6.5 - Economic Imperialism

The Rise of Economic Imperialism (Late 19th - Early 20th Century)

• Shift in Economic Power:

  • Economic power shifted from Asia and Latin America to industrialized nations like Britain, the United States, France, Japan, and Germany.

  • Economic Imperialism: This form of imperialism occurred when foreign businesses exerted significant economic influence over less developed regions, exploiting natural resources and labor for their own benefit. Colonies were transformed into export economies, producing goods primarily for the benefit of the colonizing powers.

Economic Imperialism in Asia

• India:

  • East India Company: Formed in 1600, the British East India Company initially focused on the spice trade but later dominated the global textile trade by importing cotton and silk from India. With the Industrial Revolution, India shifted to supplying raw cotton to Britain’s textile mills, diminishing the demand for finished Indian textiles.

• Dutch East Indies (Indonesia):

  • Dutch East India Company: Held a monopoly on trade in the region but shifted focus to agricultural production by the late 18th century. The Dutch government implemented the Culture System in 1830, forcing farmers to grow cash crops for export or perform unpaid labor. This exploitative system was eventually abolished in 1870.

• China:

  • Opium Trade: To address a trade imbalance caused by British demand for Chinese goods, the British East India Company forced Indian farmers to grow opium, which was then smuggled into China. The resulting addiction crisis led to the Opium Wars (1839-1842, 1856-1860), which ended with treaties that forced China to make significant concessions, including the cession of Hong Kong and the legalization of opium.

  • Spheres of Influence: By the late 19th century, various foreign powers, including Japan, France, Germany, Russia, and the United States, secured exclusive trading rights in different regions of China, known as spheres of influence.

Economic Imperialism in Africa

• Shift to Cash Crops:

  • Impact of Colonization: Before colonization, African farming was focused on subsistence crops. However, under European control, lands were converted to grow cash crops for export, making African economies dependent on European markets. This shift often led to food shortages and economic vulnerability during periods of drought or economic decline.

  • Egypt: Cotton became Egypt’s primary export by the end of the 19th century, accounting for 93% of its exports.

  • Kenya: Native groups like the Kikuyu were displaced from fertile lands, which were given to white settlers. Africans were forced into labor on these lands and were barred from growing or exporting cash crops themselves.

• Cocoa Production:

  • Gold Coast (Ghana): Became the world’s largest producer of cocoa after missionaries introduced it in the 1880s. Cocoa also became a significant cash crop in regions like the Ivory Coast, Nigeria, and Angola.

• Palm Oil:

  • West Africa: Palm oil, a crucial lubricant for industrial machinery, became a major export from West Africa.

Slavery in Africa

• Continuation of Slavery:

  • Although slavery was abolished in British colonies in 1833, it persisted in other parts of Africa. French colonial forces and administrators often relied on enslaved people for labor. It was not until the early 20th century that slavery was fully suppressed across most of Africa.

• Opposition to Slavery:

  • Some companies, like Cadbury’s, which was Quaker-owned, opposed the use of slave labor in producing raw materials. In 1908, Cadbury’s stopped buying slave-grown cocoa from Portuguese African colonies after the slave trade was exposed.

Global Consequences of Economic Imperialism

• Economic Dependency:

  • Colonies became economically dependent on the imperial powers, leading to long-term challenges in rediversifying their economies after independence.

• Environmental and Social Impact:

  • The focus on cash crops led to monocultures, soil depletion, and environmental degradation. Food shortages and famines became common as lands previously used for food production were converted to cash crop cultivation.

Economic Imperialism in Latin America

• Imperialist Aggression:

  • In the late 19th century, Latin America faced economic imperialism from Europe and the United States. The goal was to secure raw materials, cheap labor, and new markets for the industrialized nations' goods. This new form of imperialism was driven by global capitalism, as the industrial powers sought to expand their influence and control over Latin American economies.

• British Influence and Investment:

  • Trading Dominance: Britain replaced Spain as the primary trading partner for Latin America, becoming the largest investor in the region, followed by France and Germany.

  • Massive Investments: Between 1870 and 1914, European investments in Latin America, particularly in Argentina, Mexico, and Brazil, exceeded $10 billion. These investments were concentrated in infrastructure, agriculture, and industry, transforming local economies to serve European interests.

• Role of the United States:

  • Economic Expansion: The Second Industrial Revolution brought significant prosperity to the U.S., leading to increased investments in Latin America, particularly in Mexico and Cuba. U.S. corporations focused on developing infrastructure, such as railways and ports, and invested in industries like mining, guano extraction, and meat processing.

  • Monroe Doctrine: Established in 1823, the Monroe Doctrine asserted U.S. dominance in the Western Hemisphere, opposing European colonialism and signaling that Latin America was within the U.S. sphere of influence.

• Investments in Argentina:

  • British Investment: By the late 19th century, Britain had invested heavily in Argentina, more than in its own colony of India. British capital and expertise transformed Argentina into the wealthiest country in Latin America and one of the richest globally by World War I.

  • Infrastructure Development: British investments improved agricultural practices, financed large-scale farming in the Pampas, and developed crucial infrastructure like railroads, telegraphs, and ports, including the new port of Puerto Madero in Buenos Aires.

• Mining in Chile:

  • Colonial Roots: Initially colonized by Spain, Chile’s economy was based on agricultural exports. However, copper mining eventually became the cornerstone of the Chilean economy, contributing significantly to government revenue and driving economic development.

• Rubber Industry in Brazil:

  • Boom and Decline: Brazil’s rubber industry thrived in the 19th century but declined after rubber production shifted to Malaysia, where it was cheaper. This shift highlighted how global trade was manipulated to benefit European and American companies, leaving Latin American economies vulnerable to external market forces.

• Central America and the Caribbean:

  • United Fruit Company: This American corporation became a powerful force in Central America and the Caribbean, exerting significant influence over local governments to ensure favorable conditions for its operations. The term "banana republics" was coined to describe countries dominated by foreign corporations and dependent on a single export, such as bananas or minerals.

  • Political Influence: Foreign companies sought political dominance in Central America, the Caribbean, and other regions to secure monopolies over natural resources, maintaining control over transportation networks and local economies.

Economic Imperialism in Hawaii

• American Domination:

  • In the Pacific, economic imperialism was evident in Hawaii, where American businesses and sugar planters overthrew the Hawaiian monarchy in 1893. Their goal was to have the islands annexed by the United States, which occurred in 1898 when Hawaii became a U.S. territory.

Contextualizing Economic Imperialism

• Industrial Revolution:

  • The demand for raw materials and technological advancements during the Industrial Revolution, such as steamships, railroads, and military weapons, enabled industrialized nations to exert control over other territories, setting the stage for economic imperialism. This period saw the global expansion of capitalist economies, with industrial powers seeking to exploit resources and labor in less developed regions.