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Globalization - When did Globalization Begin?

There are as many beginning points of globalization as there are definitions of it, in part
due to the fact that different definitions have different starting points. Nayan Chanda from
the Yale Center of the Study of Globalization estimates globalization began 8000 years
ago, because at that time all the forces that would push globalization forward was already
in place. Chanda wrote the following in his 2007 book Bound Together: "Essentially, 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 other by armed might - all had been assembled by 6000 BCE to
start the process we now call globalization".

Other possible starting dates are when Christopher Columbus discovered the New World
in 1942, the first time someone circumnavigated the world in 1522, the Industrial
Revolution which began in the late 18th century, and the fall of the Berlin wall in 1989.
The World Bank states that there have been three 'waves' of globalization. The first
began in 1870 and ended at the beginning of World War I in 1914. It was characterized
by a reduction in trade barriers and and improvement in transportation technologies,
which resulted in major migration of about 10% of the world's population. The next wave
occurred from 1950 to 1980 during which multiple trade agreements occurred between
developed nations which left out the developing world. The final(and current) wave of
globalization(beginning 1980) in contrast has been characterized by the willingness of
developed nations to remove trade barriers in order to attract foreign capital.
In a 2002 article in European Review of Economic History , Kevin H. O'Rourke and
Jeffrey G. Williamson calculated a starting date for globalization by analyzing four
centuries of data. Their theory was that globalization would be characterized by the fact
that the prices of goods and services are determined by global supply and demand.
Therefor price levels in different countries should be similar as globalization progressed.
O'Rourke and Williamson used data from 1565 to 1936, and found that price
convergence started around 1820.

The starting point of 1820 is as acceptable as any. It also fits the current consensus that
globalization, defined as world economic integration, began somewhere between 1820-
1870.

To sum up - The beginning of globalization depends on the definition of the term, but
general academic consensus is that it began between 1820 and 1870.

Defining Globalization

Certain politicians have defined globalization as an increase in world trade. This simple
definition fails to take into account the many other reasons for increase in trade between
nations. For example, if an inventor made a technological breakthrough to increase
worker productivity, the global supply of goods would also increase. This would increase
world trade in turn, but not because of globalization.
Others, chiefly the opposers of globalization, have attempted to to define globalization by
the frictions it causes in the global economy. They use politically weighted phrases like
fair trade and race to the bottom, but these describe their critical opinion rather than the
process itself.

Finally, scholars generally have a definition of globalization that sees it as an increase in


world integration. The emphasis is mostly put on economic integration, because most
scholars believe that globalization is caused by the removal of trade barriers and works
mostly through economic channels. But they also recognize that the process has and
effect on cultural, social and political systems.

An Example of Globalization

As an example of the above integration, consider the global market in milk and milk
products(powdered milk, cheese, butter). A recent drought in Australia lessened the
amount of grass on which Australian dairy cows feed, thereby limiting the amount of milk
these cows produced for export.

At the same time a tax was levied by Argentina on milk products which caused an
increase in milk prices, which caused a decrease in milk exports. These two events
caused a shortage of milk worldwide which European dairy farmers could not fill due to
strict production quotas enforced by the European union.

Meanwhile, in China, higher per capita consumption is caused by rising income levels,
which in turn caused and increased demand of milk products. All these events may have
seemed isolated and incosequential to the average consumer, but they were actually
closely related in terms of globalization and resulted in a strong upward pressure on the
price of milk everywhere.

Definition of globalization - Globalization is best defined as an increase in world


integration. It relates most directly to national economies but also affects cultural, soical,
and political systems