When Was Globalization Introduced?

Joseph Paul Verdan - 11671262

Topic: Globalization

Thesis Statement: Globalization refers to a process of intensifying trans-border linkages in all spheres of economy, politics and culture.

History of Globalization

When was Globalization introduced? There is no consensus as to the date that pinpoints the onset of Globalization. It can be best explained by time frames in which economists suggests shorter time lines whereas historians are likely to prefer a longer and detailed process. There are five key periods of Globalization according to MacGillivray (2006), namely these are Iberian Carve up, Britannic meridian, Sputnik world, Global supply chain and Thermo Globalisation. Iberian Carve up (1490 -1500) is the period wherein the colonial rivalry of Spain and Portugal started the long-distance trade. Britannic meridian (1880-1890) portrays the British Empire as the leading imperial power that sets the tone for world shipping. Sputnik World (1955-1965) was a period of rapid economic growth as well as when decolonization took place that started the competition between for USA and Soviet Union for influence in the world. Global Supply Chain (1995-2005) was the golden era of globalization as the entire world becomes interconnected by supply chain and the global free market grew rapidly. Lastly, Thermo Globalisation (2005-till date) covers the current status that communication and commerce are booming while the global market becomes competitive. This also involves climate change that can present huge economic, social, cultural and environmental challenges in the future. On the other hand, Goldin and Reinert (2006) focuses on the three stages of modern era of globalization. The period of birth of the modern world economy began from 1870 to 1914, brought about by advancements in transportation (rail and ship) and communication (telegraph). Like the Britannic Meridian from MacGillivray (2006), the focus of this era is in European colonial systems. The second modern stage started at the end of World War II (late 1940s) with the establishment of International Monetary Fund

(IMF), presently called World Bank as well as General Agreement on Tariffs and Trade (GATT). This enabled increase in capital flows from the United States with the reduction of the trade barriers under GATT. This period was followed by the third modern stage of globalization in the late 1970s with the advancement in more flexible exchange rates and the emergence of industrialized countries in East Asia. This is also a period with rapid technological advancement in terms of transportation, information, and communication that dramatically lowers the cost of moving goods, capital, people, and ideas across the globe. The end of Cold War as well as China’s entry in the world economy marked the third stage of globalization in the late 1980s. In the 1990s, a new set of developing economies emerged that accelerated the global integration in this phase. The financial dimensions of Globalization may have been slowed as exhibited by the “Great Recession” of 2007-2009 but globalization has not certainly ended. With the continuous acceleration of technological tools, the world became tightly interconnected as demonstrated by this financial-economic crisis. This highlighted the new dangers associated with globalization in terms of complexity and systemic risk that should be managed to ensure that globalization works for development.

Globalization in Economic Perspective

Among non-academics, recent research indicates that the consensus as to the meaning of globalization is focused on economic issues such as capitalism, money, big business, and the expansion of large corporations (Mooney and Evans 2007). Capitalism at a global level is a largely positive, and irreversible, evolution of open societies. The focus is on finance, production, technology, regulation processes across the globe.

According to Goldin and Reinert (2006), there are five economic dimensions of Globalization namely: Trade, Finance, Aid, Migration, and Policy Trade is defined as the exchange of goods and services among nations. Increased trade internationally is beneficial in job creation, increased competition, improvements in education and in health, and technological learning. Finance involves the exchange of capital or money through assets or financial instruments among countries. Capital flows can help to mobilize and deploy savings, develop the financial sector, and transfer technology. Aid involves the transfer of loans, grants as well as providing assistance among countries. This is vital especially for developing countries and will help alleviate global poverty.  Migration takes place when persons move between countries, either temporarily or permanently, to seek education and employment or to escape adverse natural or political environments. Ideas involve transmission of intellectual constructs. Ideas are the most powerful influence on development as it provides impact in any field such as production, organization, management, governance and technological advances. However, this can breed conflicts in ideologies as each country has their own approach in terms of capitalism, democracy or communism.

Globalization in Political Perspective

Political Globalization is aimed at globalizing national political and legal processes. An example of which is the United Nation (UN) as it brings together nation-states as well as World Trade Organization as it regulates international trades. The presence of NGOs  around the world is a result of globalization where organizations  actively participate in developmental efforts and humanitarian aid among others. Globalization is also very essential in safeguarding developing countries that are vulnerable to attacks or exploit from the developed nations.

Issues that are of particular global importance such environmental concerns and anti-globalization are examples of Political Globalization (Mooney and Evans 2006).

Singh (2006) claimed that globalization processes are creating a global economy wherein it is dominated by transnational corporations and financial markets in which political boundaries are no longer relevant. However, this is not the case as the world economy is still governed by nation-states, along with liberation of trade, foreign investment and industrial policies. State policies are vital for the advancement and sustenance of transnational corporations in a global scale. It would be impossible to conceive globalization without laws that are binded in the nation-states. In the end, globalization is fundamentally a democratic process, driven by individual choices and what most people want are senses of culture, place and nationality (Micklethwait and Wooldridge 2000).