Economic history of Europe - AbsoluteAstronomy.com

Technology diffusion in conflict

Conflict between regions, in Viking

Viking

The term Viking is customarily used to refer to the Norse explorers, warriors, merchants, and pirates who raided, traded, explored and settled in wide areas of Europe, Asia and the North Atlantic islands from the late 8th to the mid-11th century.These Norsemen used their famed longships to...

raids and in Crusader

Crusades

The Crusades were a series of religious wars, blessed by the Pope and the Catholic Church with the main goal of restoring Christian access to the holy places in and near Jerusalem...

invasions of the Middle East

Middle East

The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...

incidentally led to the diffusion of and refinement technology instrumental to overseas travel

Maritime history

Maritime history is the study of human activity at sea. It covers a broad thematic element of history that often uses a global approach, although national and regional histories remain predominant...

, from the 8th Century to the 12th Century. People made improvements in ships, particularly the longship

Longship

Longships were sea vessels made and used by the Vikings from the Nordic countries for trade, commerce, exploration, and warfare during the Viking Age. The longship’s design evolved over many years, beginning in the Stone Age with the invention of the umiak and continuing up to the 9th century with...

. The astrolabe

Astrolabe

An astrolabe is an elaborate inclinometer, historically used by astronomers, navigators, and astrologers. Its many uses include locating and predicting the positions of the Sun, Moon, planets, and stars, determining local time given local latitude and longitude, surveying, triangulation, and to...

, for navigation

Navigation

Navigation is the process of monitoring and controlling the movement of a craft or vehicle from one place to another. It is also the term of art used for the specialized knowledge used by navigators to perform navigation tasks...

, greatly aided long-distance travel over the seas. The improvements in travel in turn increased trade

Trade

Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...

and the diffusion of consumer items.

Crafts and urban growth

From the 11th Century to the 13th Century, farmers and small-scale producers of crafts increasingly met in town

Town

A town is a human settlement larger than a village but smaller than a city. The size a settlement must be in order to be called a "town" varies considerably in different parts of the world, so that, for example, many American "small towns" seem to British people to be no more than villages, while...

s to trade their goods. They met in either seasonal trade fair

Trade fair

A trade fair is an exhibition organized so that companies in a specific industry can showcase and demonstrate their latest products, service, study activities of rivals and examine recent market trends and opportunities...

s or they traded in an ongoing basis. Craft associations called guild

Guild

A guild is an association of craftsmen in a particular trade. The earliest types of guild were formed as confraternities of workers. They were organized in a manner something between a trade union, a cartel, and a secret society...

s fostered the development of skills and the local growth of trade in particular goods. Over the course of the centuries of this period towns grew in size and number, first in a core in England

England

England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

, Flanders

Flanders

Flanders is the community of the Flemings but also one of the institutions in Belgium, and a geographical region located in parts of present-day Belgium, France and the Netherlands. "Flanders" can also refer to the northern part of Belgium that contains Brussels, Bruges, Ghent and Antwerp...

, France

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

, Germany

Germany

Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

and northern Italy

Italy

Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

.

The economic system of this era was merchant capitalism

Merchant capitalism

Merchant capitalism is a term used by economic historians to refer to the earliest phase in the development of capitalism as an economic and social system. Early forms of merchant capitalism were developed in the medieval Islamic world from the 9th century, and in medieval Europe from the 12th...

. The core of this system was in merchant houses, backed by financiers acting as intermediaries between simple commodity producers

Simple commodity production

Simple commodity production is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products...

. This system continued until it was supplanted by industrial capitalism in the 18th Century.

Economic renaissance in late middle ages

Economic activity over a broad geographic range began to intensify in both northern and southern Europe in the 13th Century. In cities linked to the North Sea

North Sea

In the southwest, beyond the Straits of Dover, the North Sea becomes the English Channel connecting to the Atlantic Ocean. In the east, it connects to the Baltic Sea via the Skagerrak and Kattegat, narrow straits that separate Denmark from Norway and Sweden respectively...

and in cities linked to the Baltic Sea

Baltic Sea

The Baltic Sea is a brackish mediterranean sea located in Northern Europe, from 53°N to 66°N latitude and from 20°E to 26°E longitude. It is bounded by the Scandinavian Peninsula, the mainland of Europe, and the Danish islands. It drains into the Kattegat by way of the Øresund, the Great Belt and...

a trade monopoly developed in the Hanseatic League

Hanseatic League

The Hanseatic League was an economic alliance of trading cities and their merchant guilds that dominated trade along the coast of Northern Europe...

. This facilitated the growth of trade among cities in close proximity to these two seas.

Trade flourished also in Italy (albeit not united, but rather ruled by different princes in different city-state

City-state

A city-state is an independent or autonomous entity whose territory consists of a city which is not administered as a part of another local government.-Historical city-states:...

s), particularly by the 13th Century. Leading the trade in Mediterranean Europe were traders from the port

Port

A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land....

cities of Genoa

Genoa

Genoa |Ligurian]] Zena ; Latin and, archaically, English Genua) is a city and an important seaport in northern Italy, the capital of the Province of Genoa and of the region of Liguria....

and Venice

Venice

Venice is a city in northern Italy which is renowned for the beauty of its setting, its architecture and its artworks. It is the capital of the Veneto region...

. The wealth generated in Italy fueled the Italian Renaissance

Italian Renaissance

The Italian Renaissance began the opening phase of the Renaissance, a period of great cultural change and achievement in Europe that spanned the period from the end of the 13th century to about 1600, marking the transition between Medieval and Early Modern Europe...

Hanseatic League

The Hanseatic League

Hanseatic League

The Hanseatic League was an economic alliance of trading cities and their merchant guilds that dominated trade along the coast of Northern Europe...

was an alliance of North German and Baltic cities during the Middle Ages. The Hanseatic League was founded for the purpose of joining forces for promoting mercantile interests, defensive strength and political influence. By the 14th century, the Hanseatic League held a near-monopoly on trade in the Baltic, especially with Novgorod and Scandinavia

Scandinavia

Scandinavia is a cultural, historical and ethno-linguistic region in northern Europe that includes the three kingdoms of Denmark, Norway and Sweden, characterized by their common ethno-cultural heritage and language. Modern Norway and Sweden proper are situated on the Scandinavian Peninsula,...

Industrial Revolution

The Industrial Revolution

Industrial Revolution

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

brought factories to western Europe, especially England and Scotland, 1750s to 1830s. The U.S. experienced its industrial revolution in the early 19th century; Germany in the late 19th century; and to Russia in the mid 20th century.

In Britain, the Industrial Revolution was a period of economic transformation from the 1750s to the 1830s, characterized by the growth of a new system comprising factories, railroads, coal mining and business enterprises using new technologies that it sponsored. The new system operated first on textiles, then spread to other sectors and by the mid 19th century totally transformed the British economy and society, setting up sustained growth; it spread to parts of America and Europe and modernized the world economy. Although localized to certain parts of Britain (the London area was not included), its impact was felt worldwide on migration and trade, society and politics, on cities and countryside, and affected the remotest areas. The growth rate in the British GDP was 1.5% per year (1770-1815), doubling to 3.0% (1815-1831).

Success in building larger, more efficient steam engines after 1790 meant that the cost of energy fell steadily. Entrepreneurs found uses for stationary engines in turning the machines in a factory or the pumps at a mine, while mobile engines were put into locomotives and ships (where they turned paddles or, later, propellers). The use of water power was growing too, so that in 1830 steam mills and water mills were about equal (at 165,000 horsepower each); by 1879 Britain obtained 2.1 million horsepower from steam engines, and 230,000 from water.

Railways

see History of rail transport

History of rail transport

The history of rail transport dates back nearly 500 years and includes systems with man or horse power and rails of wood or stone. Modern rail transport systems first appeared in England in the 1820s...

The growth of industry soon brought to light the need for a better system of transportation. While canals and roads did improve, they were soon overshadowed by a means of transportation that held great promise: the railroads. The railroads may have been that most important factor of the industrial revolution. Railways had existed as early as 1500, but in 1700s the primitive wooden rails were replaced with wrought iron. These new rails enabled horses to pull even heavier loads with relative ease. But dependence on horsepower did not last for long. In 1804 the first steam-powered locomotive pulled 10 tons of ore and 70 people at 5 miles per hour. This new technology improved dramatically; locomotives soon reached speeds of 50 miles per hour. While the railroads revolutionized transportation, they further contributed to the growth of the industrial revolution by causing a great increase in the demand for iron and coal.

Iron and steel

Throughout the middle ages iron was smelted using charcoal, however in the eighteenth century, new methods of iron production were discovered; the resulting iron was of higher quality than ever before. These advances, such as the process developed by Henry Cort in 1780’s, greatly encouraged the use of machinery in other industries.

Iron was so durable that it became the preferred metal for tools and equipment until displaced by steel after 1860. Britain had iron ores but lacked a process to produce iron in quantity until in 1760 John Smeaton invented a blast furnace that could smelt iron both quickly and cheaply. His invention used an air-blast produced by a fan run by a waterwheel. In 1783 Henry Cort introduced the puddling, or reverberatory furnace, in which the final product was a pasty solid instead of a liquid. It was rolled into balls, squeezed and rolled to eliminate the impurities, or slag. The result was malleable iron in large quantities. The greatest of the early ironmasters, John Wilkinson (1728-1808) invented new machinery to process the iron. In 1779 the first cast-iron bridge was constructed across the Severn; in 1790 the first iron ship was launched. By 1830 Britain was producing 700,000 tons of iron a year; the amount quadrupled a quarter-century later, with centers in Scotland, South Wales, and Staffordshire. Railway builders were the chief customer. In 1847-48 they bought 3 million tons for rolling-stock, bridge building, and station building for 2000 new miles, plus the demands of the 3000 previously built miles of railway.

State of German Economics during the Interwar Period

After World War I

World War I

World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

, Germany was forced to pay all of the war reparations

War reparations

War reparations are payments intended to cover damage or injury during a war. Generally, the term war reparations refers to money or goods changing hands, rather than such property transfers as the annexation of land.- History :...

after the Treaty of Versailles

Treaty of Versailles

The Treaty of Versailles was one of the peace treaties at the end of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June 1919, exactly five years after the assassination of Archduke Franz Ferdinand. The other Central Powers on the German side of...

. These reparations along with the economic climate within Germany during this time period led to the fall of the Weimar Republic

Weimar Republic

The Weimar Republic is the name given by historians to the parliamentary republic established in 1919 in Germany to replace the imperial form of government...

and the rise of Adolf Hitler

Adolf Hitler

Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...

and his Nazi Party. The reconstruction period was based on private investment and demand. When the stock market crashed in 1929, the investors who had been financing Germany pulled out, crippling its economy.

Employmemt

During the interwar period, the unemployment

Unemployment

Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

rates in Germany were estimated to be 1.7 to 1.8 million people in July 1932. This did not include those who had become discouraged and had withdrawn from the labor force completely. The sectors which were hardest hit by unemployment were those concentrating in industrial work. Nearly 50% of workers in the iron and steel industry were unemployed, the textile industry faced an unemployment rate of 40%. The building industry was one of the hardest hit, at 84%, because there was no growth in the economy, causing a lack of demand for new buildings. These unemployment issues led to a fall of 40% in industrial production from 1929 to 1933.

The Dawes Plan

Dawes Plan

The Dawes Plan was an attempt in 1924, following World War I for the Triple Entente to collect war reparations debt from Germany...

was adopted in August 1924 as a result of Germany's inability to repay its war reparations as the Treaty of Versailles

Treaty of Versailles

had previously drawn up. Germany was unable to pay reparations due to their unwillingness to raise their taxes while their Reichsmark became inflated to the point that it was almost worthless. The Dawes Plan was created to stabilize Germany's currency while reducing the payments required per period. This allowed American and British bankers to hand out loans to Germany, so its industry would be able to expand to pay off the massive debts. The new payment regulations that were enacted with the Dawes Plan were such that the first year, Germany had to pay one billion marks the first year. After the first year, the amount owed would increase until it reached 2.5 billion marks.

European Coal and Steel Community

Six European nations, Belgium

Belgium

Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...

, France

France

, Germany

Germany

, Italy

Italy

, Luxembourg

Luxembourg

Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...

and the Netherlands took a step toward economic integration with the formation of a common market of coal

Coal

Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

and steel

Steel

Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...

. They formed the European Coal and Steel Community

European Coal and Steel Community

The European Coal and Steel Community was a six-nation international organisation serving to unify Western Europe during the Cold War and create the foundation for the modern-day developments of the European Union...

in 1951. The idea was to stream-line coal and steel production. A side-benefit would be economic interdependence. Thereby, there would be less interest in war between the member nations. In particular, this move was promoted as a means to reduce the likelihood of war between France and Germany, two nations that were at war with each other several times between the 1860s and the 1940s.

Industrial decline

The decades from the 1960 saw an economic decline in the output of the more developed nations of Europe, particularly those in Western Europe. These nations' position in output of refined raw materials, e.g. steel, and in finished goods fell in contrast to Asia countries.
Several Asian nations made use of comparative advantage

Comparative advantage

In economics, the law of comparative advantage says that two countries will both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods...

and specialized in producing certain goods, utilizing comparably cheaper labor forces. First this occurred in Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

and the four "Asian Tigers

Asian Tigers

The Asian Tigers is a Pakistani militant group, first publicised when they claimed credit for the kidnapping of former Pakistani intelligence officers Khalid Khawaja, Colonel Imam, British journalist Asad Qureshi and Qureshi's driver Rustam Khan in March 2010. Khawaja was killed in April 2010....

" (South Korea

South Korea

The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

, Taiwan

Taiwan

Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...

, Hong Kong

Hong Kong

Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

and Singapore

Singapore

Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

); by the latter half 1980s the shift of industrial production began occurring in the newly industrializing countries.
First, the shift occurred in cheaper, lower technology products, such as textiles. Then, this shift occurred in higher-technology goods, such "durables" as refrigerator

Refrigerator

A refrigerator is a common household appliance that consists of a thermally insulated compartment and a heat pump that transfers heat from the inside of the fridge to its external environment so that the inside of the fridge is cooled to a temperature below the ambient temperature of the room...

s or automobile

Automobile

An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

s. The shift of international industrial production out of Europe is a key outcome of globalization

Globalization

Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

Introduction of the Euro

The Euro

Euro

The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

became the official currency of certain European Union

European Union

The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

members on January 1, 2001. The currency was signed into effect in 1992 in the Treaty of Maastricht. The initial idea behind the Euro was that it eliminates exchange rate

Exchange rate

In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...

s between European nations and makes currency

Currency

In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

fluctuation risks minimal.

Countries Involved

The nations involved in the initial treaty were Austria

Austria

Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...

, Belgium, Finland

Finland

Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...

, France, Germany, Ireland

Ireland

Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...

, Italy, Luxembourg, the Netherlands, Portugal

Portugal

Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...

, and Spain

Spain

Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

. These nations agreed in principle to the European Monetary Union (EMU) in 1999 and installed the Euro as its currency on January 1, 2001. More European countries agreed to join the union in the following years; Slovenia

Slovenia

Slovenia , officially the Republic of Slovenia , is a country in Central and Southeastern Europe touching the Alps and bordering the Mediterranean. Slovenia borders Italy to the west, Croatia to the south and east, Hungary to the northeast, and Austria to the north, and also has a small portion of...

(2007), Cyprus

Cyprus

Cyprus , officially the Republic of Cyprus , is a Eurasian island country, member of the European Union, in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea.The earliest known human activity on the...

and Malta

Malta

Malta , officially known as the Republic of Malta , is a Southern European country consisting of an archipelago situated in the centre of the Mediterranean, south of Sicily, east of Tunisia and north of Libya, with Gibraltar to the west and Alexandria to the east.Malta covers just over in...

(2008), and Slovakia

Slovakia

The Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...

(2009). Countries are only allowed to begin utilizing the Euro when they have met certain requirements set about by the EMU. The criteria includes "a low and stable inflation, exchange rate stability and sound public finances." The reason for such criteria is because the best way to achieve a successful economy is by ensuring price stability.

Exchange Rate

One goal of the euro was to eliminate exchange rates between two European nations. The exchange rate is the current market price that one currency is exchanged for another. Before the Euro, each country had to deal with varying currencies, which all had different exchange rates. The euro unified all Economic and Monetary Union members.

Versus the US Dollar

The current exchange rate as of April 18, 2009 is 1.06% or +0.0137. This means that 1 euro is equal to 1.30 American dollars. The euro was strongest against the US dollar on July 15, 2009. At this time, 1 euro was equal to 1.599 American dollars. On October 26, 2000, the euro was at its weakest point. The euro was only worth 0.8252 American dollars.

Versus Other Currencies

Current exchange rates of the euro to other nations are as follows (as of April 18, 2009):

American dollar: 1.3058
Japanese yen: 129.67
Danish krone: 7.4492
Pound sterling: 0.8828
Swiss franc: 1.5218
Russian rouble: 43.6835
Indian rupee: 65.1070
Mexican peso: 17.0616

External links

EHE - An Economic History of Europe, webpage linking to resources for economic historians of Europe. Contains links to major databases, technology descriptions, examples of use of data, a forum for economic historians.

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Technology diffusion in conflict

Crafts and urban growth

Economic renaissance in late middle ages

Hanseatic League

Industrial Revolution

Railways

Iron and steel

State of German Economics during the Interwar Period

Employmemt

The Dawes Plan

European Coal and Steel Community

Industrial decline

Introduction of the Euro

Countries Involved

Exchange Rate

Versus the US Dollar

Versus Other Currencies

See also

Further reading

External links