Jan 30, 2013

When did globalization begin?

There are many different starting dates for globalization as there are definitions of the term, in part because different definitions suggest different starting points. According to Nayan Chanda of the Yale Center for the Study of Globalization, globalization began eight thousand years ago, because by that time all the forces that would push the process forward were already in place. "Essentially," Chanda wrote in his 2007 book Bound Together, "the basic motivations that propelled humans to connect with others -- the urge to profit by trading, the drive to spread religious belief, the desire to exploit new lands, and the ambition to dominate others by armed might -- all had been assembled by 6000 BCE to start the process we now call globalization."

Other proposed starting dates include Christopher Columbus's discovery of the New World in 1492; the first circumnavigation of the globe, completed in 1522; the Industrial Revolution, which began during the late eighteenth century; the adoption of the prime meridian and the international date line in 1884; and the fall of the Berlin Wall in 1989.

According to the World Bank, there have been three "waves" of globalization. The first began in 1870 and lasted until the start of World War I in 1914. Brought about by reductions in trade barriers and advances in transportation technology, it resulted in vast migrations of people amounting to 10 percent of the world's population. The second wave, which lasted from 1950 to 1980, was characterized by multilateral trade agreements among developed nations that essentially left out the developing world. In contrast, the third (and current) wave of globalization, which began in 1980, has been characterized by the willingness of large developing countries to adopt trade liberalization in order to attract foreign capital.

In a 2002 European Review of Economic History article, economists Kevin H. O'Rourke and Jeffrey G. Williamson attempted to calculate a starting date for globalization by analyzing four centuries of historical data. Their premise was that in a globalized world, the prices of goods and services would be determined solely by global supply and demand. Therefore, as globalization progressed, price levels in different countries should converge. Using data from 1565 to 1936, O'Rourke and Williamson found that price convergence began around 1820. (‘The Bedside Baccalaureate’, edited by David Rubel)