The paper 'Global Economy during the Great Depression Period" is a perfect example of a macro and macroeconomics case study. The 1930s great depression period marked the beginning of the protectionism outbreak. The period lasted for about five years (1929 t0 1933), but its impact was felt for about ten years. Although this period greatly affected the U. S, all other parts of the globe felt its impact. Unlike other depression that had occurred previously such as the 1970s and 1890s, where the GDP returned to normalcy after about five years, it took over one decade for the GDP to come back to normal.
In 1929, the economic activity began to experience a decline and by 1933, GDP had fallen by over 25%, erasing of the growth of the economy witnessed in the previous century. The hardest-hit sector was the industrial production which saw a fall of about 50 %. This was unlike 1870 where the fall was only 7% and 1890s that had witnessed a 13% fall. From the depression depth in 1933, the economy did not recover until 1939.
Severe recession followed this for a short time and eventually a period of growth of the global economy. Many scholars have highlighted the rate of unemployment witnessed during this period and according to them, the rate was very high (Kindleberger & Charles, 2009). Many have widely accepted the level of unemployment to have been more than 25% in 1933 and stood at 14% through the 1940s. The period witnessed so many hardships and among them included the panic seen in the banking system since many depositors withdrew their money since rumors were spreading that the banks were in trouble.
While some banked were forced to merge, others terribly failed and in the US alone, there was 35 percent fall of the banks from 1929 to 1933. Although the recession than other hard-hit some economic sectors, all regions, as well as areas of the globe, experienced a severe decline as well as sharp output decline. Millions of people went unemployed. Farmers were also significantly affected by the prices of their produce sharply fell by about half (Maddison & Angus, 2010). According to historians, several economic factors led to the origin of a great depression and these include weakness and imbalance of the global economy, the decline in demand, faltering housing needs, and a reduced production rate.
Foreign loans to nations following the First World War faced difficulties in the 1920s as many countries in Europe did not have the means to back the loans they had borrowed from the US. This eventually led to the destabilization of the US debt market. Other factors that made the market be unstable included "buying on margin", where shared were bought on credit while loans were utilized to pay-off shares.
After the 1929 market crash, banks started to witness failure in 1930, and this caused many people to make the withdrawal. Banking system's collapse led to the closure of many factories (Kindleberger & Charles, 2009). The great depression was the most severe form of depression to have occurred in the developed world. Although the origin of the depression was in the U. S, its results were felt in many parts of the globe. It is the second gravest crisis to have been witnessed in the world.
Nations across the world had varied timing as well as the severity of the great depression. The US, as well as many European countries, had a prolonged as well as severe depression period. In Latin America and Japan, the time was milder (Maddison & Angus, 2010).