Impact of The Golden Age in The World Economy

At the end of the 19th century was the end of an era of mercantilism and the gold standard. Starting from America, almost all over the world against the gold standard system and the role of Government that is too big, which is considered not siding against the welfare of its people. It ultimately brings the world to a new economic order in which free trade, capital movement, and bigger market role in precious take over. A very big government's role in determining the exchange rate in a gold standard system rated may undermine the competitiveness of the country's commodities that do not have a lot of gold, hence the new order where the market runs more freely and the price of a commodity is determined by market mechanisms

Jeffrey a. Frieden in his book Global Capitalism, Its Fall and Rise in the Twentieth Century explain about the development of international trade, which started from the power of European countries, especially the United Kingdom — marked by the use of the gold standard system as a tool of international trade exchange, until an end to the use of the system when the gold standard. Significant events that affect the development of the overall international trade conditions, such as industrialization trend embraced countries at that time and the protectionism policies applied

After the power of the global economy, some groups of countries such as United Kingdom, Netherlands and Belgium started to improve its trade relations with other countries. Countries that have smaller strength (Latin America) began reducing its trade protection due to the magnitude of the benefit of free trade for countries that have limited market

Free trade, investment and migration of people bound by a statute of strong gold standard system. The owner of the company, mining, and forestry in each region producing for global markets, with the use of capital and resources that exist throughout the world. With such conditions, the world economy is growing faster than ever. Standard life increases with the development of the country to follow the leading industrial countries in the world which is United Kingdom. The gold standard system so as to increase the attraction of trade and contrary to international trade 1997 financial and international finance as well as enhance the attractiveness of the system use the gold standard.

Referensi :          http://people.virginia.edu/~hms2f/frieden.pdf 

                Global Capitalism, Its Fall and Rise in the Twentieth Century

Jihan Putri Zuariah