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To our daughters Isabella and Louisa The world is yours to explore and improve This page intentionally left blank List of Boxes, Tables, Figures and Maps x Preface to the Fifth Edition xiii List of Abbreviations xiv Introduction 1 Part 1 Theoretical Perspectives 5 1 Theories of Global Political Economy 6 Understanding the Global Political Economy 6 The Economic Nationalist Perspective 8 Key actors 8 Key dynamics 9 Conflict and cooperation 10 Economic nationalism today 10 The Liberal Perspective 12 Key actors 13 Key dynamics 13 Conflict and cooperation 13 Liberalism today 14 The Critical Perspective 16 Key actors 17 Key dynamics 17 Conflict and cooperation 18 Critical theory today 18 Contending Perspectives: A Summary 19 Further Reading 21 2 International Political Economy and its Methods 22 Locating the Field 22 Economics 23 Political science 24 Political economy 24 International relations 25 Methodological Issues 26 Case studies and large n studies 26 Rational choice 27 Institutionalism 28 Constructivism 30 Contents Trends in Contemporary GPE Theory 32 Consolidation 32 Integration 33 Expansion 34 Approach of the Book 36 Further Reading 38 Part 2 Evolution 39 3 Forging a World Economy: 1400–1800 40 Regions of the World Economy 41 The Middle East 42 China 43 India 44 Africa 45 The Americas 45 Europe 46 European Expansion 51 Into the Americas 51 Along Africa: the triangular trade 54 On the peripheries of Asia 56 Conclusion 58 Further Reading 62 4 Industry, Empire and War: 1800–1945 63 The Industrial Revolution 64 What was the Industrial Revolution? 64 Why Britain? Why then? 66 What did the others do? 67 Pax Britannica 68 The gold standard and capital flows 68 Free trade 71 Balance of power 71 Renewed Imperialism 74 War and Economic Disorder 77 The world wars 77 Interwar economic failure 79 Conclusion 82 Further Reading 85 viii Contents 5 Growing a Global Economy: 1945–2015 86 The Cold War Era: 1945–89 86 The US-led Western political economy 86 The communist political economy 89 The southern political economy 89 The Post-Cold War Era: 1990–2015 91 Competing capitalisms and state transformation 91 The information revolution 93 International organizations and governance 95 Conclusion 97 Further Reading 100 Part 3 Dynamics 101 6 International Trade 102 Definitions 102 Theoretical Perspectives: Free Trade and Protectionism 103 Proponents of free trade 104 Critics of free trade 105 Major Developments 108 Growth and protectionism 108 Changing institutional arrangements 112 Key Issues 115 Developing country interests 115 Regional trade agreements 120 Legitimacy 122 Conclusion 124 Further Reading 124 7 Transnational Production 125 Definitions 127 Theoretical Perspectives: Explaining the Growth of TNCs 128 Major Developments 131 The globalization of production 131 Changing organizational principles 135 Key Issues 138 Re-evaluating the benefits of FDI 138 State–firm interactions 142 Regulating capital 145 Conclusion 146 Further Reading 147 8 The Global Financial System 148 Definitions and Background 148 Theoretical Perspectives: The Mundell- Fleming Model 151 Major Developments 153 IMS: from fixed to floating and regional currencies 153 Credit: financial innovation and repeated crises 157 Key Issues 166 Global credit crisis 166 Future of the US dollar 168 The European sovereign debt and euro crisis 170 Corporate and individual tax abuse 173 Conclusion 177 Further Reading 178 9 Global Division of Labour 179 Definitions 179 Theoretical Perspectives: Adam Smith and his Critics 181 Major Developments 184 Changes in the production process 185 From the new international to the global division of labour 186 Key Issues 187 Global restructuring: the rise of China and India 188 The struggle for workers’ rights in a global economy 191 The division of labour and global stability 193 Conclusion 196 Further Reading 197 10 Gender 198 Definitions and Background 198 Theoretical Perspectives: GPE as if Gender Mattered 200 Major Developments 203 Women in the world economy: employment trends and prospects 203 Gender and global public policy 205 Key Issues 210 The feminization of poverty 210 Globalization of reproductive work 211 Gender and global restructuring 214 Conclusion 216 Further Reading 216 11 Economic Development 217 Definitions 218 Contents ix Theoretical Perspectives on Growth and Development 222 Major Developments 226 Development and national capitalism, 1947–81 227 Development, neoliberalism and beyond, 1982–2015 229 Key Issues 232 The organization of development 232 Debt and debt relief 235 North–South conflict 237 Conclusion 239 Further Reading 240 12 Global Environmental Change 241 Definitions and Background 242 Theoretical Perspectives: IPE and Environmental Studies 244 IPE debates 244 Environmental studies’ debates 246 Major Developments 249 Bringing the environment in 249 Mainstreaming environmentalism 251 Key Issues 253 Sustainable development 253 Climate change 256 Transnational land acquisitions 259 Conclusion 260 Further Reading 261 13 Ideas 262 Definitions 262 Theoretical Perspectives: Ideas about Ideas 263 Major Developments 266 The information revolution and the information society 266 The rise and stall of the Washington Consensus 268 Key Issues 271 Technological diffusion 271 Property rights and life (HIV/AIDS) 272 Ideas, interests and the global financial crisis 274 Conclusion 277 Further Reading 278 14 Security 279 Definitions: Three Views of Security 279 The traditional state-centric approach 279 New security studies 280 Human security 281 Theoretical Perspectives: Integrating Security and Political Economy 282 Major Developments 285 The Cold War security structure 285 The post-Cold War security structure 286 Key Issues 290 Economic statecraft and security 290 Transnational crime and corporate espionage 293 Disease, pandemics and security 296 Conclusion 298 Further Reading 298 15 Governing the Global Political Economy 299 Definitions 299 Theoretical Perspectives: Whither the State? 300 Major Developments 301 Proliferation of governance levels 302 Proliferation of actors 305 Rise of the BRICS 307 Twenty-First-Century Challenges 310 Development and growth 310 Equality and justice 311 Democracy and regulation 313 Conclusion 316 Further Reading 316 Bibliography 317 Index 342 W hy do we inhabit a world where there are such great inequalities of wealth and life chances between regions? Why do some countries seem to be caught in a trap of producing products whose value declines over time, such as sugar or coffee? What accounts for the racial hierar - chies in countries such as the US and South Africa? Why do some societies and countries seem suspicious of the foreign and economic policies of Western states, corporations and civic associations? The answers to these questions are partially rooted in the origins of the global economy. Indeed, a full understanding of today’s global economy requires a familiarity with patterns that were initiated hundreds of years ago. Croce’s argument that ‘however remote in time events there recounted may seem to be, the history in reality refers to present needs and present situations wherein those events vibrate’ (Croce, 1941, p. 19) implies that history is constantly rewritten in light of existing debates and sensibilities. New histories often tell us as much about the times in which they were written as they do about the historical events themselves. An interesting example of this can be seen in the last decade of the 20th century when several prominent scholars engaged in a debate about the ‘rise of the West’. They tried to explain why political and economic power was concentrated in the hands of several Western states (western Europe and the US).

On one side of the debate were those who congratulated today’s winners in the global economy by arguing that the rich were wealthy because they had the most virtuous social, economic and political institutions. We can call this the ‘cultural approach’. The rich are rich because they have a culture that supports success.

A prominent exponent of this view is Harvard historian David Landes in his book The Wealth and Poverty of Nations (1998). The other side of the debate argued that Western success was accidental and temporary, built on force and expropriation as much as any positive cultural attributes. We can call this the ‘global historical approach’, because it stresses the role of other civilizations and refutes the histori - cal claims of the culturalists. Such an approach challenges the notion that history has ended because Western states have discovered the ultimate model for struc - turing economic, social and political relations. A prominent illustration of this approach is Hobson’s The Eastern Origins of Western Civilization (2004). The debate between cultural and global historical explanations about the ‘rise of the West’ became heated because it concerned the present and the future as much as it did the past. Participants claimed that they had discovered the secrets to why some are rich and others are poor. Such knowledge can be used by others to restructure their societies in the hope of similar success. The practical implica - tions are immense. The culturalists see the cause of poverty as the behaviour of the poor, while the global historicist side sees it as a result of the relationship between the poor and the rich. The policy implications of the first view are that Chapter 3 Forging a World Economy: 1400–1800 Regions of the World Economy 41 European Expansion 51 Conclusion 58 Further Reading 62 Chapter 3 Forging a World E Conomy: 1400–1800 41 the poor are themselves primarily responsible for improving their position, while the implication of the second view is that the system of political and eco - nomic relations must be changed to create greater equity. The first message offers comfort to those already enjoying economic success, while the second urges mobilization and change. How far back in history should we go to gain a better understanding of today’s patterns of inequalities and wealth generation? In his bestselling book Guns, Germs, and Steel: The Fates of Human Societies , Diamond (1997) argued that we need to go back 11,000 years to find the ultimate causes of differences in economic development between people and regions. In his view, environmental and geographic factors such as differ - ences in plant and animal species, rates of migration and diffusion within and between continents and total area/population size of continents privileged the peo - ples of Europe and Asia over people in other parts of the world. The ability to produce food and domesticate animals allowed for the creation of civilizations that overwhelmed societies with less complicated divisions of labour. Our investigation will begin in the late 1400s when Spanish adventurers forcefully integrated sections of the Americas into an intercontinental economy that already linked parts of Europe, Africa and Asia. This chapter focuses on the period when the major regional economies in Asia, Africa, Europe and the Americas were brought into increased contact through the persis - tence of European expansionism. It is the beginning of the first truly worldwide or global economy. This will be accomplished in two steps. First, we will provide a brief overview of the major economic areas before the Spanish conquest of the 1500s. This will give us an understanding of the diversity of political economy arrangements around the world and will lay the groundwork for understanding the varying pattern of European–non-European interaction in subsequent centuries. Second, we will look at the pattern of Euro - pean engagement with other parts of the world from the 1490s until the early 1800s. The conclusion analyses the historical record in terms of the key frameworks used in Part 3 – trade, production, finance, labour, gender, devel - opment, environment, ideas, security and governance. The chapter has two major arguments. First, the regional political economies that were connecting dur - ing this period varied greatly in terms of social, political and economic organization. Second, this heterogeneity created a variety of interactions from free exchange to open warfare and slavery. A third point, explored in fol - lowing chapters, is that these interactions would have long-lasting effects.

Regions of the Wo Rld economy This section provides a snapshot of several areas of the world prior to European contact with the Americas, which created the first truly worldwide political econ - omy. In the year 1400, there was little hint that the resi - dents of Europe would have such an influence on the majority of people who lived in other regions. As the Portuguese, Spanish, Dutch, English and French stead - ily moved outwards from their own continent, they encountered a variety of people and social organiza - tions. Rather than expanding into a vacuum, the Euro - peans interacted with established civilizations, economic systems and military forces. There are several points to keep in mind. First, with few exceptions, economic activity was on a local level.

Agricultural production was the norm and this was usually centred on a market town with an agricultural hinterland of about 30 kilometres (Schwartz, 1994, p.  13). Second, despite the predominance of this local activity, intercontinental trade routes moving luxury goods had existed for thousands of years. Third, at the heart of these trade routes lay very different civiliza - tions with distinct political economies. Indeed, some approaches to international relations and global history take different civilizations as their starting point (Brau - del, 1994; Cox, 1996). Janet Abu-Lughod (1989) has provided an interest - ing account of the world system before Europeans began their transatlantic voyages. Her research reveals a system of trade and economic exchange reaching from China to Europe. The system was composed of eight overlapping regions. Economic activity was concen - trated within these regions, but they were linked to neighbouring regions, allowing products to move from eastern Asia to western Europe. Map 3.1 reproduces Abu-Lughod’s diagram showing the regions, but it also adds four additional regions that will be discussed below under ‘Africa’ and ‘the Americas’. Moving from west to east on the Eurasian continent, the first area is the region that brought together northern and southern 42 Part 2 EVol UT ion Europe. The second region sits above the Mediterra - nean, crossing the divide between Christian southern Europe and the Islamic centres of Egypt. This Mediter - ranean region overlapped with three central regions.

Region 3 covered the overland trade routes that stretched across central Asia to China and were main - tained by the Mongols. Region 4 included the territory around the Tigris and Euphrates rivers (modern-day Iraq) down to the Persian Gulf. Region 5 also joined the Mediterranean and the Indian Ocean, but through Egypt and the Red Sea. Products making their way into the Indian Ocean were then transported across Region 6, which covered the Arabian Sea, linking Ara - bia with the western coast of India. Region 7 linked India with South-east Asia, while Region 8 finished the route by taking in China and South-east Asia. This meant that there were three routes for products to move from China to Europe. The northern route moved goods overland from China via central Asia through the Mediterranean into the European region. Alterna - tively, products could move by sea through South-east Asia, the Indian Ocean and then into the Mediterra - nean either through the Persian Gulf or the Red Sea. Abu-Lughod’s work omits African trading regions, so we have added two regions that cover certain areas of sub-Saharan Africa. Region 9 brought goods from sub-Saharan Africa into northern Africa and the Medi - terranean/European world. Region 10 brought African goods into the Middle East and Asia via the Indian Ocean. Our map also includes two regions in the Amer - icas that were not joined to the African-European- Asian system. These are Region 11, which belonged to the Aztec Empire, and Region 12, ruled by the Incas. Although it would have taken years to travel around this circuit of trade in the 1400s and the volumes of trade were minuscule by today’s standards, economic activity was increasing across the system. Let’s turn our attention to each of these regions to get a brief idea of their nature. We are particularly interested in the types of economic activity and political relations that charac - terized each region.

The Middle East In Abu-Lughod’s diagram of 14th-century regions, the Middle East acts as the key gateway between the Medi - terranean/European and the Eastern worlds. Indeed, the desire to get around this gateway was one of the key motivations driving European merchants into the Atlantic Ocean, around Africa and across to the Amer - icas. By the time of Christopher Columbus’s voyage across the Atlantic, there had already been a 700-year history of bloody and lucrative interchange between European Christendom and Middle Eastern Islam.

Islamic and Christian clashes took place from the south 11 12 9 1 2 4 5 3 6 10 7 8 Map 3.1 Regions of the 15th-century world economy Chapter 3 Forging a World E Conomy: 1400–1800 43 of France, through modern-day Egypt, Israel and Tur - key, to the gates of Vienna. Yet, this rivalry was balanced by many instances of cooperation, with alliances and economic interchange between Europeans and Middle Easterners. For example, the Genovese sold Christian and pagan slaves to the Mamlukes in Egypt who then trained them as soldiers to be used against the Crusaders, while the Venetians financed an Ottoman fleet to battle the Portuguese in the Red Sea. For almost 1,000 years Islamic warriors waged suc - cessful military campaigns against European forces.

Behind those Middle Eastern armies stood a dynamic economy, extensive trade networks, bustling cities and great centres of learning. In retrospect, we can see that the 15th century was a period of transition in the Middle East. While the religion of Islam was dominant, forms of political authority were the objects of intense rivalry. Although ultimate political authority eventu - ally came to rest in the hands of the sultan of the Otto - man Empire, this occurred only after a period of conflict with and between Turkish tribes, Mongols, Persians and Mamlukes. The competition between rival sources of political power characteristic of Europe was not absent in the Middle East. However, by the early 1500s, the Ottoman Empire held the upper hand. It proceeded to extend its rule eastwards and westwards towards Europe. On land and at sea the Europeans had great difficulty matching the might of Islamic forces. It would not be until the second siege of Vienna in 1683 that European militaries would start to win consistent victories. The Mamlukes, followed by the Ottomans, presided over a thriving trading economy. In the 14th century, Cairo had a population of approximately half a million, which was only exceeded by one or two cities in China (Abu-Lughod, 1989, p. 212). The Mamlukes developed a structured and prosperous trading relationship with the Venetians. Through force of arms they prevented Europeans from seizing Egyptian territory that would have granted direct access to the wealth of India and China via the Red Sea. Venetians docked in Alexandria to wait for access to spices, dyes, pepper, silk, cotton and porcelains from Malaysia, India and China. Outside the Mediterranean, Arab traders pursued economic activity along the coast of eastern Africa, the western coast of India and into South-east Asia. Zanzi - bar, off the coast of eastern Africa, was occupied by Arab traders as early as the eighth century. The cultural remnants of this early commercial activity can be seen in the Muslim populations of countries such as Malay - sia and Indonesia (the largest Muslim country in the world).

China Of all the great civilizations of the 15th century, China was the largest and most powerful. It produced prod - ucts that were greatly desired by the elite in other regions of the world, chief among these being ceramics and silk. China contained the world’s largest cities, advanced technology and impressive military forces.

Indeed, the wonders of China were so great that when the Italian Marco Polo returned from his travels to that land in 1295, his observations were often dismissed as being fanciful. Some of his tales were exaggerated, but there is no doubt that China was a world leader in tech - nology and inventions many years before the European Renaissance (see Box 3.1). During the 14th and 15th centuries China was also undergoing dramatic changes. In 1370, the Chinese had finally succeeded in driving out Mongol rulers and re- established a Chinese emperor. This line of rulers was called the Ming Dynasty (1368–1644). Initially, the Mings launched several long-range trading voyages as far as the eastern coast of Africa. Their ships were five times as large as later Portuguese ships and they con - tained far more cargo space and cannons. They would have been capable of crossing the Pacific Ocean if they had attempted the task (McNeill, 1982, pp. 44–5).

Indeed, had the voyages continued, it is possible that the Chinese might have sailed around Africa and reached Portugal, as well as ‘discovered’ the Americas. However, expeditions to the west (1405–33) were eventually halted by the Ming emperors and the seagoing fleet decommissioned. For the next several hundred years, the Chinese were less engaged with the outside world and fell behind, relative to the expanding Europeans. There are several possible explanations for why the naval excursions were ended. One has to do with court politics. The leader of the expeditions (Zheng He) was both a Muslim and a eunuch and eventually lost the support of the emperors. Another explanation is that although the voyages brought back interesting goods, there was little the Chinese found that they actually needed. Unlike the Europeans, who were desperate for spices and silks, the Chinese did not find anything so attractive that it would justify the expense of further 44 Part 2 EVol UT ion exploration. Finally, the centre of gravity in China shifted towards the north and internal development.

The Mings moved the capital from Nanjing northwards to Beijing and became more concerned with land rather than sea threats. In addition, new locks on the Grand Canal joined the Yangtze and Yellow River valleys, securing year-round rice transport in internal waters.

This greatly reduced the importance of any maritime threats to Chinese stability and hence the need for a powerful navy (McNeill, 1982, p. 47). In terms of political structures, the Ming emperor was the sole source of law. His views might be restrained by appeal to precedent and scholarly discussions or debates, but his power was absolute (Mote, 1999, p. 637).

China was governed by a single political authority, unlike the rival states that fought continuously in Europe. The court sat in Beijing and governors of prov - inces reported to the bureaucracy and the court in the capital city. The emperor was supported by a well- trained bureaucracy that was selected through a pro - cess of examination. Confucian scholar-officials played the major role in running the bureaucracy and advising the emperor. Increasingly during the Ming Dynasty, eunuchs played a key role in running the court and pro - viding services to the emperor. In some cases, they advanced their interests over that of the empire and cut the emperor off from developments in his realm.

India Like China, India also possessed an ancient civilization, considerable economic wealth and military might.

However, India was a more diverse and decentralized political economy than China. The northern section of India had experienced a series of invasions from Per - sian, Mongol, Turkish and Afghan tribes. In the 15th century, the northern region, known as the Delhi Sul - tanate, was ruled by descendants of invading Islamic forces, but they were constantly under attack from new waves of invaders. The sultanate was ravaged by the Mongol descendant Timur (Tamerlane) in 1388 and Delhi was sacked in 1398. Internal cohesion was diffi - cult to maintain. In 1526, Barbur, a descendant of Timur, invaded India and founded the Mughal (Mon - gol) dynasty. Many of India’s architectural wonders, such as the Taj Mahal, date from the Mughal era. Other parts of India were ruled by independent king - doms. The southern region was dominated by the Hindu kingdom of Vijayanagar from 1336 to 1565. It was often engaged in conflict with its neighbour, the Bahmani Sul - tanate. The eastern province of Bengal was usually con - trolled by independent rulers and the western coastal area of Gujarat also enjoyed independence. There were numerous other smaller kingdoms during this period. Ports in coastal areas of India enjoyed a great deal of autonomy from the inland empires and economic activity was conducted by a wide range of social and economic groups. In Kerala, external trade was con - ducted by Jews and Christians who had been resident since the sixth century. In other parts of India, Jains, Buddhists, Muslims and Hindus were involved in trade (Bouchon and Lombard, 1987). On the western coast of India, the state of Gujarat dominated trade moving from the Middle East to the east coast of India. On the east coast, Bengal played a major part in moving goods on to South-east Asia. However, these coastal areas were relatively peripheral to the land-based empire. For Box 3.1 Ancient Chinese technology Archaeological discoveries point to the origins of Chinese civilization as early as 7,000–8,000 years ago. Traditionally, the Chinese view the greatest technological contributions of ancient China to the world as the Four Great Inventions: the compass ( ad 104 44), gunpowder ( ad 80 900), papermaking ( ad 105) and printing ( ad 868). Not only have the four discoveries had an enormous impact on the development of chinese civilization, but also a far-reaching global impact as other peoples adopted these innovations. a closer examination of china reveals a whole series of inventions that had their origins in that civilization (Needham, 195 1995). These include:

◗Metal casting (1800 bc) ◗Decimal system (1200 bc) ◗Row planting ( c. 500 bc) ◗Seed drill ( c. 202 bc ad 220) ◗Iron ploughs (202 bc ad 220) ◗Deep drilling (202 bc ad 220) ◗Ship’s rudder (202 bc ad 220) ◗Abacus (200 bc) ◗Paper money (140–87 bc) ◗Harness for horses ( ad 22 581) ◗Porcelain ( ad 58 618) ◗Mechanical clock ( ad 732). Chapter 3 Forging a World E Conomy: 1400–1800 45 example, it is reported that when the Mughal Emperor Akbar visited the recently conquered Indian ports of Cambay and Surat in the late 1500s, it was the first time he had ever seen the ocean (Risso, 1995). Reflecting on the experiences of the Middle East, China and India, it is noteworthy that while these civili - zations engaged in maritime activity, it was difficult for maritime interests to influence political power. The large land-based empires engaged in seaborne trade and established wide-ranging activity crossing the Mediter - ranean, Red Sea, Persian Gulf, Indian Ocean and around the seas to China. However, the Ottomans, Chinese and Mughals were primarily concerned with events within their existing empires and concentrated most of their effort in land-based expansion and defence. This was a very different pattern from the maritime-dependent Portuguese, Spanish, Dutch and British Empires.

Africa To Abu-Lughod’s diagram of trading networks we added two regions to cover interaction with sub-Saharan Africa (see Map 3.1). Region 9 covers land on either side of the Sahara Desert and the difficult trade across that arid territory. In western Africa, gold mines sup - plied European demand for currency while pepper was shipped north for consumption in food seasoning. This trade eventually encouraged the Portuguese to sail around the desert to establish direct trading contacts.

Region 10 integrates the trade of eastern Africa with that of the Indian Ocean. In eastern Africa, trading posts exported slaves, ivory, iron, rhinoceros horn, tur - tle shell, amber and leopard skins to India and beyond.

Both networks had existed for thousands of years. Africa contained a large variety of political groups (Shillington, 1995). Northern African states were integrated into the Islamic empire. In Ethiopia, a Chris - tian kingdom was founded in the fourth century and maintained its independence until the late 1930s. In the Shona state of Great Zimbabwe, 10-metre-high stone enclosures surrounded the king’s residence. Around the great lakes area of central Africa, the Luba and Lunda Empires concentrated on fishing and hunting. They purchased iron and salt from the north and copper from the south, which was made into rings, bracelets and necklaces. In summary, the large continent con - tained a number of different political economies linked together through trade. It is important that Africa is not viewed as static or stagnant in this period. Briefly we can note three main characteristics of the African political economy at that time. First, as noted above there was significant variation among different regions. Different ecological regions gave rise to differing factor endowments and thus the production of different goods and services. Second, over the period covered, commercial activity shifted as new commercial centres rose and old ones declined. For example, control over the gold trade made Hausaland a major commercial centre in the 16th century. But as gold declined in importance and the trade in people increased, Dahomey (modern day Benin) became the new hub of activity in the 17th century. Third, African economic activity was frequently disrupted by drought and fam - ine. These ‘limits to growth’ both spurred technical inno - vation and also limited consistent development.

The Americas Although the existence of the Americas came as a sur - prise to Europeans, many areas were marked by advanced civilizations. Advanced civilization, in terms of intensive agricultural activity and large cities with complicated architecture, took place in two regions of the Americas. One region was the Inca Empire in the Andes in Peru and Bolivia, which stretched from Ecua - dor to Chile. The other was in Mesoamerica – Mexico and Guatemala. This was the home of the Maya who were starting to decline and the Aztecs who were in the process of creating a large empire. The Spanish encountered a well-developed empire when they began contact with the population of Mexico in 1519. The Aztecs ruled Mexico and were the successor to a series of civilizations, which included the Olmec, Teotihuacan and Toltecs. Although there were differ - ences between these civilizations, some continuities are noticeable (Davies, 1982). Similar to Old World civiliza - tions, the native Americans demonstrated an ability to build and maintain cities, erect large monuments and support sophisticated forms of art. Tenochtitlan, the Aztec capital, dazzled the Spanish invaders because of its large population and elaborate beauty. Its population was more than ten times that of leading Spanish cities of the same era. Unlike the Europeans and Asians, the native Americans faced greater transportation difficulties. They lacked beasts of burden, so most goods were carried on foot. Water transport was also limited due to the presence