EC120 The World Economy in Historical Perspective Preparing assignment 2 Topics Assignment 2, topic 1 Migration and International Capital Flows Convergence (of what?) in the late 19th Century Assignment 2, topic 2 (briefly) Reminder of previous guidance, especially –Implementing your plans –Sources –How to reference sources –Quotations –Submission EC120 assignment 2, slide 0

Assignment 2, question 1 The assignment question: How important were economic factors in determining the international flows of labour and capital beginning in the mid- 19th century, through to 1914? Discuss the extent to which these flows served to foster 'international convergence'. Preliminaries: `Economic factors’ = role of economic forces in the flows Migration: focus on inter-continental flows of labour Capital flows: overseas investments Time period: “mid-19C”, shortly before surges in migration and capital flows, to 1914, the watershed of World War 1. `International convergence’ of what? EC120 assignment 2, slide 1

International Flows of Labour Main flows from Europe to `New World’, esp. 1880s and from late 1890s. Changing sources (Britain/Ireland, then East/South Europe) Less well documented sources: South and East Asia (free or indentured labour?) Explanations and evidence: –Economic incentives: relative wages –Demographic change & modernisation –Social networks and information –Changes in land tenure and agriculture (in source countries) EC120 assignment 2, slide 2

International flows of Capital Distinguish between financial (“portfolio”) and non-financial (foreign direct investment, FDI) flows. Also, between long-term (“bonds”) and short-term (“bills”) finance. Focus on bond finance (e.g. for infrastructure projects); FDI increasingly important towards 1914 Sources: industrialising West European nations Destinations: mainly European offshoots Note long-swings, surges c1870, c1890, & esp. up to 1914 Economic factors: –Divergence in wealth between source and destination –Technological advance, esp. communications –Political and financial stability (e.g. Gold Standard) –Financial innovations, e.g. standardisation of contracts EC120 assignment 2, slide 3

International convergence? Convergence of what? Refers to convergence (or not) of incomes in different countries But incomes reflect prices. Which “prices”? –Wage rates, the price of labour services –Rates of return (interest rates) on capital (e.g. bonds) –Prices of traded commodities or services Comment on evidence for wage convergence and interest rate convergence, noting different patterns and reliability of evidence Convergence of traded commodity prices not directly relevant for the essay question but the indirect relationships should be studied: impact of migration and capital flows on commodity price convergence? Impact of commodity prices on wages and rates of return on capital? EC120 assignment 2, slide 4

Assignment 2, question 2 The assignment question: What explanations have been offered to explain the collapse of the Bretton Woods international monetary system? What might explain why the collapse of the Bretton Woods system was so much less traumatic than that of the Gold Exchange Standard in the 1930s? Preliminaries: What was the “Bretton Woods” system? When did it start to function? How well (if at all) did it function? When did it “collapse” (disintegrate) and why? What were the main features of the “Gold Exchange Standard” adopted in 1920s? How did the GES collapse in 1930s? (Comparison with Bretton Woods disintegration.) EC120 assignment 2, slide 5

Explanations for the Collapse of Bretton Woods Overwhelmed by its own success? What strains did the rapid growth of international trade place on Bretton Woods’ arrangements? What constituted international reserves in the Bretton Woods’ system? How stable were these reserves? What was the role of capital controls in maintaining Bretton Woods? (Review International Trilemma from Week 18.) What links might exist between trade and capital flows? Incompatible political objectives? Who should adjust to balance of payments deficits/surpluses? Why might the balance of payments differ from the balance of trade? How can payments imbalances be corrected? These two explanations are not necessarily incompatible. EC120 assignment 2, slide 6

The Process of Collapse When did the GES begin to break down? Bretton Woods? Compare the impact on the dollar of Britain going off gold in 1931 September with Britain’s devaluation in November How did these two devaluations of sterling affect the value of international monetary reserves? The value of gold in dollar terms? Compare the fiscal stances of governments as the two international monetary regimes began to break down. Appealing again to the International Trilemma from Week 18, what was gained in each case from the collapse of fixed exchange rates? Compare the costs and benefits of abandoning fixed exchange rates in the early 1930s with early 1970s. EC120 assignment 2, slide 7

Fitting it all together Plan carefully: no single “right” way (your discretion) Always keep the question in mind Formulate “sub-questions” that your paper addresses (and make sure the reader knows what they are!) The factual material: filling in countries’ experiences Not just a mass of “facts”: use facts with a purpose, (i) to illustrate the general aspects of migration and capital flows (ii) for comparisons among different nations (iii) for contrasts among different nations Use facts to make an argument, and make sure the reader knows what it is: justify and explain Organise: adopt a transparent, systematic layout Introduction and Conclusion: keep to the point, avoid waffle, make sure the Introduction matches what follows! EC120 assignment 2, slide 8

Reminder The following slides repeat some previous guidance. Very important: Avoid academic offences (plagiarism) at all costs: negligence is no excuse Sources to cite: –focus on academic works (don’t just rehash rehashed websites) –take care with the accuracy of your bibliography and citations –consider the reason for each quotation (what point are you trying to make?) Check that your writing makes grammatical sense (avoid clumsy, confusing and ambiguous sentences) Correct spelling mistakes (including names of authors of sources) Check the coherence of your draft: do the arguments fit together? Remember your goal: to demonstrate your understanding If in doubt, ask EC120 assignment 2, slide 9

Implementing your plans Leave yourself ample time: presentation is important − including the clarity of what you write Use section headings to make your layout transparent, paying careful attention to the Introduction and Conclusion Word length: –Upper limit 3,000 words, for the entire submission Penalty for > 3,000 words, according to why the paper is overly long (just waffle or irrelevance?) Getting feedback: available when you have made a start –Ask for comments on your plan ( Dr Kennedy or me) –Ask for comments on a draft (but not a forecast mark): One draft per student (not multiple drafts) Deadline for drafts at least 7 days before final deadline EC120 assignment 2, slide 10

Sources Any source may be used BUT not all are of equal value –Sources must be referenced, apart from widely known “facts” Identify reliable academic sources – beware the internet –Does the source have a named author? If not, beware Reliable sources: –Albert Sloman Library: anything here or accessible via the Library website is almost certainly worthy of attention: most academic journals are now accessible electronically –Internet: a vast resource but avoid the trash Searches: try to restrict yourself to Google Scholar Wikipedia? Handy for checking facts, that don’t need citing Other internet sites: sometimes helpful for background but not worth citing. How many sources? No rigid rule. Probably 4 or 5 academic sources (excluding minor items) EC120 assignment 2, slide 11

How to reference sources (reminder) What to cite? All substantive sources. What to omit? Specific, widely accepted facts − unless you have reason to challenge them. Citations are brief. Example: “(Eichengreen, 2008, p. 59)” Citations point to items in the Bibliography (List of references at the end). Example: “Eichengreen, B. Globalizing Capital: A History of the International Monetary System, 2nd ed., 2008, Princeton University Press” The reference: Every citation points to exactly one reference. Every reference identifies at least one citation. Avoid citing every detail separately. Often one citation suffices. Make explicit why the citation appears (inform the reader) –Avoid inserting citations at the end of paragraphs/sentences without explanation. Why is it there? EC120 assignment 2, slide 12

Quotations Avoid plagiarism, an academic offence Plagiarism: copying from another source without “proper citation” Proper citation for copied material: enclose the copied material in “…” followed immediately with a citation. What counts? One or more sentences. No need to quote common phrases, e.g. the iron law of wages Why quote? –Beware of long quotes (they reflect bad practice and don’t demonstrate your understanding of the subject) –Ask yourself “why am I including this quote?” 1.Because you agree with it (To support your argument) 2.Because you disagree with it (You will then dispute it) 3.Because it’s easier that way (A bad reason) EC120 assignment 2, slide 13

Submission Don’t forget to: –Check that your writing is clear and that sentences make sense! –Correct any remaining spelling mistakes –Insert your name, registration number and paper’s title on p.1 –Number the pages, double-space the lines, use a 12pt font –Submit in Word doc/docx format (if possible) or pdf Submit electronically via FASER well before 12:00 noon on the day of the deadline. Allow yourself ample time. What happens to late submissions ? –We will still mark your essay and give you feedback, BUT –For assessed papers a zero will be recorded as your mark unless you justify the late submission, in writing, on a late submission form. We have no authority to grant “extensions”. EC120 assignment 2, slide 14