The Cold War, Globalization and the Effect

on the First World Economies

August 29, 2014 Ryan Underwood Keeping a nations economy going is a very difficult
balancing act. Things the country itself does, like pass new laws, can effect a countries economy
greatly. Situations were economies are hurt by new laws are completely in the hands of the
countries government. In some situations its not in their control at all. This is like the situation
with Scotland and its trade with Russia. The actions Russia has taken with the Ukraine have
caused the European Union to put sanctions on Russia. This intern has hurt Scotlands economy
greatly. The country usually exports 45 million GPD of food and drink to Russia but 22 million
GPD was stopped by the sanctions. That is a huge loss in revenue and has far reaching affects, the
normal trade of these countries can be seen in the image bellow. Also it not only affects that sector
of the economy but ripples through the whole economy (Maddox). However, this situation is not a
new one and its causes can be traced back to the Cold War.

World War II created many issues on a world wide scale, two different forms a government were
fighting for influence. This created a divide between communist countries and democratic counties
which set up the Cold War. This divided world created a globalized economy unlike ever before,
one with communist countries and one with democratic. All the countries of the world, of each
government type, were interconnected and dependent on each other. The countries of the opposite
group were not traded with, all the trading was done within a countries own group. This created a
situation where some countries were given opportunities to advance for the better of the group,
democratic or communist. This caused many first world countries, which were allies of the U.S.,
to make huge economic gains and gain huge amounts of strength and power in this time period.
These countries were given massive amounts of funding by the U.S. which made them strong
allies to the U.S. Countries that became theses strong allies were Western Europe, Japan and
Korea. The deep seeded conflict of the Cold War created a very unique and powerful split
globalized world economy.
At the root of this issue there are some common themes, conflict and inequality. The conflict
between the U.S. and The Soviet Union caused a race to be the most militarized and most
powerful country. The picture bellow shows one of Russias displays of military power. This issue
thus affected the worlds economy, as they pushed to be the best they dragged countries with the
same ideas along with them. Another broad theme is inequality, there were great inequalities
caused solely by this issue. The economic race between the super powers allowed some countries
to thrive, like Japan and Europe, and some others to fail. Thus this era of the cold war caused a
huge amount of economic growth for first world allies of the United States and the increase in
globalization. This new integration of economies was caused by many things with a few being
new technologies in the fields of transport, communication and production. These were all
technologies that came out of World War II and the following race for supremacy. These things
brought the global economy closer together, but affected first world countries more. Those
countries had the money to afford these technologies and were closely tied to the U.S. economy
(Simensen).
Right after WWII at the start of the Cold War, the Soviet Union had a strong front in Europe. The
U.S. wanted to stop the spread of communism so it was attempting to strengthen its allies
(Hoffman Reports Gain in Cold War'). The U.S. was worried about the economies of its allies
but the bigger worry was the rise of itself and the fall of the Soviet Union and would use any
means to achieve that. One major strategy was controlling the access to third world countries.
Doing this would stop the Soviet Union from being able to buy materials from them and would
help maintain these markets for the U.S. The idea was that if the U.S. bought the materials they
needed for their economy the 3rd world countries would have money to buy things from Western
Europe and Japan, helping their economies immensely (Painter, 23). This was not the original
source of this idea though, trade systems involving the use of 3 rd world countries and globalization
go all the way back to the 1700s. The idea of globalization for the better of the countries in charge
was the dominating economic policy on this time period (McWilliams, 430). Then with that
money they could buy goods from the U.S. creating a circle of economic reconstruction and
growth. This was accruing during the start of the Cold war before Korea when things changed
economically (Painter, 23).
The Korean War changed a lot of things on the world stage, some of the major ones were with
Japan. Japans economy was still struggling to recover from the aftermath of WWII but with aid
from the U.S. from March 1950 to March 1951 there industrial production increased 50%. The
U.S. funding helped further industrialize japan and increae their manufacturing ability, like seen in
the picture above. The U.S. did this because they needed a strong ally in the Pacific and Japan had
previously been very strong and thus and a huge amount of potential. The Korean War also
allowed a final peace treaty to be formed and allowed the U.S. to create bases in Japan. After the
war the U.S. stepped in and gave South Korea a huge amount of economic assistance to try and
achieve the same thing as it did with Japan. At a point the U.S. financed 70% of Koreas imports
and placed a huge defensive force in South Korea. Another goal of the U.S. for South Korea was
to have a strong position to stop North Korea from trying to invade again (Painter, 36).
As the U.S. and the Soviet Union competed and pushed for their forms of government they greatly
boosted the worlds economy however it was not evenly distributed. They both helped countries
economically that allied with their views and had something to contribute to themselves. The U.S.
helped to strength Japan so they had another strong non communist country in the Pacific
(Simensen). Politicians from the U.S visited Tokyo and held a conference to help check up on
Japanss economy. However this was not the only thing this visit did, it helped ensure that Japan
would help the U.S. influence the whole area. This boosted the economies of many first world
countries that were allies of the U.S., but it also boosted their own economy. The picture of the
busy U.S. stock market above is more proof that just because the U.S. funded a lot of other
countries their economy was also thriving. The GPD of both the super powers was increased by a
whole 12%. This happened throughout all of the cold war period from after WWII tell the fall of
the Soviet Union (Simensen). The effect on the whole world was an even larger affect, it set up the
president of two very large separate globalized economies.
The same ideas that affected the World in the Cold War have come back around because Russia
has taken action and annexed Crimea, which was part of the Ukraine. These actions have caused
Nato to take action against Russia in the way of sanctions. These sanctions have been on the state
controlled oil companies and state owned banks. These are just like the refusal to buy goods from
counties that are part of the other group. These have reportedly had a huge effect on the Russian
economy, the economy was growing and after the sanctions its taken a downward turn. However
these sanctions have not only affected the Russian economy but other counties economies.
Specifically in this article the Scottish economy has been affect, half of the food products that used
to be exported to Russia are now banned (Maddox). This is the same effect the split economies of
the communists and democratic states caused during the cold war. Some countries take major
economic hits and other grow rapidly all caused by globalization split in two.
Over the ages the worlds economic policies have shifted and changed, from colonialism to now
days and Globalization. The modern form of globalization is however different from what it was
at its birth. It shifted from true globalization to one split at political lines. This split occurred at the
end of WWII and the start of the cold war where The United States and Russia were in fierce
competition against each other. This competition to be the most powerful super power created a
worldwide divide. This split between communist and democratic states created two globalized
economies. Each group traded within and tried to strengthen their close allies. This is where first
world countries supported by the U.S. got major aid and advice which helped them separate them
selves from other countries and become super powers in there own right. They have became
pillars in the modern globalized democratic economy, alongside the U.S., causing many issues and
creating a worldwide economic rift even to this day.

ILLUSTRATIONS (Order of Appearance)

What is Russias economic relationship with the U.S?, March 24th 2014,
http://edition.cnn.com/2014/03/20/business/russia-eu-sanctions-economy/
Height of Cold War, 1963, http://www.dailymail.co.uk/news/article-2053179/US-dismantles-B53-
nuclear-weapon-600-times-powerful-Hiroshima.html
Japanese industry after World War II, January 21 2002,
http://home.europa.com/~telscope/listp200.txt4
People race from the floor of the New York Stock Exchange during an air raid drill, November
1951, http://www.vintag.es/2013/02/classic-life-photos-of-big-apple.html
WORKS CITED
Hoffman Reports Gain in Cold War' New York Times, December 8,1949.
Maddox, David. Nato tells Putin: We stand with Ukraine The Scotsman, September 5, 2014.
McWilliams, Wayne C., and Harry Piotrowski. The World since 1945: A History of International
Relations. 7th ed. Boulder: Lynne Rienner Publishers, 2009.
Our Own Correspondent, et al. Occupation Powers And European Economy. Times [London,
England] 11 Apr. 1950: 6. The Times Digital Archive. Web. 16 Nov. 2014.
Painter, David. The Cold War An International History. New York: Routledge, 1999.
Simensen, Jarle. Democracy and Globalization; Nineteen Eighty-nine and the Third Wave
Journal of World History 10.2 (1999) 391-411.