[SAJC] Challenges in the Global Economy 2024 FINAL

9174/01 H2 History Paper 1 Theme II: The Development of the Global Economy Page | 1 The development of the Global Economy Topic 2: Challenges in the Global Economy SAJC History Unit, 2024 Learning Outcomes (from the Examination Syllabus) 5 Essential Questions for this topic: 5 Guiding Questions for this topic: 5 1. Overview 6 2. Major Events and Developments 6 3. Reasons for the ‘Crisis Decades’ 8 4. Positive Aspects of the ‘Crisis Decades’ 9 5. What happened to the Rest of the World? 9 6. The Oil Crises of 1973-74 and 1979-80 10 6.1 Background 10 6.2 The Formation of OPEC 10 6.3 The 1973 OPEC Oil Embargo 11 6.4 The 1979 Iranian Revolution and Its impact on Oil Supply 13 7. Impact of the Oil Crises on the Global Economy 13

9174/01 H2 History Paper 1 Theme II: The Development of the Global Economy Page | 2 7.1 Increase in Oil Prices 14 7.2 Higher Costs of Production in Both Developed and Developing Countries 15 7.3 High Rates of Inflation 15 7.4 Economic Slowdown 16 8. Did OPEC Benefit? 17 9. Did the Negative Impact of the Oil Crises Last? 17 10. What About the Soviets? 18 11. Measures to Liberalise Trade after World War II 19 11.1 What is Free Trade? 19 11.2 GATT and its impact on Free Trade? 20 12. The Rise of Protectionism in the 1970s and 1980s 21 12.1 The Global Economic Context in the 1970s and 1980s 21 12.2 What is Protectionism? 21 12.3 Reasons for Rise of Protectionism 22 12.3.1 Economic Slowdown in Developed Countries 22 12.3.2 Increased Competition among Developed Countries 22 12.3.3 Competition from Developed Countries 24 12.3.4 Domestic Political Pressures for Protectionism 24 12.3.5 Weakening US Political Will and Economic Capacity to Maintain Free Trade 25 12.4 Impact of the Rise of Protectionism and Implications for Free Trade (Counter Argument) 25

9174/01 H2 History Paper 1 Theme II: The Development of the Global Economy Page | 3 12.4.1 Benefits of Protectionism 25 12.4.2 Disadvantages of Protectionism 26 12.4.3 Development of Regional Trade Groups as a Means to Balance Free Trade and Protectionism 26 12.4.4 Continued Commitment to Free Trade Regimes and Norms 27 12.4.5 New Opportunities for Protectionism 28 13. Causes of US Trade Imbalances 28 13.1 Weakening of the US Economy in the 1970s 28 13.1.1 Budget and Trade Deficits 29 13.1.2 Currencies Under-Valued Vis-à-vis the US Dollar 29 13.2 US Response to the Trade Deficit and Its Consequences 30 13.2.1 US Abandoned Parity in 1971- Collapse of the BWS Fixed Exchange Rates System