 1951, and 8 percent in 1952. The largest recipients were the U.K. ($3.2 billion, or $32 billion today), France ($2.7 billion, or $27 billion today), Italy ($1.5 billion, or $15 billion today), and West Germany ($1.4 billion, or $14 billion today). Austria and Norway were the biggest beneficiaries per capita ($130, or $1,300 today).

An excerpt taken from “The Marshall Plan: Dawn of the Cold War” by Benn Steil.

Containment or recovery?
The Truman administration introduced the Marshall Plan not solely for the purpose of rehabilitating Europe. In addition, the support for post-war recovery was an effective approach to counter Soviet Communism.

The administration’s East European chiefs of mission would conclude that “any and all movements within world communism which tend to weaken and disrupt the Kremlin’s control within the communist world represent forces which are operating in the interests of the West and therefore should be encouraged and assisted.” These statements made clear that it was Soviet influence, rather than communism as such, that the United States would oppose through the use of economic and political levers.

An excerpt taken from “The Marshall Plan: Dawn of the Cold War” by Benn Steil.

Studying the importance of US aid
Although the Marshall Plan was no doubt significant in financing the post-war recovery of European nations, questions were raised over its extent of contributions as compared to other factors. As aptly described by Herbert C. Mayer, “like all economic miracles, the German Wirtschaftswunder (economic miracle) was the result of wise planning, hard work and well timed aid… the German recovery would not have been accomplished alone”.

Historical statistics suggest further that recovery had begun well before the currency reform and that it was not transformed into sustained growth until the early 1950s. […] the most important limiting factors of industrial expansion in post-war Germany, namely the urban housing shortage and the structural disproportions caused by the redrawing of borders, persisted for many years after 1948. Foreign aid did little to improve these conditions, for it was not substantial enough and it was not focused primarily on these critical bottlenecks.

[…] At the same time, fiscal policy was chiefly responsible for the price stability that made West Germany the object of envy in the Western world and which earlier accounts as well as most international observers considered to be the achievement of the German Bundesbank. In reality, and most of the time, monetary policy played second fiddle.

An excerpt taken from “The Economic Consequences of the War: West Germany’s Growth Miracle after 1945” by Tamás Vonyó.

What can we learn from this article?
Consider the following question:
– How far do you agree that the post-war reconstruction of Europe can be explained by American aid?

Join our JC History Tuition to learn more about the Global Economy and the Cold War. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Lower Secondary English Tuition, Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did Giant become the biggest bicycle manufacturer in the world

How did Giant become the biggest bicycle manufacturer in the world?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the Taiwanese bicycle manufacturer Giant [Video by Cycling Pulse]

Humble beginnings: A SME run by family and friends
In 1972, a 36 year-old engineer King Liu founded Giant with a group of associates, including Tony Lo, in Taichung (臺中). Lo was a business graduate from the National Taiwan University. Interestingly, Liu cycled to work at first to understand his product better.

In 1977, Liu secured a contract to produce bicycles for an overseas American company Schwinn, which was known for its 10-speed steel machines. Giant then functioned as an Original Equipment Manufacturer (OEM). Liu, who was fluent in Japanese, visited Japan to study the bicycle production process, replicating suitable work practices at Giant.

An unexpected turn of events: Turning setbacks into opportunities for success
In 1981, Giant set up its own bicycle brand as an Original Brand Manufacturer (OBM). It was a bold and unusual move as products that were manufactured in Taiwan were still viewed as low-quality and cheap.

Five years later, Giant brought its bicycles to the global market, starting with the Netherlands. Lo had identified Netherlands as a suitable European headquarters due to its geographical location, comprehensive infrastructure and integrated transport network. From there, Giant exported to other European markets. By the mid-1980s, Giant exported nearly 10 million bicycles a year.

The own-branding strategy was intensified when Schwinn shifted its OEM orders to its joint China’s company (China Bicycle Company) in 1985. Under this adverse condition, Liu steered the company into a new direction, through rapidly expanding its overseas branches around the world, in order to fill up the excess capacity generated by Schwinn’s withdrawal. The overseas branches were all targeted on pursuing entrepreneurial profit by promoting its own-brand Giant bicycles. Its overseas branch was established in Netherlands in 1986, the Us in 1987, Japan in 1989, Canada and Australia in 1991, and mainland China in 1992.

An excerpt from “Entrepreneurship and Taiwan’s Economic Dynamics” by Fu-Lai Tony Yu.

In the 1985, the US-based Schwinn switched to a Chinese supplier to keep production costs low. As a result, nearly three-quarters of Giant’s revenue had been affected. Yet, Giant did not relent. Instead, the company capitalised on the low production base in China, setting up two production plants in China, namely in Shanghai (上海) and Jiangsu (江苏).

Close collaboration with the government
In 1986, Giant launched a joint project with the government-funding Industrial Technology Research Institute (ITRI). They explored use of advanced materials to create carbon fiber bicycle frames. Giant also worked on other technology diffusion projects for aluminum welding with Chun Shan Institute of Science and Technology (CSIST).

Giant’s R&D efforts had paid off as tts revenue rose to over NT$ one billion.

In 1987, Giant pioneered the mass production of carbon bicycles, particularly the model called Cadex 980C. Lo dubbed it ‘Project 88’. Giant had applied computer-aided design and volume production techniques to manufacture these carbon fiber road bicycles. By 1991, Giant manufactured 20 thousand units of carbon bicycles.

Now, Giant one of the top bicycle manufacturers in the world.

Giant thinks of itself as an innovator in the fields of production and design, as well as competitive strategy. Giant was one of the first to upgrade parts and begin exporting them when Taiwan’s market became too costly. Giant was also the first Taiwanese company to use chrome alloy steel in their frames and to produce single-piece graphite bicycle frames.

An excerpt from “Strategy, Structure, and Performance of MNCs in China” by Yadong Luo.

What can we learn from this article?
Consider the following question:
– How far do you agree that Giant’s successes in export promotion were the result of Confucian culture?

Join our JC History Tuition to learn more about the rise of Asian Tiger economies and the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Lower Secondary English Tuition, Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What does United Microelectronics do - Asian Tigers Notes

What does United Microelectronics do?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the Taiwanese semiconductor company, United Microelectronics Corporation (UMC) [Video by UMC Group (USA)]

Historical context: Silicon Valley of the East
On 22 May 1980, the United Microelectronics Corporation (UMC) was formed as the first-ever private integrated circuit (IC) company in Taiwan. The UMC was a product of the state-backed technology R&D institution, known as the Industrial Technology Research Institute (ITRI).

Under the leadership of President Chiang Ching-kuo (蔣經國), the government embarked on an ambitious project to encourage knowledge and skills acquisition in the private sector to intensify Taiwan’s industrial development.

The UMC occupied the Hsinchu Science Park (HSIP, 新竹科學園區), which was modelled after the Silicon Valley.

Located in Hsinchu County, approximately 80 km to the south of the capital city Taipei, HSIP had easy access to the international airport and harbours, a skilled labour force and abundant technological resources, including two national universities and the government-sponsored ITRI. Since its inception, HSIP has received over US$500 million from the government, earmarked for the acquisition and development of land and construction of housing and factories.

An excerpt from “The Silicon Dragon: High-Tech Industry in Taiwan” by Terence Tsai and Bor-Shiuan Cheng.

Enter the age of semiconductors
Under the astute leadership of Robert Tsao (曹興誠), who became president of UMC in 1982, the UMC became the first IC manufacturer in Taiwan to provide wafer foundry services.

In the late 1980s, the UMC broadened its scope of production, venturing into Dynamic Random Access Memory (DRAMs) and telecommunications circuitry. Tsao believed that specialisation in foundry services was the ideal model for the UMC to thrive.

The UMC turned out to be a successful spin-off from HSIP, as seen by its entry to the Taiwan Stock Exchange in 1985. From then on, the UMC went further to build increasingly advanced chips, such as Static Random Access Memory (SRAMs).

A similar venture: The TSMC
In 1987, the Taiwan Semiconductor Manufacturing Company (TSMC) was set up. It was the second spin-off from the HSIP after the UMC. The company was a joint development with the Dutch company Philipps and the Taiwanese government.

Interestingly, the Chiang government had invited Morris Chang, who later became founder of the TSMC, to lead the ITRI in the early 1980s. Chang had put forward the idea of creating a foundry industry in Taiwan.

Originally the ERSO sent a team to RCA in the US to learn integrated circuit (IC) manufacturing technology. After the team returned to Taiwan, the members spun off from ERSO to form UMC, which began chip manufacturing.

[…] Chang led a team spun off from ITRI to form TSMC in 1987. The new business model proved effective, and TSMC became the largest semiconductor foundry in the world with $5.3 billion of sales in 2000. TSMC was therefore mainly a Taiwanese creation with state participation in ownership (48 per cent in the beginning).

An excerpt from “The East Asian High-Tech Drive” by Yun-Peng Chu and Hal Hill.

Evidently, the successes of the UMC and TSMC were partly attributed to the joint efforts of the Taiwanese and American governments (Electronics Research and Service Organization, ERSO, the Radio Corporation of America, RCA). By giving their founders and core team members the opportunities to acquire the technical know-how, the aim of creating a semiconductor industry in Taiwan could finally materialise.

What can we learn from this article?
Consider the following question:
– Assess the view the the United Microelectronics Corporation was a crucial piece of the puzzle in explaining the remarkable growth of Taiwan in the 1980s.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies and the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Lower Secondary English Tuition, Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - Why is Taiwan an Asian Tiger - Asian Tigers Notes

Why is Taiwan an Asian Tiger?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the contributing factors that led to Taiwan’s economic miracle. [Video by Real World Economics]

Historical context: The Cold War
During the Korean War, the Truman administration committed its armed forces to defend the Republic of China (ROC) government under Chiang Kai-shek. President Truman announced on 27 June 1950 that the Seventh Fleet would be deployed to the Taiwan Strait. His intention was to protect Taiwan from any possible Chinese attack.

The US government switched its foreign policy stance towards Taiwan from a “hands-off” approach to increased military commitment. Its purpose was to contain a possible expansion of Communist influence in East Asia.

In retrospect, Truman’s new policy of 1950 disengaged the Chinese from their hot civil war while engaging them in the global Cold War.

[…] It had secured the ROC in Taiwan from a major military showdown with the PRC on the mainland in the 1950s, it had preserved the political unity and social stability of Taiwan through the 1960s, and it had provided an opportunity for the island’s economic growth in the 1970s.

An excerpt from “The History of Taiwan” by Xiaobing Li.

Export promotion and industrial restructuring
In the 1960s, Taiwan was one of the world’s primary exporter for consumers goods, such as umbrellas, toys and shoes. In 1966, Taiwan established Export Processing Zones (EPZs). The Chiang government sought to pursue an export-driven strategy as seen by the provision of tax incentives to spur businesses to engage in international trade.

In the 1970s, the government had realised that its reliance on the maturing light industry was not sustainable, given the rise of other developing countries that possessed cheap and abundant labour. As such, it embarked on heavy and chemical industrialisation (HCI), targeting steel and petrochemical production.

In 1973, the Industrial Technology Research Institute (ITRI) was formed to facilitate the conduct of research and development (R&D). A year later, the Electronics Research Service Organisation (ERSO) was also set up, focusing on areas like electronic packaging, semiconductors and display devices. Similarly, the Hsinchu Science Park was created in 1980 to intensify efforts to develop high-tech industries. The government’s attempts have paid off as seen from the rise of tech firms like the Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).

In August 1974, Sun contacted Dr. Pan in the United States and invited him to Taiwan to produce a study of ways in which the government could upgrade local industry, with the electronics industry playing the leading role. […] Pan recommended that the electronics industry should focus on semiconductor technology and that the technology be acquired from abroad; that a two-part strategic planning team be formed, one part in the United States and one in Taiwan; and that an organizational capability for implementation within the state be set up. A U.S. partner was to be located for an agreement for technology transfer and training.

An excerpt from “The Role of the State in Taiwan’s Development” by Joel B. Aberdach.

The 1980s tech drive: OEM and ODM
In the 1980s, the government went through institutional reforms to integrate Taiwan into the global economy. It intensified its policies of trade liberalisation and financial deregulation, opening the economy gradually. Yet, it proved challenging following the opening of China in the late 1970s as part of Deng Xiaoping’s Four Modernisations (四個現代化). Many Taiwanese manufacturers shifted production to China in response to rising production costs.

In this decade, more Taiwanese manufacturers in the electronics and technology sectors adopted either of the following two models: Original Equipment Manufacturer (OEM) or Original Design Manufacturer (ODM). For OEM, the local companies manufactured products for transnational corporations that focused on product design and R&D. Over time, some of these firms transitioned to become ODMs, such as Acer.

While the ERSO projects were important for the PC industry, the two industry leaders, Acer and Mitac, were doing OEM for ITT since 1982 and Mitac was not part of two of the three big desktop computer projects run by ERSO. […] OEM manufacturing firms can leverage their relationships with outsourcing partners to upgrade. The experience of Mitac, Acer and other fims, such as the printed circuit board manufacturer, Compeq, confirms this theory of upgrading.

An excerpt from “Technology Transfer Between the US, China and Taiwan: Moving Knowledge” by Douglas B. Fuller and Murray A. Rubinstein.

What can we learn from this article?
Consider the following question:
– How far do you agree that state intervention was indispensable in contributing to the economic miracle of Taiwan.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies, particularly Taiwan and South Korea. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Lower Secondary English Tuition, Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English Tuition. Call 9658 5789 to find out more.

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