Globalisation is a concept that, in the lead-up and after the turn of the millennium,

has become a fierce and recurring topic of debate. Over the long history of the
idea, it’s been called a necessary, even inevitable, process that will cure all the
world’s ills, if only we embrace it. Others have seen it as a purely negative process,
enriching the few while the many suffer.1

It is, however, undeniable that globalisation has (and continues to have) a

profound effect on the world, in the way companies and even governments
do business: according to World Bank data, trade accounted for more than 70 per
cent of global GDP in 2017, from less than 25 per cent in 1960.2 To understand
these effects, and maybe glean an insight into the future of globalisation and its
current impact on business, it is useful to cast our eye backward, to learn how the
process started.

Historical globalisation
The term ‘globalisation’ itself first appeared sometime in the late 1920s…

Globalisation describes the ways in which “national and regional economies,

societies, and cultures have become integrated through the global network of
trade, communication, immigration and transportation”. 3 The beginnings of
globalisation are still debated, with some sources placing it as long ago as the
bronze age, fully 4,000 years ago.4 Others pin the date more reasonably in the
period of global exploration kicked off by Christopher Columbus’ discovery of
America in 1592 – this marked the birth of the first global trade networks,
pioneered by European powers.5 This is generally considered the first wave of
globalisation, in which business and trade crossed seas, and it lasted for more
than a century.

By the nineteenth century, the movement of globalisation entered a new phase;

the advent of technologies such as the steam engine facilitated international trade
further, quickening the pace and scope at which business could be conducted. A
dearth of major wars (after the end of the Napoleonic wars in 1815) 6 aided rapid
growth during this period,7 which was characterised by, among other things, vast
waves of immigrants expanding across the globe – more than 20 million people
left Europe for other shores between 1850 and 1913.8
The term ‘globalisation’ itself first appeared sometime in the late 1920s; a little
over a decade and a half later, during and immediately after World War II,
globalisation entered a new phase.9 Near the end of the war, the German army
developed V-2 rockets for use against London – after the end of the war, this
technology would form the basis of modern communication, as nations began
exploring the potential of rockets to send satellites, and eventually men, to the
stars.10 Alongside these technological developments came a range of institutional
changes that served to integrate trade even further: the founding of the United
Nations, in 1945, aimed to bridge the gaps between countries, with economic
development a core tenet of the organisation.11

At the same time, the creation of broad trade agreements such as the General
Agreement on Tariffs and Trade (GATT), “the first worldwide multilateral free trade
agreement”.12 This agreement was specifically created to facilitate trade through
the elimination of tariffs that were considered harmful to free trade. It was
eventually succeeded by the creation of the World Trade Organisation. 13
These are the roots of the final, and the current wave of globalisation, in which
computing also figures heavily: while computers have existed in some form since
at least the 1940s, the creation of the first microprocessor, by Intel in 1971,
marked the great leap forward towards modern computing.14 This began a trend
which saw companies able to use computing to increase their access to
information, and ultimately unlock economic potential. 15 This era – as all those
before it – has had, and continues to have, enormous influence, not only on the
large conglomerates and corporations who do business across borders, but on the
small businesses who interact with them, and even many of those who don’t.

Modern globalisation
[I]n a 2017 comparison of the 100 largest economic entities in the world, only 31 spots were
claimed by governments.

The period after World War II saw rapid expansion and integration of global trade,
as nations went about the task of rebuilding in the wake of the war.16 This sudden
uptick in the process of globalisation was fueled by the surge of business and
technological innovation, that allowed cross border trading to flourish at a pace
unseen previously. Ultimately, this resulted in an increase in trade value of over
4,000 per cent between 1913 and 2014, with the greater share of that increase
occurring after 1950.17
The modern, post-war period saw an increase of another type, however: the rise of
the modern multinational (or transnational) corporation. 18

Large corporations with global ambitions had been around for quite some time:
the various East India Companies traded between Europe and India from as early
as the 17th century, even becoming involved in the politics of the day. 19 After World
War II, however, new technologies and liberalised trade allowed corporations to
grow far larger than ever seen in history – in a 2017 comparison of the 100 largest
economic entities in the world, only 31 spots were claimed by governments. The
other 69 entities were multinational corporations.

These corporations owed much of their growth to the facilitating role of trade
agreements such as GATT, which made it possible to move goods around the
globe much more cheaply.20 Companies in the US, Europe and Japan were also
beneficiaries of domestic trends in the middle of the century that saw banks invest
heavily in industrial stocks, while encouraging mergers that concentrated capital
stock.21

They were able to use technological advancements in transport and

communication to take advantage of the newly opened markets that were quickly
opening, and the technology allowed them to operate more effectively on those
shores. The rapidly advancing process of globalisation also gave the corporations
access to new, and cheaper, labour markets.22
Alongside the rise of the multinationals, international trade split into three broad
groups:

 The so-called first world industrialised nations, who relied on market

economics along with liberalised international trade policies
 Centrally planned economies, exemplified by the Soviet Union, China, and
parts of eastern Europe – international trade took on a lesser importance in
these regions until the 1990s
 Developing countries, many of whom had gained independence in the post
World War II period, favoured a mixed system of intervention that favoured
tariffs as a method of protecting and encouraging industries, leading in
most cases to reduced international trade23