Peak Globalization

Discussion

The Five Stages of Globalization

Douglas A. Irwin:

"In the first period from 1870 until 1914, economic integration increased, driven by the steam ship and other advances that allowed more goods to be moved more cheaply between markets.

Globalization reversed in the second period, from the outbreak of World War I in 1914 until the end of World War II in 1945. World War I produced prolonged economic dislocation, which included the withdrawal of Russia from world trade after the communist revolution in 1917, the Spanish flu pandemic in 1918, monetary instability in the early 1920s, new immigration restrictions, the Great Depression starting in 1929, and a severe outbreak of protectionism in the 1930s. This turmoil reduced integration and the world economy suffered.

Economic integration rebounded in the third period, the three decades after World War II. American leadership helped create new institutions for economic cooperation, such as the General Agreement on Tariffs and Trade, enabling countries to open their economies once again to trade and investment. These steps helped usher in a golden age of growth.

Yet the geographic scope of this third phase—confined to the United States, Western Europe, Japan, and a few other countries—limited how far world economic integration could go. The Soviet bloc of communist states and China were nonmarket economies that did not participate for political and economic reasons. The developing world in Latin America, South Asia, and Africa chose their own path of import substitution and remained relatively isolated.

During the fourth period, from the 1980s until the financial crisis of 2008, economic integration rose to a historically unprecedented global scale.[3] Led by China and India, developing countries began dismantling trade barriers. The Soviet bloc in Eastern Europe moved toward democracy and economic liberalization with the fall of the Berlin Wall in 1989, followed by the collapse of the Soviet Union in 1991. Changes in technology—the shipping container and improvements in information and communication technology—also fueled integration and led to the creation of global supply chains. Global growth was strong and world poverty fell significantly." (https://www.piie.com/blogs/realtime-economic-issues-watch/pandemic-adds-momentum-deglobalization-trend)

Graph at [1]

More information

Mentioned in: Jeremy Rifkin on the Third Industrial Revolution