“GLOBALISATION” has become the buzzword of the last two decades. The sudden increase in the exchange of knowledge, trade and capital around the world, driven by technological innovation, from the internet to shipping containers, thrust the term into the limelight.
Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation “has enriched the world scientifically and culturally, and benefited many people economically as well”. The United Nations has even predicted that the forces of globalisation may have the power to eradicate poverty in the 21st century.
Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it. Some agree that they may have a point. The International Monetary Fund admitted in 2007 that inequality levels may have been increased by the introduction of new technology and the investment of foreign capital in developing countries. Others, in developed nations, distrust globalisation as well. They fear that it often allows employers to move jobs away to cheaper places. In France, “globalisation” and “délocalisation” have become derogatory terms for free market policies. An April 2012 survey by IFOP, a pollster, found that only 22% of French people thought globalisation a “good thing” for their country.
However, economic historians reckon the question of whether the benefits of globalisation outweigh the downsides is more complicated than this. For them, the answer depends on when you say the process of globalisation started. But why does it matter whether globalisation started 20, 200, or even 2,000 years ago? Their answer is that it is impossible to say how much of a “good thing” a process is in history without first defining for how long it has been going on.
Early economists would certainly have been familiar with the general concept that markets and people around the world were becoming more integrated over time. Although Adam Smith himself never used the word, globalisation is a key theme in the Wealth of Nations. His description of economic development has as its underlying principle the integration of markets over time. As the division of labour enables output to expand, the search for specialisation expands trade, and gradually, brings communities from disparate parts of the world together. The trend is nearly as old as civilisation. Primitive divisions of labour, between “hunters” and “shepherds”, grew as villages and trading networks expanded to include wider specialisations. Eventually armourers to craft bows and arrows, carpenters to build houses, and seamstress to make clothing all appeared as specialist artisans, trading their wares for food produced by the hunters and shepherds. As villages, towns, countries and continents started trading goods that they were efficient at making for ones they were not, markets became more integrated, as specialisation and trade increased. This process that Smith describes starts to sound rather like “globalisation”, even if it was more limited in geographical area than what most people think of the term today.
Smith had a particular example in mind when he talked about market integration between continents: Europe and America. The discovery of Native Americans by European traders enabled a new division of labour between the two continents. He mentions as an example, that the native Americans, who specialised in hunting, traded animal skins for “blankets, fire-arms, and brandy” made thousands of miles away in the old world.
Some modern economic historians dispute Smith’s argument that the discovery of the Americas, by Christopher Columbus in 1492, accelerated the process of globalisation. Kevin O’Rourke and Jeffrey Williamson argued in a 2002 paper that globalisation only really began in the nineteenth century when a sudden drop in transport costs allowed the prices of commodities in Europe and Asia to converge. Columbus' discovery of America and Vasco Da Gama’s discovery of the route to Asia around the Cape of Good Hope had very little impact on commodity prices, they argue.
But there is one important market that Mssrs O’Rourke and Williamson ignore in their analysis: that for silver. As European currencies were generally based on the value of silver, any change in its value would have had big effects on the European price level. Smith himself argued this was one of the greatest economic changes that resulted from the discovery of the Americas:
The discovery of the abundant mines of America, reduced, in the sixteenth century, the value of gold and silver in Europe to about a third of what it had been before. As it cost less labour to bring those metals from the mine to the market, so, when they were brought thither, they could purchase or command less labour; and this revolution in their value, though perhaps the greatest, is by no means the only one of which history gives some account.
The influx of about 150,000 tonnes of silver from Mexico and Bolivia by the Spanish and Portuguese Empires after 1500 reversed the downwards price trends of the medieval period. Instead, prices rose dramatically in Europe by a factor of six or seven times over the next 150 years as more silver chased the same amount of goods in Europe (see chart).
The impact of what historians have called the resulting “price revolution” dramatically changed the face of Europe. Historians attribute everything from the dominance of the Spanish Empire in Europe to the sudden increase in witch hunts around the sixteenth century to the destabilising effects of inflation on European society. And if it were not for the sudden increase of silver imports from Europe to China and India during this period, European inflation would have been much worse than it was. Price rises only stopped in about 1650 when the price of silver coinage in Europe fell to such a low level that it was no longer profitable to import it from the Americas.
The rapid convergence of the silver market in early modern period is only one example of “globalisation”, some historians argue. The German historical economist, Andre Gunder Frank, has argued that the start of globalisation can be traced back to the growth of trade and market integration between the Sumer and Indus civilisations of the third millennium BC. Trade links between China and Europe first grew during the Hellenistic Age, with further increases in global market convergence occuring when transport costs dropped in the sixteenth century and more rapidly in the modern era of globalisation, which Mssrs O’Rourke and Williamson describe as after 1750. Global historians such as Tony Hopkins and Christopher Bayly have also stressed the importance of the exchange of not only trade but also ideas and knowledge during periods of pre-modern globalisation.
Globalisation has not always been a one-way process. There is evidence that there was also market disintegration (or deglobalisation) in periods as varied as the Dark Ages, the seventeenth century, and the interwar period in the twentieth. And there is some evidence that globalisation has retreated in the current crisis since 2007. But it is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with Smith’s primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a “good thing” or not, it appears to be an essential element of the economic history of mankind.
Alvey, J. E. (2003). 'Adam Smith’s Globalization (but anti-Secularization) theory'. Massey University, Department of Applied and International Economics Discussion Papers.
Bateman, V. N. (2012). Markets and Growth in Early Modern Europe. Pickering & Chatto.
Bayly, C. A. (2004) The Birth of the Modern World 1780-1914: Global Connections and Comparisons. Blackwell.
Fisher, D. (1989) 'The Price Revolution: A Monetary Interpretation'. The Journal of Economic History, 49(4), 883-902.
Hopkins, A. G. (ed.). (2002). Globalization in World History. W. W. Norton.
O’Rourke, K. H., and Williamson, J. G. (1999). Globalisation and History: The Evolution of a Nineteenth-century Atlantic Economy. MIT Press.
O’Rourke, K. H., and Williamson, J. G. (2002). ‘When did globalisation begin?’. European Review of Economic History, 6(1), 23-50.
Upgrade your inbox and get our Daily Dispatch and Editor's Picks.
Foreman-Peck, James. Historical Foundations of Globalization. Cheltenham: UK: Edward Elgar, 1998.
LC Call Number: HF1418.5 .H57 1998
LC Catalog Record: 98024874
The fifth volume of the series, The Globalization of the World Economy, is comprised of a collection of scholarly essays examining globalization from the mid 19th century to 1945.
Hopkins, A.G. Globalization in World History. New York: Norton, 2002.
LC Call Number: D883 .G56 2002
LC Catalog Record: 2002071936
A collection of studies that provide a historical analysis of globalization. The book examines the historical diversity of globalizing forces and the process of globalization throughout the world dating back to the 15th century.
O’Rourke, Kevin H, and Williams, Jeffrey G.Globalization and History: The Evolution of a Nineteeth-Century Atlantic Economy. Cambridge, Mass: MIT Press, 1999.
LC Call Number: HF1711 .O76 1999
LC Catalog Record: 99017963
This publication conducts a rigorous examination of the history of globalization dating back to the mid 18th century. The authors provide a thorough analysis of global commerce, trade, and global capital markets, which includes many empirical studies with supporting data (tables and graphs).
Seavoy, Ronald E. Origins and Growth of the Global Economy: From the Fifteenth Century Onward. Westport, CT: Prager, 2003.
LC Call Number: HF352 .S357 2003
LC Catalog Record: 2002029898
The author looks at the history of the global market up to the present-day global market, discussing early international commerce and trade, and its origins in 15th century Western Europe.
Williamson, Jeffrey G. Winners and Losers Over Two Centuries of Globalization. NBER Working Paper No. 9161. National Bureau of Economic Research. Cambridge, Mass: National Bureau of Economic Research. 2003.
http://www.nber.org/papers/w9161.pdf [PDF format: 614 KB / 60 p.]
This study examines globalization over the past two centuries measuring various economic disparities throughout the world and conducting comparative economic analysis. The study concludes with four lessons of history.
History of International Economics & Trade
Dimand, Robert W.The Origins of International Economics. London; New York: Routledge, 2004.
LC Call Number: HF1379 .O75 2004
LC Catalog Record: 2003060550
A collection of scholarly essays within a ten volume set, which study the orgins of international economics to the mid 1960's. This collection thoroughly examines international trade theory looking at both macro and microeconomic aspects, and exchange rates.
Estevadeordal, Antoni, and Taylor, Alan M., editors. A Century of Missing Trade? NBER Working Paper No. 8301. Cambridge, Mass: National Bureau of Economic Research. May 2001.
http://www.nber.org/papers/w8301.pdf [PDF format: 155 MB / 22 p.]
This study examines the major trading zone that inspired the factor abundance theory, the Old and New Worlds of the pre-1914 "Greater Atlantic" economy. The authors apply modern-day tests to historical data.
Hugill, Peter J.World Trade Since 1431: Geography, Technology, and Capitalism. Baltimore: Johns Hopkins University, 1993.
LC Call Number: HC21 .H84 1993
LC Catalog Record: 92006765
Publication identifies the relationship between geography, technology and economy since 1431, and argues that the interaction between these factors have influenced the evolution of the modern-day global capitalist system. The book includes historical data, photographs, and maps.
Kenwood, A.G., and Lougheed, A.L., editors. The Growth of the International Economy 1820-2000: An Introductory Text. 4th ed. London; New York: Routledge, 1999.
LC Call Number:HC1359 .K465 1999
LC Catalog Record: 98033134
An introductory level text for the study of international economy dating back to the early 19th century, examining the growth of economic growth between nations. This edition includes topics such as globalization and the world economy; growth of regional trading blocs; and the Asian financial crisis.
Schenk, Catherine R.International economic relations since 1945. 1st ed. Abingdon, Oxon ; New York, NY : Routledge, 2011.
LC Call Number: HF1359 .S34 2011 LC Catalog Record: 2010048564
This is a chronological look at international economic relations post war and though the global financial crisis.
Taylor, Alan M.Globalization, Trade, and Development: Some Lessons from History. NBER Working Paper No. 9326, . Cambridge, Mass: National Bureau of Economic Research. November 2002.
http://www.nber.org/papers/w9326.pdf [PDF format: 413 KB / 39 p.]
This paper examines the discussion and research surrounding the origins of globalization, its causes and consequences, and considers the lessons that can be learned from historical research in order to better understand current linkages between trade and development.
History of International Finance & Global Markets
Andrews, David M.Orderly change : international monetary relations since Bretton Woods. Ithaca : Cornell University Press, 2008.
LC Call Number: HG3881 .O647 2008
LC Catalog Record: 2007049028
Table of contents
Goes over the history of international monetary relations since Bretton Woods and the creation of the IMF and World Bank.
Eichengreen, Barry J.Globalizing Capital : a history of the international monetary system. 2nd ed. Princeton : Princeton University Press, c2008.
LC Call Number: HG3881 .E347 2008
LC Catalog Record: 2008018813
Table of contents
This is an updated version of a title originally written in 1998. An historical overview of the international monetary system going back over 150 years.
Findlay, Ronald, and O'Rourke, Kevin H. Commodity Market Integration, 1500-2000. NBER Working Paper No. 8579. Cambridge, Mass: National Bureau of Economic Research. November 2001
http://papers.nber.org/papers/w8579 [PDF format: 579 KB / 76 p.]
This paper examines and provides a summary about trends in international commodity market integration during the second half of the millennium. The paper discusses the history of trade between nations & regions, and how technology has greatly driven commodity integration, especially in the 19th and 20th centuries.
Jorion, Philippe, and Goetzmann, William N.A Century of Global Stock Markets. NBER Working Paper No. 7565. Cambridge, Mass: National Bureau of Economic Research. February 2000.
Published as "Global Stock Markets in the Twentieth Century", Journal of Finance, Vol. 54,no. 3 (June 1999): 953-980.
This study conducts a historical analysis on the return on capital from world equity markets. The study examines capital appreciation indexes for 39 markets dating back to the 1920's.
Reis, Jaime. International Monetary Systems in Historical Perspective. London; New York: Macmillan Press; St. Martin's Press, 1995.
LC Call Number:HG205 .I558 1995
LC Catalog Record: 95004171
A collection of essays that review historical and modern attempts to create principals that govern international monetary relations and exchange rates over the past 150 years.
Rosseau, Peter L., and Sylla, Richard. Financial Systems, Economic Growth, and Globalization. NBER Working Paper No. 8323, June 2001. Cambridge, Mass: National Bureau of Economic Research.
http://papers.nber.org/papers/w8323.pdf [PDF format: 305 KB / 53 p.]
A historical analysis that explores key issues surrounding financial and economic growth, and capital market integration. The study examines 17 countries covering the period from 1850-1997.
A Quick Guide to the World History of Globalization, University of Pennsylvania
A website dedicated to the history of globalization. This site covers a number of aspects related to globalization, which include: key concepts; a chronology of important historical events related to globalization; and definitions.
Financial Crisis, IMF
The IMF tracks financial developments worldwide so that it can help policymakers with the latest forecasts and analysis of developments in financial markets. Much of the content is devoted to help policymakers weather the crisis and includes policy advice and other articles, documents, and background information.
Financial Crisis, World Bank
World Bank focus on issues related to development. Of interest is The Global Financial Development Report. Other data and reports are available.
Global Financial Crisis, Brooking Institution
Experts at Brookings continue to explore and write on the ongoing global effects of the crisis that began in earnest in 2007/2008.
Globalization, Stanford Encyclopedia of Philosophy
An online encyclopedia that provides a comprehensive analysis on the history of globalization, covering: 1. Globalization in the History of Ideas; 2. Globalization in Contemporary Social Theory; 3. Normative Challenges of Globalization; Bibliography; and Other Internet Resources.
Globalization in Historical Perspective, National Bureau of Economic Research
This National Bureau of Economic Research Conference Report allows access to a number of full-text scholarly works, which examine historical perspectives of globalization. The papers were presented at a National Bureau of Economic Research Conference held May 3-6, 2001.
Globalization - International - resources selection for business professionals, public policy makers, and academic staff, by Applied Business
The webpage provides a list of links to sites covering the subject of globalization.
The History of Globalization, YaleGlobal Online
This webpage is dedicated to the study of the history of globalization. YaleGlobal Online is the online publication of the Yale Center for the Study of Globalization.
Last Updated: 02/07/2017
To view PDFs