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History of globalization
From Wikipedia, the free encyclopedia
Even as early as the Prehistoric period, the
roots of modern globalization could be
found. Territorial expansion by our ancestors
to all five continents was a critical
component in establishing globalization.
The development of agriculture furthered
globalization by converting the vast majority
of the world's population into a settled
lifestyle.
An early form of globalized economics and
culture, known as archaic globalization, existed during the Hellenistic Age, when
commercialized urban centers were focused around the axis of Greek culture over a
wide range that stretched from India to Spain, with such cities as Alexandria, Athens,
and Antioch at its center. Trade was widespread during that period, and it is the first
time the idea of a cosmopolitan culture (from Greek "Cosmopolis", meaning "world
city") emerged. Others have perceived an early form of globalization in the trade links
between the Roman Empire, the Parthian Empire, and the Han Dynasty. The
increasing articulation of commercial links between these powers inspired the
development of the Silk Road, which started in western China, reached the boundaries
of the Parthian empire, and continued onwards towards Rome.
The Islamic Golden Age was also an important early stage of globalization, when
Jewish and Muslim traders and explorers established a sustained economy across the
Old World resulting in a globalization of crops, trade, knowledge and technology.
Globally significant crops such as sugar and cotton became widely cultivated across
the Muslim world in this period, while the necessity of learning Arabic and
completing the Hajj created a cosmopolitan culture.
The advent of the Mongol Empire, though destabilizing to the commercial centers of
the Middle East and China, greatly facilitated travel along the Silk Road. This
permitted travelers and missionaries such as Marco Polo to journey successfully (and
profitably) from one end of Eurasia to the other.
The next phase is known as proto-globalization. It was characterized by the rise of
maritime European empires, in the 16th and 17th centuries, first the Portuguese and
Spanish Empires, and later the Dutch and British Empires. In the 17th century,
globalization became also a private business phenomenon when chartered companies
like British East India Company (founded in 1600), often described as the first
multinational corporation, as well as the Dutch East India Company (founded in 1602)
were established.
The Age of Discovery brought a broad change in globalization, being the first period
in which Eurasia and Africa engaged in substantial cultural, material and biologic
exchange with the New World. It began in the late 15th century, when the two
Kingdoms of the Iberian Peninsula – Portugal and Castile – sent the first exploratory
voyages around the Cape of Good Hope and to the Americas, "discovered" in 1492 by
Christopher Columbus. Shortly before the turn of the 16th century, Portuguese started
establishing trading posts (factories) from Africa to Asia and Brazil, to deal with the
trade of local products like gold, spices and timber, introducing an international
business center under a royal monopoly, the House of India.
Global integration continued with the European colonization of the Americas
initiating the Columbian Exchange,the enormous widespread exchange of plants,
animals, foods, human populations (including slaves), communicable diseases, and
culture between the Eastern and Western hemispheres. It was one of the most
significant global events concerning ecology, agriculture, and culture in history. New
crops that had come from the Americas via the European seafarers in the 16th century
significantly contributed to the world's population growth.
The 19th century witnessed the advent of globalization approaching its modern form.
Industrialization allowed cheap production of household items using economies of
scale, while rapid population growth created sustained demand for commodities.
Globalization in this period was decisively shaped by nineteenth-century imperialism.
After the First and Second Opium Wars, which opened up China to foreign trade, and
the completion of the British conquest of India, the vast populations of these regions
became ready consumers of European exports. It was in this period that areas of
sub-Saharan Africa and the Pacific islands were incorporated into the world system.
Meanwhile, the conquest of new parts of the globe, notably sub-Saharan Africa, by
Europeans yielded valuable natural resources such as rubber, diamonds and coal and
helped fuel trade and investment between the European imperial powers, their
colonies, and the United States.
The global trade in the 20th shows a higher share of trade in merchant production, a
growth of the trade in services and the rise of production and trade by multinational
firms. The production of merchant goods in the 20th century largely decreased from
the levels seen in the 19th. However, the amount of merchant goods that were
produced for the merchandise trade grew. The trade in services also grew more
important in the 20th compared to the 19th century. The last point that distinguishes
the global trade in the 19th century compared to the global trade in the 20th century, is
the extent of multinational cooperation. In the 20th century you can see a "quantum
leap" in multinational cooperation compared to the 19th century. Before the 20th
century began, there were just Portfolio investment, but no trade-related or
production-relation Direct investment.
Commercial integration has improved since last century, barriers that inhibit trade are
lower and transport costs have decreased. Multinational trade contracts and
agreements have been signed, like the General Agreement on Tariffs and Trade
(GATT), North American Free Trade Agreement (NAFTA), the European Union (EU)
has been hugely involved in eliminating tariffs between member states, and the World
Trade Organization. From 1890 and up to WWI instability in trade was a problem, but
in the post war period there has mostly been economic expansion which leads to
stability. Nations have to take care of their own products; they have to make sure that
foreign goods do not suffocate their domestic products causing unemployment and
maybe social instability. Technological changes have caused lower transporting costs;
it takes just a few hours to transport goods between continents to-day, instead of
weeks or even months in the nineteenth century.
The flows information were an important downside in the 19th century. Prior to the
Transatlantic cable and the Radiotelephone, it used to take very long for information
to go from one place to another. So this means that it was very difficult to analyze the
information. For instance, it was not so easy to distinguish good and bad credits.
Therefore, the information asymmetry played a very important role in international
investments. The railway bonds serve as a great example. There was also many
contracting problems. It was very difficult for companies working overseas to manage
their operations in other parts of the world, so this was clearly a big barrier to
investment. Several macroeconomic factors such as exchange risks and uncertain
monetary policies were a big barrier for international investments as well. The
accounting standards in the U.S. were relatively underdeveloped in the 19th century.
The British investors played a very important role in transferring their accounting
practices to the new emerging markets.
The first phase of "modern globalization" began to break down at the beginning of
the 20th century, with World War I. The European-dominated network were
increasingly confronted with images and stories of ‘others’, thus, then took it upon
themselves to take the role of world’s guardians of universal law and morality. Racist
and unequal practices became also part of their practices in search of materials and
resources that from other regions of the world. The increase of world trade before
beginning in 1850 right before World War 1 broke out in 1914 were incentives for
bases of direct colonial rule in the global South. Since other European currencies were
becoming quite largely circulated, the need to own resource bases became imperative.
The novelist VM Yeates criticised the financial forces of globalization as a factor in
creating World War I. Financial forces as a factor for creating World War 1 seem to
be partly responsible. An example of this would be France’s colonial rule over most of
Africa during the 20th century. Before the World War One broke out there was no
specific aims for the wars in Africa from the French, which left Africans in a “lost”
state. Military potential of Africa was first to be emphasized unlike its economic
potential…at least at first. France’s interest in the military potential of French Africa
took a while to be accepted. Africans in the French army were treated with feelings of
inferiority from the French. As for the economic incentive for colonial rule came in
1917 when France’s was faced with a crisis of food supply. This coming after the
outbreak of the war which had left France without the ability to support itself
agriculturally since France had a shortage of fertilizers and machinery in 1917.
Globalization, since World War II, is partly the result of planning by politicians to
break down borders hampering trade. Their work led to the Bretton Woods conference,
an agreement by the world's leading politicians to lay down the framework for
international commerce and finance, and the founding of several international
institutions intended to oversee the processes of globalization. Globalization was also
driven by the global expansion of multinational corporations based in the United
States and Europe, and worldwide exchange of new developments in science,
technology and products, with most significant inventions of this time having their
origins in the Western world according to Encyclopædia Britannica. Worldwide export
of western culture went through the new mass media: film, radio and television and
recorded music. Development and growth of international transport and
telecommunication played a decisive role in modern globalization.
These institutions include the International Bank for Reconstruction and Development
(the World Bank), and the International Monetary Fund. Globalization has been
facilitated by advances in technology which have reduced the costs of trade, and trade
negotiation rounds, originally under the auspices of the General Agreement on Tariffs
and Trade (GATT), which led to a series of agreements to remove restrictions on free
trade.
Since World War II, barriers to international trade have been considerably lowered
through international agreements — GATT. Particular initiatives carried out as a result
of GATT and the World Trade Organization (WTO), for which GATT is the
foundation, have included:
Promotion of free trade:
elimination of tariffs; creation of free trade zones with small or no tariffs
Reduced transportation costs, especially resulting from development of
containerization for ocean shipping.
Reduction or elimination of capital controls
Reduction, elimination, or harmonization of subsidies for local businesses
Creation of subsidies for global corporations
Harmonization of intellectual property laws across the majority of states,
with more restrictions
Supranational recognition of intellectual property restrictions (e.g. patents
granted by China would be recognized in the United States)
Cultural globalization, driven by communication technology and the worldwide
marketing of Western cultural industries, was understood at first as a process of
homogenization, as the global domination of American culture at the expense of
traditional diversity. However, a contrasting trend soon became evident in the
emergence of movements protesting against globalization and giving new momentum
to the defense of local uniqueness, individuality, and identity.