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JC H2 History Tuition - What is World Trade Organization and its function - JC History Essay Notes

What is World Trade Organization and its function?

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

Re-look at the contributions of the World Trade Organization ever since its inception in 1995 [Video by the World Trade Organization]

What is the World Trade Organization (WTO)?
The WTO is an inter-governmental organization that formalized international trade. Under the Marrakesh Agreement, the organization was formed on 1 January 1995, replacing the multilateral framework known as the General Agreement on Tariffs and Trade (GATT).

A Prelude to WTO: Trade Rounds under GATT
Before the WTO was established, GATT provided the essential guidelines on international trade from 1948 to 1994. During the Bretton Woods Conference, an International Trade Organization (ITO) was supposed to be formed alongside two other pillars (World Bank and the International Monetary Fund). Yet, the US Congress refused to ratify the Havana Charter. As such, the concept of an ITO was not realized.

Even so, GATT had played its part in promoting multilateral discussions. In the post-war years, GATT contributed to tariff reductions of nearly 8 percent on average till the 1960s.

1. Kennedy Round (1964-1967)
During the Kennedy Round, an Anti-Dumping Agreement was passed. ‘Dumping’ refers to an unfair trade practice in which a firm sell its exports at a price below the price set in the domestic market. The Act was recognized as a success, especially for developing nations.

Recognizing that anti-dumping practices should not constitute an unjustifiable impediment to international trade and that anti-dumping duties may be applied against dumping only if such dumping causes or threatens material injury to an established industry or materially retards the establishment of an industry;

Considering that it is desirable to provide for equitable and open procedures as the basis for a full examination of dumping cases;

An excerpt from the Kennedy Round.

2. Tokyo Round (1973-1979)
In the 1970s, the Tokyo Round was held with the intention to manage the imposition of non-tariff barriers (NTBs). Although participating countries managed to agree on the reduction of tariffs on industrial goods, they were unable to accept the use of plurilateral agreements (they are trade agreements between more than two countries).

The Tokyo Round also led to the adoption of a range of specific new disciplines. These included the legalization of preferential tariff and nontariff treatment in favour of developing countries and among developing countries.

Codes were negotiated on subsidies and countervailing measures, technical barriers to trade (product standards), government procurement, customs valuation, import licensing, antidumping (a revision of a Kennedy Round code), bovine meat, dairy products and civil aircraft…

By negotiating a code, like-minded countries were able to agree to new, legally binding commitments, without having all GATT contracting parties on board.

An excerpt from “The Political Economy of the World Trading System” by Bernard M. Hoekman, Michel M. Kostecki

3. Uruguay Round (1986-1994)
The eighth and final round lasted nearly seven and a half years. In the wake of the twin oil shocks of the 1970s, the Uruguay Round was held as the largest multilateral trade negotiation. The main purpose of the round was to reduce agricultural subsidies, introduce the protection of intellectual property and liberalise trade services in the banking sector. It was a tricky issue due to the sensitivity of the agricultural and textile sectors that affected many developing countries. Furthermore, the round dragged on due to the lack of consensus between the USA and European Union (EU) [also known as the “European Community”, EC] over the reforms to agricultural trade.

For much of the Round the USA and the EC held their own mini-round and their mutual intransigence, especially over agriculture and specifically a long-running dispute over oil seeds, stalled the Uruguay Round for some time. Completion of the Round was in the end facilitated by the so-called Blair House (Washington) accords…

Negotiations on agriculture were among the most contentious of the Round, the final Agreement on Agriculture seeking reforms for a ‘fair and market-oriented agricultural trading system’, but with special consideration for poorer countries and for non-trade concerns such as food security, environmental protection or schemes for diversification from narcotic crops and the like.

An excerpt from “The Free Trade Adventure: The WTO, the Uruguay Round and Globalism–a Critique” by Graham Dunkley.

The WTO
As the Uruguay Round concluded in December 1993, the Marrakesh Agreement was signed on 15 April 1994 by 123 participating nations. Officially, the WTO was formed eight months later, ushering a new era for international trade. The WTO replaced GATT as the institutional framework for trade.

1. The WTO shall facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration and operation of the Plurilateral Trade Agreements.

2. The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement. The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference.

An excerpt from the Marrakesh Agreement – Article 3 “Functions of the WTO”, 15 April 1994.

What can we learn from this article?
Consider the following question:
– How far do you agree that trade liberalization was beneficial to the global economy from 1945 to 2000?

Join our JC History Tuition and find out more about the Bretton Woods System and other areas relating to the global economy. We provide summary notes for H2 History and H1 History as well as practices for essay writing and source based case studies. Attend our online learning classes to develop an analytical mind.

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 Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to learn more.

JC History Tuition - What is GATT and its purpose - Global Economy Notes

What is GATT and its purpose?

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

Examine the history of the multilateral trading system, namely the GATT and the WTO [Video by the World Trade Organization]

Origins of a multilateral trading institution: ITO
Before the World Trade Organisation (WTO) was established on 1 January 1955, leaders from over 50 countries gathered during the “Bretton Woods” Conference and contemplated on the creation of an International Trade Organisation (ITO). Ideally, it was to be the third pillar of the Bretton Woods, together with the World Bank and the International Monetary Fund (IMF).

The proposed ITO was meant to promote world trade, cross-border investments and commodity agreements. Following the end of World War Two, more countries supported trade liberalisation. They sought to reverse the adverse protectionist stance since the early 1930s.

A by-product of failed negotiations: GATT
Amidst negotiations, 23 “contracting parties” signed the General Agreement on Tariffs and Trade (GATT) on 30 October 1947. GATT was created as a framework for international trade, taking effect on 1 January 1984.

The signatories were: Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, United Kingdom and the United States.

There were three provisions:

  • Conferment of “Most Favoured Nations” status to other members
  • Prohibition of trade restrictions (except for emerging industries)
  • Elimination of import tariffs (by developed countries to support the admission of developing countries)

However, the path to institutionalise world trade proved difficult. Although the USA was one of the key advocates of free trade, the US Congress opposed the decision. During the fifth Session of the Contracting Parties, USA announced that the ITO Charter (Havana Charter) would not be re-submitted to the US Congress. From then on, the ITO did not take shape. Instead, GATT became the multilateral framework from 1948 to 1995.

Periodic Bargaining: Trade Rounds
From 1949 to 1973, the trade rounds were focused on reduction of tariffs. In 1964, the “Kennedy” Round took place and a noteworthy act was signed. The Final Act was signed by 50 participating countries that accounted for three-quarters of world trade. Concessions were estimated at $40 billion of trade value.

Following the admission of newly-independent countries (Recall: the Third World decolonisation in Asia and Africa led to the admission of new developing member countries into the UN), the GATT included its third provision to support developing countries. The Committee on Trade and Development was established to ensure that developed countries gave priority to the reduction of trade barriers to exports of developing countries.

Setbacks: The advent of “New Protectionism”
Although trade rounds were still being conducted from 1973 to 1993, the start of the Crisis Decades made it difficult for member nations to fully adhere to the provisions of trade liberalisation. Although economic integration enabled freer access of goods and services between countries, it also meant the intensification of trade competition from developed and developing countries.

For example, USA experienced severe and persistent trade deficits vis-à-vis West Germany and Japan. In response, USA introduced protectionist policies, particularly non-tariff barriers to shield its economy from the adverse effects of trade competition. For example, the “Voluntary Export Restraint” (VER) agreement restricted the quantity of Japanese automobile exports to USA in 1981.

The next phase of international trade: WTO
Trade negotiations during the Uruguay Round finally made progress. On 15 April 1994, the Marrakesh Agreement was signed, which led to the formation of the WTO that succeeded the GATT.

Developing nations demanded that VERs should be outlawed. Notably, this led to the creation of the Multi-Fibre Arrangement that accelerated the liberalisation of trade in the agricultural sector.

What can we learn from this article?
Consider the following question:
– How far do you agree that GATT was the main driving force that caused the liberalisation of world trade [to be discussed in class]?

Sign up for our JC History Tuition and learn how to answer A Level History essay and source based case study questions effectively. We also incorporate online learning features to diversify your study methods such that learning the historical developments is enjoyable and productive at the same time.

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 Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to learn more.

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.

Also, we offer other JC tuition programmes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to find out more.

JC History Tuition Bishan Singapore - What caused the Taiwan economic miracle - JC History Essay Notes

What caused the Taiwan economic miracle?

What is the Taiwanese economic miracle?
Taiwan’s phenomenal economic transformation has been examined thoroughly by academics. Some argue that the economic miracle was attributed to internal factors, particularly the role of the government in spearheading heavy industrialization. In contrast, others believe that Taiwan’s meteoric rise in international markets was due to international developments, such the role of the USA in providing loans and access to foreign technology. Generally, both perspectives are valid and indeed contributed to the economic development of Taiwan.

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]

In the next section, we will examine the key contributing factors that led to the economic miracle of Taiwan, especially the government and private enterprises.

1. [Government] Import-substitution Industrialization
From the 1950s, the Taiwanese government engaged in import-substitution industrialization (ISI) to develop the manufacturing sector. Apart from the focus on restoring pre-war levels of production in the agricultural sector, the government insulated domestic firms from foreign competition, thereby enabling the production of textiles, plastics and plywood.

For example, in the textile industry, the government imposed tariffs and quotas on the imports of yarn. Additionally, the government improved access to credit, thus allowing firms to purchase capital. A limit of new entrants was imposed to prevent excessive competition from undermining the growth of local textile firms.

As a result, their efforts provided successful as Taiwan became a major textile exporter in the 1950s. The export of textiles increased twofold in the same time period. In fact, Taiwan was so successful that USA engaged in protectionism in 1961.

2. [Government] Export-oriented Industrialization
Over time, the government recognized the economic potential of export-led growth and pursued an outward strategy. This was known as export-oriented industrialization (EOI), which aligned with the trend of economic liberalization.

One of the many areas of focus was the provision of incentives to encourage export promotion. For example, a concessional export credit scheme was introduced. Also, the government devalued the exchange rate to raise export competitiveness.

Besides, the government pursued an indirect approach by nurturing the growth of small and medium enterprises (SMEs) in Taiwan. By having a sizable pool of SMEs, the government can benefit from an additional dimension of trade-led growth. For instance, the SME Development Fund was set up to grant financial assistance to the private enterprises. Firms were also granted access to foreign technology and manpower training.

As a result, SMEs dominated the domestic markets. In contrast to South Korea, in which the chaebols (large family-dominated conglomerates) occupied major shares of the economy, Taiwan was backed by numerous SMEs. By 1994, nearly 98% of Taiwan’s manufacturers were SMEs. Furthermore, SMEs were key producers that provided nearly half of the total production in the late 1970s and early 1980s.

3. [Private Enterprises] Greater emphasis on export promotion
Eventually, as SMEs grew and expanded in size, the government continued to play a vital role in supporting these private enterprises that became internationally competitive. Although many industrialized countries like Taiwan and South Korea were hit by the Crisis Decades, the SMES were able to endure these external shocks through continual state support.

For instance, the oil shocks in the 1970s eroded export competitiveness for Taiwanese manufacturers. In response, the government formulated a new plan in the mid-1970s to engage in economic restructuring. As such, Taiwan ventured into quality-driven exports, such as petrochemicals and electronics.

The government oversaw the transition from a labour-intensive to capital-intensive production by establishing the Industrial Technology Research Institute (ITRI) in 1973. The ITRI specialised in R&D. In 1987, the Taiwan Semiconductor Manufacturing Company (TSMC) was formed as a result of ITRI.

4. [USA] External support to enhance capital-intensive production
The private enterprises were also supported by the USA, which capitalized on the low-cost base and pro-liberalization policies of the government to set up firms in Taiwan. The entry of American MNCs (e.g. Taiwan) proved beneficial for Taiwan as it led to the influx of foreign direct investment (major source of growth) and foreign technology (raised quality of production).

What can we learn from this case study?
Consider the following question to understand this issue:
– How far do you agree that the economic transformation of Taiwan was the result of government intervention? [to be discussed in class]

After you have examined this case study to understand the importance of the above-mentioned factors in contributing to the growth of the Taiwanese economy from the 1970s to the 1990s, you should apply your knowledge to the essay questions. It is important that you review your learning through an application-oriented approach. You can consider joining our JC History Tuition and learn how to condense your content revision in a more productive way, such that you can answer both essay and source-based case study questions effectively.

Furthermore, you can join other JC tuition classes, such as GP Tuition, Economics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition classes, we offer Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to learn more.

JC History Tuition Bishan Bedok Singapore - How did trade protectionism affect economies in the 1970s - JC History Essays - Global Economy Notes

How did trade protectionism affect economies in the 1970s?

Why did countries engage in trade protectionism?
In view of the Golden Age of Capitalism that took place from 1945 to 1973, the Bretton Woods System was established, in which the General Agreements on Tariffs and Trade (GATT) facilitated the liberalization of world trade. Over time, free trade seemingly proved beneficial to trading partners, as evidenced by benefits like access to larger markets and cheaper raw materials.

However, international trade also meant that firms were open to more intense forms of competition. Clearly, developing nations were disadvantaged due to obstacles like inadequate infrastructural support and financing. In contrast, developing nations possessed the capacity to support their multinational corporations (MNCs) in maintaining international competitiveness. Therefore, some member nations gradually imposed trade protectionism, thus reversing the liberalization effects caused by GATT.

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 

In the subsequent sections, we will study the limitations of free trade and the methods of protectionism that eventually caused the slowdown in the growth of the global economy in the 1970s and 1980s. Students should pay attention to the significance of trade protectionism with respect to other contributing factors that affect the Crisis Decades, such as the Third World Debt Crisis and the Oil Shocks.

1. Limitations of Free Trade
Although free trade is arguably beneficial to most economies, critics of economic liberalization remained hesitant to embrace this policy approach.

One reason is that free trade leaves many economies vulnerable to the volatile international markets. Trade-oriented growth can be disastrous as the fluctuating business cycles determine the growth and decline of economies.

Furthermore, should firms remain incapable of coping with international competition, their closure results in the rise of unemployment, thereby jeopardizing the social and political stability of nations.

2. [Developed Nations] Trade Protectionism: Rise of Non-Tariff Barriers (NTBs)
As such, governments in the industrial world introduced protectionism. In general, these measures can be grouped under a common type, known as ‘non-tariff barriers’ (NTBs).

NTBs comprised of different versions, like the provision of subsidies to local goods, strict standards and voluntary export restraints (VERs). For example, the US introduced the VERs in the 1980s, which affected the Japanese automakers. The US government perceived the increasingly popular Japanese automobile exports to be a significant threat to its trade position. In 1981, US introduced a VER in which Japan was pressured to reduce its export volume of cars. This created an artificial shortage of Japanese exports, thus raising their prices. As such, American automakers could profit from this effect.

Consequently, the share of imports restricted by NTBs increased extensively in the developed world, such as USA and Japan, thus causing a fall in the world output.

3. Consequences: A slowdown in the global economy
As a result of trade protectionism, the world economy experienced a major slowdown, which was further exacerbated by other problems like the Oil Shocks and the Third World Debt Crisis.

For example, the imposition of trade protectionism meant that MNCs were less mobile. Therefore, the the surge in market pessimism caused the decline in trading and investment activities. Given that these economies activities are vital for growth, the use of protectionist measures resulted in the economic slowdown in many developed nations.

What can we learn from this case study?
Consider the following questions to understand this economic issue:
– How far do you agree that the Crisis Decades was primarily caused by the rise of trade protectionism in the 1970s? [to be discussed in class]

In view of the trade protectionism problem that undermined the development of the global economy, we advise students to apply this knowledge to JC History essay questions. This is to ensure that what you know can be understood and applied effectively. Join our JC History Tuition and learn to synergize your knowledge of various factors to form persuasive and logical arguments. We teach students to do factor analysis and comparison through numerous class practices and discussions.

Additionally, you can consider other JC tuition classes, such as GP Tuition, Economics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition classes, we offer Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to find out more.

JC History Tuition Bishan Bedok Tampines Singapore - What caused the Third World Debt Crisis - JC History Essays - Global Economy Notes

What caused the 1980s Third World Debt Crisis?

What happened during the Third World Debt Crisis of the 1980s?
In the 1970s, developing nations were in need of financial support to carry out their economic development. As such, the governments took loans from international banks and developed nations. However, poor resource management resulted in the accumulation of debts, which was worsened by external factors like petrodollar recycling. By 1985, the total external debt rose to $1,017 billion, causing severe disruption to the international banking system.

Examine the origins of the Third World Debt Crisis: How oil production affected debtor nations?

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 

In the following sections, we will look at the contributing factors of the Third World Debt Crisis and its consequences on the global economy. This case study is crucial as students are expected to be weigh the significance of the Debt Crisis, with respect to other factors like the Oil Crisis of the 1970s and trade protectionism.

1. [OPEC] Cause #1: Petrodollar Recycling
One of the major contributing factors of the Third World Debt Crisis was related to twin oil shocks in 1973 and 1979. The OPEC (Organization of Petroleum Exporting Countries) profited tremendously from the artificial oil shortage, thus accumulating ‘petrodollars’. With these excess profits, the OPEC members invested in international banks. Subsequently, these banks lent money to developing countries.

However, as these developing nations accepted loans to purchase raw materials and oil to facilitate economic development, the external shocks in the global market led to the expansion of foreign debts.

2. [USA] Cause #2: Volcker Shock
The second contributing factor relates to the US government’s response to the high inflation rates that plagued their economy. The Chairman of the Federal Reserve, Paul Volcker, proposed the increase in interest rates to combat the double-digital inflation caused by the 1979 oil shock.

The Federal Reserve hiked its interest rates from 10.25% to 20% by March 1980. Consequently, higher interest rates led to higher costs of loan repayments for borrowers. For example, the total interest payment for Latin American countries increased by 360% from 1978 to 1983.

3. [Third World Nations] Cause #3: Mismanagement of Loans
Internally, it can be argued that some of these debtor nations were ineffective in managing their loans. In particular, the money was used for other purposes, besides economic development. For instance, inept leaders diverted the loans to the purchase of military equipment.

Besides, a large proportion of the loans were used to purchase oil and inflated prices. As a result of the interest rate hike (as discussed earlier), loans were also used to finance interest payments. Hence, it is clear that some of these nations were unable to repay their loans.

4. [Third World Nations] Consequence #1: Economic slowdown
In view of the debt accumulation, one significant impact is the slowdown in economic growth for debtor nations. Governments were unable to focus on economic development as they lacked the finances to function. Furthermore, Third World nations experienced a decline in living standards as many citizens suffered from extreme poverty.

Latin American countries, such as Mexico and Brazil, defaulted on loans, which caused severe disruption to the international financial system. For example, Mexico declared its inability to finance the loans in Aug 1982, which caused a cascading effect on other neighbouring countries.

5. [IMF] Consequence #2: Washington Consensus and SAPs
As such, these countries turned to the International Monetary Fund (IMF) for solutions, such as debt re-scheduling or even cancellation. the IMF proposed a ‘bailout’ strategy, which was known as the ‘Structural Adjustment Programmes’ (SAPs).

To ensure these debtor nations are committed to the repayment of loans, the IMF imposed a set of strict conditions before loans were handed to them (i.e. Neo-Liberalism). In short, countries must adopt a policy of macroeconomic stabilization, trade liberalization and privatization.

Contrary to IMF’s expectations, the bailout was more of a hindrance than help to the indebted countries. For example, governments were forced to cut spending (i.e. austerity measures) to reduce debt. Yet, this meant that less subsidies were given to keep the price of necessities low, thereby resulting in higher cost of living. Eventually, the aim of debt reduction was not achieved.

Note to students: In fact, this IMF ‘bail-out package’ was accepted by some of the Southeast Asian governments during the 1997 Asian Financial Crisis (Paper 2 Theme II topic), which also created problems for their economies.

What can we learn from this case study?
Consider the following questions to understand this economic issue:
– How far do you agree the debt crisis of the 1980s was more severe than the oil shocks of the 1970s? [to be discussed in class]

Following the thorough analysis of the Third World Debt Crisis, it is imperative to apply your newfound knowledge to practice questions. Sign up for our JC History Tuition and learn to form cohesive and persuasive arguments that answer a wide range of A Level History essay questions effectively.

Besides, you can consider other related JC tuition classes, such as GP Tuition, Economics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition classes, we offer Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to learn more.

JC History Tuition Bishan Bedok Tampines Singapore - What caused the energy crisis of the 1970s - JC History Essays

What caused the energy crisis of the 1970s?

What was the oil shocks about?
Following a period of rapid economic modernization, also known as the ‘Golden Age of Capitalism‘, the world witnessed a sudden turn of events that resulted in the gradual decline in this fast-paced growth, ushering the ‘Crisis Decades‘. The twin oil shocks that took place in 1973 and 1979 were the result of geopolitical conflicts that involved the key driver of the global economy – USA – as well as the OPEC (Organization of the Petroleum Exporting Countries) that dictated the output of oil. In general, the surge in oil prices dealt a significant blow to many economies, including USA, reflecting the significance of oil as an essential resource for households and firms.

Learn more about the causes and consequences of the energy crisis of the 1970s

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 

In the next section, we will look at the background causes to understand what happened during the energy crisis of the 1970s.

1. [USA] 1973 Oil Crisis: Causes
There were two major factors that contributed to the start of the 1973 Oil Crisis – the dismantling of the ‘Gold Standard’ (US Dollars -Gold) fixed exchange rate system as well as the Yom Kippur War.

On 15 Aug 1971, US President Nixon announced that the United States would cease to maintain the Gold-USD standard fixed exchange rate system, which was based on the 1944 Bretton Woods Agreement. Consequently, the loss of market confidence towards the USD resulted in its depreciation (fall in currency value). In contrast, many firms and investors valued gold, contributing to the surge in gold prices.

However, the depreciation of USD undermined the OPEC as their export revenue (earnings from the sale of oil) was in USD. Therefore, OPEC lost a significant proportion of its export earnings.

The second factor was the Yom Kippur War, which began on 6 Oct 1973. Following Israel’s victory during the Six-Day War in 1967, both Egypt and Syria deployed its military to attack Israel on a religious day for the Jewish population, known as the Yom Kippur. Several weeks later, Nixon sought Congress funding of $2.2 billion to provide military backing for Israel.

2. [OPEC] Oil Embargo of 1973: Consequences
In view of the American intervention in the Yom Kippur War, the OPEC members in the Middle East, such as Egypt and Syria, protested by engaging in an oil embargo. This embargo persisted even after the end of the Yom Kippur War, thus triggering a global energy crisis.

The price of crude oil surged from $3/barrel to $12/barrel in 1974. The oil crisis was arguably a major cause of the economic recession in the developed economies from 1973 to 1975.

In the US, the economy experienced stagflation, in which there was high inflation, high unemployment and slow economic growth rates. Unemployment rate peaked at 9% in 1975.

In the UK, it experienced a fall in GDP (Gross Domestic Product) by 3.9% in the same time period. Also, the UK experienced double-digit inflation that went beyond 20%.

3. [USA & OPEC] 1979 Oil Crisis: Causes
The energy crisis resurfaced in the late 1970s. Primarily, the Iranian Revolution of 1979 was a major contributing factor that led to the spike in oil prices. After the departure of the Shah of Iran, the world supply of crude oil fell significantly.

4. 1979 Oil Shocks: Consequences
Similar to the 1973 energy crisis, the oil shortage was detrimental to the oil-dependent economies. The price of crude oil increased to nearly $40/barrel from 1979 to 1980.

In the US, many households were forced to undergo conservation, since petrol and fuel were needed for transport and other domestic purposes (like cooking). Also, the automobile companies, such as Detroit’s “Big Three” (General Motors, Chrysler and Ford) suffered from the oil spike.

In contrast, Japanese manufacturers adapted to the situation by producing fuel-efficient automobiles, which then captured a significant market share in the global industry.

On a separate but related note, the OPEC earned a significant sum from the sale of petroleum exports – known as ‘petrodollars’. OPEC members then placed their earnings in international banks, which were handed out to developing nations as loans. Later, this petrodollar recycling process was known to have contributed to the ‘Third World Debt Crisis‘ of the 1980s.

What can we learn from this case study?
Consider the following questions to understand this economic issue:
– How far do you agree that the energy crisis of the 1970s was more significant than the debt crises of the 1980s in causing the problems of the global economy? [to be discussed in class]

Now that you have studied the key considerations, you can enhance your knowledge application skills through the answering of History Essay questions. Join our JC History Tuition and find out how we teach you to form clear and logical arguments to answer fundamental and complex questions effectively and efficiently.

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JC History Tuition Bishan Bedok Tampines Singapore - How did Taiwan become a successful export economy - JC History Essay Skills

How did Taiwan become a successful export economy?

How did Taiwan become an economic power in Asia? 
In continuation of the previous article pertaining to the contributing factors that led to the economic transformation of South Korea, we will now examine how Taiwan, also known as the ‘accidental nation’, achieved its economic success from the 1960s to the 1990s. Taiwan also undergone a process of rapid industrialisation, shifting its focus from domestic production to export-driven production that propelled the nation to its developed status.

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] 

In the following section, we will focus on four major roles that led to the economic miracle in Taiwan. Take note that these points are to be evaluated based on role and factor comparison, so as to improve your comprehension of these contributing roles to the economic development of Taiwan. For example, you should analyse the varying degrees of importance for government and private businesses in affecting the economic transformation of Taiwan.

1. Role of the Government
a. Target Setting and Planning
Taiwan began its planning phase with the establishment of the Council for United States Aid (CUSA) in 1948, which was later reformed as the Council for Economic Planning and Development (CEPD). The CEPD played the role as a government agency to draft plans and set targets for the economic development of Taiwan. As a planning body, the CEPD decided on the allocation of state resources for the growth of industries, such as the distribution of development funds.

b. Policy Implementation
From the 1950s to 1960s, Taiwan’s economic policies were centred on the the implementation of the ‘import-substitution industrialisation’ (ISI) strategy, which focused on the protection of infant industries. For instance, the government introduced import restrictions on consumer goods to protect local firms from external competition. As a result, the agricultural sector flourished, contributing to the growth of the Taiwanese economy.

However, the economic contribution of the agricultural sector was low in value. As such, the Taiwanese government shifted its focus to ‘export-oriented industrialisation’ (EOI), which emphasised on the production of exports in capital-intensive industries. The government oversaw this development by passing laws that reinforced export-based production, such as the Provisions for Export Zone in 1965. Consequently, the EOI strategy was met with great success, as evidenced by the domination of numerous exporting goods in the international markets by the 1980s. For example, Taiwan was known for its exports of motherboards and computer terminals as it occupied more than three-quarters of the global exports.

2. Role of the Private Businesses [i.e. SMEs]
On the other hand, not only the public sector contributed to the economic transformation of Taiwan, but also the private counterpart, particularly the small and medium enterprises (SMEs). In contrast to South Korea, which is known for its few and massive chaebols that dominated the entire economy, Taiwan’s economic growth was driven by the existence of many SMEs. These SMEs played a crucial role in pursuing the goals set by the government, as observed by the large-scale production of exports. In the 1960s and 1970s, SMEs accompanied the government’s focus on EOI by producing standardised light-industry products. These goods were produced and sold at the international markets.

Over time, SMEs dominated the Taiwanese export production, accounting for nearly two-thirds of the entire country’s exports. Given that Taiwan’s economic developed hinged on export gains, this implied that SMEs became the key driver of the economy.

3. Role of Culture
Although Taiwan had a stark difference in the role of private businesses as compared to South Korea, the cultural factor remained similar, in the sense that favourable cultural influences could explain the remarkable economic performance of Taiwan from the 1960s to 1990s. Taiwan was also shaped by Confucianism, which is a philosophy that encouraged diligence, frugality and respect for authority.

One of the notable consequences of such cultural traits is the emergence of SMEs. In this case, the Taiwanese people were entrepreneurial. Their willingness to innovate and battle against the odds was critical in supporting this significant development. As a result, many business owners possessed the business acumen to deal with economic uncertainties.

Furthermore, the relevance of frugality to economic development can be explained by the high savings rate, which means that many firms have sources of financing to conduct investment activities that propel economic growth even more. Therefore, cultural values were important in helping us to understand the vigour that drives these firms.

4. International Developments [i.e. Role of USA]
The economic development of Taiwan was also supported by the role of USA, which increased its presence in Asia as a response to the perceived ideological threat of Communism. This response was carried out in the form of advancing economic progress by providing financial aid and other forms of support. For example, Taiwan was given exclusive access to American market and the privilege to impose trade protection temporarily. As such, USA occupied nearly two-fifths of Taiwan’s exports. From 1960s to 1970s, USA became Taiwan’s major export market, accounting for a large proportion of its economic growth.

Points to Ponder
Now that you have looked into the four major roles that affected the economic transformation of Taiwan, do consider the following ideas to reinforce your study of this topic for essay writing:
– How did the role of SMEs contribute to the economic miracle of Taiwan? 
– In comparison between South Korea’s chaebols with Taiwan’s SMEs, analyse their approaches in supporting the economic development of these two Asian Tigers. [to be discussed in class]

Are you ready to sit for the A Level History examination? If you are experiencing difficulties in organising your materials and completing your essays on time, fret no more! In addition to these regular articles that are published on this site, we also offer JC History Tuition programmes for JC1 and JC2 students to support their revision efforts. Examine topics in International History and Southeast Asian History together in class with fellow students and our JC History Tutor Justin Ng. We teach you to analyse historical issues carefully, form arguments logically and express ideas systematically

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JC History Tuition Bishan Bedok Tampines Singapore - How did South Korea become a developed nation - JC History Essay Skills

How did South Korea become a developed nation?

What are the Four Asian Tigers? 
To understand how South Korea become a developed nation, we must start off the discussion with the understanding of the ‘Four Asian Tigers‘. The ‘Four Asian Tigers’ refer to the fast-developing nations of South Korea, Taiwan, Hong Kong and Singapore. These four Asian economies were identified as remarkable case studies, given their high levels of sustained economic growth from 1960s to 1990s. Due to their extensive focus on export-oriented industrialisation, these countries have caught up with developed countries and competed at the international markets

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] 

In the following section, we will examine the contributing factors that can explain the economic transformation of South Korea.

1. Role of the Government
a. Target Setting and Planning
At the stage of economic development, the South Korean government undergone a process of central planning that involved target setting and resource management. Central planning was essential in the prioritisation of promising industries to nurture and expand, especially the family-owned chaebols. Institutionalisation of planning procedures took the form of the Economic Planning Board (EPB was established in 1961), which took the lead in formulating Five-Year Plans (FYP), which were important in charting the direction on a progressive basis. The EPB was accredited for the successful policy shift from import-substitution industrialisation (ISI) to export-oriented industrialisation, which propelled the South Korean economy significantly.

b. Policy Implementation
The strategies employed by the South Korean government have evolved over time. At the initial stage, the South Korean economy was built upon the foundations of domestic production. This strategy is known as ‘import-substitution industrialisation‘, which refers to the use of artificial trade barriers to insulate the domestic economy from foreign competition. The main purpose of ISI was to nurture local firms, such that they will develop and expand to become the key driver of the South Korean economy. In this case study, the government imposed trade protection to develop labour-intensive sectors that produce textile, agriculture and light consumer goods.

However, the South Korean government realised the economic gains of ISI were not sustainable as the above-mentioned goods yielded low-value economic growth. Hence, they turned their gaze towards foreign markets. This approach involved ‘export-oriented industrialisation‘. In contrast to ISI, EOI involved the production of exports (i.e. domestically-produced goods to be sold in the international markets) to promote economic development. In order for exports to be competitive, the South Korean government provided financial support to exporting firms, such as tariff exemptions on the import of raw materials for export production. Given that the foreign markets were much larger than the domestic market of South Korea, it was evident that the country enjoyed tremendous success, which was indicated by the increase in per capita income from $100 from 1963 to $6614 in 1990.

2. Role of the Private Businesses [i.e. Chaebols]
In addition to the notable contributions by the South Korean government, the economic transformation was made possible through the efforts of the private enterprises. In this case, the chaebols played a crucial role in the economic development of this Asian Tiger. Chaebols are family-dominated conglomerates that serve as the key pillars of support for the development of the South Korean economy. These major business corporations (e.g. Samsung and Hyundai) were formed in the 1960s under the auspices of the government, which provided extensive financial support and exclusion from stiff foreign competition. As such, these companies expanded and dominated the economy.

It was an economic success as the chaebols could compete in international markets against multinational corporations (MNCs) as they possessed large capital to innovate and improve the quality of exports. By 1980s, these major companies were self-sustaining and no longer needed government support to function. In return, these companies acted as the lifeline of the South Korean economy. For instance, Samsung occupied nearly one-fifth of South Korea’s Gross Domestic Product (GDP), implying that a single chaebol could support nearly 20% of the entire nation’s economy.

However, the remarkable achievements of these chaebols were blemished by structural flaws that began to appear over time. The over-bearing influence of these major companies was observed in the monopolisation of markets, which crowded out small and medium enterprises (SMEs). The nearly-absent competition cultivated a culture of complacency, which resulted in the deterioration of product quality. Furthermore, the family-oriented structure of chaebols encouraged the top management to appoint family members, which translated to the growing inefficiencies of these corporations. As such, it was imperative for the government to intervene and address the dominance of chaebols.

3. Role of Culture
The ‘Miracle on the Han River’ can also be explained by the inherent characteristics of the South Koreans, particularly the cultural traits shaped by Confucianism. Similar to the Japanese, many look up to the South Koreans for their work ethics, as they are described as industrious and reliable. In economic terms, many firms benefited in terms of higher labour productivity levels, which contributed to increase in economic growth rates.

Additionally, the frugal mindsets of South Koreans were beneficially for economic developments as savings rate was high. This meant that many firms could take loans from banks to finance their investment activities, thus promoting economic growth.

4. International Developments
South Korea’s economic development can also be explained by the tremendous economic support provided by USA during the Cold War period. During and after the Korean War (1950 to 1953), USA supported Korea’s industrialisation policy as part of its strategy to stem the tide of Communism in Asia. For example, USA provided post-war financial aid to South Korea, in which the financial resources were important for public infrastructure projects, like road-building and airport construction. From 1950 to 1980, the estimates of American aid to South Korea amounted to nearly US$6 billion. Due to the efforts of the USAID (United States Agency for International Development), South Korea’s exports increased from US$4 million to over $150 billion in 1980. Therefore, it can be observed that USA played a significant role in the development of the Korean economy.

Points to Ponder
Now that you have covered the four major factors that could explain the economic transformation of South Korea, consider the following pointers to integrate your knowledge for essay writing application:
– Which role was more important in the economic transformation of South Korea: Government or Private Enterprises [explain why]
– “The role of USA was most crucial in achieving the economic miracle of South Korea.” Assess the validity of this statement. [to be discussed in class]

We can value-add your learning experience of this A Level subject. You can join our JC History Tuition as we provide concise study materials and practice questions for your revision. We complement your study at school by covering the key chapters in preparation for your upcoming school assessments. Furthermore, we are focused on the aim of preparing you for the rigours of the A Level History examination at the end of this journey. Therefore, these lessons emphasise on knowledge application through the cultivation of analytical and writing skills for essay and SBQ.

Besides, you can sign up for other related A Level tuition programmes, like our GP Tuition and Economics Tuition classes. Under the guidance of renowned JC GP Tutor and Economic Tutor Simon Ng, you will learn how to analyse real world issues and apply what you have learnt to answer questions effectively.

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JC History Tuition Bishan Bedok Tampines Singapore - What caused the end of the Golden Age of Capitalism - JC History SBQ Skills

What caused the end of the Golden Age of Capitalism?

What led to the end of the Golden Age of Capitalism?
As the world observed a sustained period of phenomenal growth that accelerated the pace of economic development in many countries, problems began to emerge. The feasibility of existing international financial systems and frameworks, such as the Bretton Woods System, began to exhibit flaws that hindered growth. Eventually, the Golden Age of Capitalism came to an end.

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 

In the following section, we will focus on the key factors that have contributed to the decline in the global economy.

1. Collapse of the Bretton Woods System [15 Aug 1971]
Initially, the Bretton Woods System was essential in creating financial stability through the fixed exchange rate system that pegged the U.S. dollar against gold [USD 35 per ounce of gold]. However, excessive domestic spending [Great Society program] and military expenditure in foreign campaigns [Vietnam War] caused the American dollar to be overvalued. This meant that USA was unable to provide adequate gold to match the vast volume of dollars in international circulation.

As a result, speculators foresaw the U.S government seeking to devalue USD, creating a widespread panic to sell the currency. Market pessimism was pervasive. Eventually, it culminated in the historic moment in August 1971, when American President, Richard Nixon, declared the suspension of the dollar-to-gold convertibility, signalling the end of the fixed exchange rate system. As such, many countries were given the choice to adopt fixed or flexible exchange rates, resulting in declining stock prices, rising oil prices and bank failures.

2. Twin Oil Shocks [1973 and 1979] 
In addition to collapse of the Bretton Woods System, there were two disastrous events that led to skyrocketing oil prices and declining economies, also known as the Twin Oil Shocks of the 1970s.

The first oil shock took place in 1973-1974, which was attributed to the actions of the Organisation of Petroleum Exporting Countries (OPEC, in short). The OPEC sought to undermine USA for its provision of support to Israel in the Yom Kippur War [part of the longstanding Arab-Israeli War] by imposing an oil embargo. As a result of the sudden artificial shortage of oil, oil prices surged from $3 per barrel to $12 per barrel in one year. Consequently, the increase in oil prices had devastating impacts on the affected economies. Given that oil was an essential resource for production, many businesses declined. In contrast, OPEC benefited from the gains in revenue due to the sale of oil at artificially high prices.

The second oil shock occurred in 1979 due to the Iranian Revolution. Oil production was once again cut, causing an increase in price of oil. This had a severe impact on the developed economies, especially USA. Firms in oil-dependent industries, like car manufacturers, were undermined by this development. Furthermore, consumers had difficulty coping with the increase in price of fuel for domestic usage.

3. Third World Debt Crisis [1980s]
The Third World Debt Crisis was a regional economic challenge that plagued developing nations in the early 1980s. Countries, such as Mexico, were unable to finance the external debts. Although international financial institutions, like the World Bank and International Monetary Fund (IMF) extended loans and aid to these countries, their efforts were inadequate to resolve the persistent debts.

Furthermore, the twin oil shocks of the 1970s had worsened the government deficits, causing many Third World countries to suffer from the longstanding debt issue. For example, the Mexican government’s budget deficit was at 16.3% of its Gross National Product (GNP). Consequently, economic activities declined in these countries, causing growth rates to slow down.

4. Advent of Trade Protectionism
Although the General Agreement on Tariffs and Trade (GATT) was the reason for the economic boom that started the Golden Age of Capitalism, liberalisation of world trade did not benefit all countries evenly. In particular, developing countries were incurring losses, while developed nations gained from the freer movement of labour, commodities and capital.

Besides, the U.S. economic slowdown in the 1970s and emergence of developed countries, like Germany and Japan, as well as the ‘Four Asian Tigers’, influenced the shift in economic stance by the American government. As such, trade protectionism was imposed to insulate the domestic economy from the adverse effects of economic competition. For example, the American government introduced a Voluntary Restraint Agreement (VRA) that forced Japan to cut down its exports of automobiles into USA. Developed countries, like UK, raised tariffs.

As such, this artificial trade barriers began to undo the beneficial impacts of the free trade agreements, causing a decline in global output and the subsequent slowdown in economic development.

What’s Next?
Given this understanding of the devastating impacts that caused the decline in the global economy, you should examine the following questions and think about the significance of the above-mentioned factors to reinforce your knowledge comprehension to better apply them to your SBQ answers:
– Why was the Golden Age of Capitalism not sustainable? 
– What were the internal and external factors that contributed to the decline in the global economy? [class discussion]

In preparation for the examination, sign up for our JC History Tuition to be ready for the complexities of the essay and source based case study questions. We provide many useful revision materials and additional practice questions to supplement your school lessons. Furthermore, we make learning enjoyable and enriching, incorporating online resources and videos that can synergise your knowledge of past issues with the present.

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