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History of Globalisation and Trade (Reasons why trade grew (The Great…
History of Globalisation and Trade
Historical Development
Not a new concept, globalisation is a historical process
Trade started to blossom in the 1600-1700s due to shipping and transport links
Periods of colonialism also demonstrate globalisation
i.e. Brazil and Portugal and Britain and India
Thomas Friedman
divides the history of globalisation into three periods:
Glob 1.0 of countries 1492-1800. Glob 2.0 of companies 1800-2000. Glob 3.0 of individuals 2000-present
Large to Medium 1400 - WW1
Medium to Small end of WW2 - 2000
Small to Tiny 2000 - present
World Wars
Pre WW1 1870-1914 saw massive integration of economies
After WW1 - world became fragmented and countries looked inward to become self sufficient
USA 1925 raised tariffs on manufactured goods to c. 37%
WW2 saw further fragmentation - however, post WW2 establishment of GAT and EU - catalyst for globalisation development
Reasons why trade grew
The Great Depression - protectionist policies
Started to boom in the last four decades due to technology and transportation -
war
was a catalyst for technological developments that would help trade
Trade becomes more, or less, popular depending on geopolitics and macroeconomic events
Excelled due to Big Bang 1986 - Thatcher and Reagan - deregulation and financial liberalisation
Development of collaborative politics post world war helped trade develop
Development of EU post WW2
Drivers
Improved communications and transport
Free trade agreements
Global banking
Growth of MNCs
Financial liberalisation and deregulation
Reasons why trade/glob grew
Technological Innovation
Internet
Telecommunications
transportation - larger cargo ships
Steel shipping container
reduces cost
Access
Economic Reforms
China 1978 onwards
Industrialisation
Farm to Factory movement
Tapping into unused pool of labour
Deregulation
Capital becomes highly mobile - FDI
immigration - free movement of labour
Excelled due to big bang 1986 - Thatcher and Reagan
financial liberalisation
Trade agreements
WTO
Supranational bodies
increase of exports/emerging to advanced economies
The Marshall Plan?
finance