Brief History of Globalization in 21st

Century by Farhan Ahmed

Visiting Faculty at Bahria
 The World is Flat
• Thomas L. Friedman argues that the
technologies have leveled the economic playing
field, around the world, making it flat.
• He points to a slew of other causes, from the
fall of Berlin Wall to the rise of the internet, as
sources of this flatness.
• He says that such developments are making it
easier for people all over the world to work
together with each passing day or compete.
 The World is Flat
• How the flattening of the world happened at
the dawn of the 21st century.
• What it means to countries, companies, and
individuals.
• Please go through the ten flatteners of the
world from the other PPT.
 Globalization
• The phenomenon of increasing flow across
national borders of goods and services, capital
(investments), people, and culture.
• Goods and Services (Studied in International
Trade)
• Capital (Studied in International Finance)
• People (Migration)
• There were three waves of Globalization.
 First Wave of Globalization
• The first wave was just before the first world
war (1880-1914)
• This was an era when international trade
received a boost because of cheap transport
made possible by steam ships and rail roads.
• Capital flowed freely between Europe and the
new world, Europe and its colonies and
among European countries themselves.
 First Wave of Globalization
• The movement of labor was pretty free.
• There was no passport or visas required.
• However, if you were non white, you would face
difficulty in getting naturalized or becoming a US
citizen but there were no restrictions.
• This age was referred as the golden age of
globalization because capital and labor flows were
quite unrestricted and trade barriers were falling.
 First Wave of Globalization
• The inter war years are considered as dark age
of globalization.
• War made people suspicious of foreigners and
passport and visa restrictions were first
introduced.
• People did not make safe in making
investment in foreign countries so capital
flows dwindled.
 First Wave of Globalization
• During the great depression, the US greatly increased
its tariff.
• The other countries in retaliation increased their
tariffs and brought about a sharp downturn in
international trade.
• After second world war the countries began a
concentrated effort to reduce the trade barriers with
the belief that economic interdependence and
prosperity resulting from international trade will
make countries less likely to on war.
 First Wave of Globalization
• The European Economic Community which is
the precursor to the present European Union
was also founded on such a belief.
• One might argue that the project has been
quite successful and the reason that Europe is
at peace since World War II is because its
countries are so economically interdependent.
 Second Wave of Globalization
• The second wave of globalization lasted from
1945 till 1979.
• The trade liberalization that took place under
the treaty known as GATT was mainly between
rich countries of North America, Europe and
Japan.
• Developing countries with a few exception such
as South Korean and Singapore mainly set out
this wave of globalization.
 Second Wave of Globalization
• Many of the were ex-colonies of European
powers and were in no mood to engage with
their former colonial masters either as buyers
of their exports or recipients of their capital.
• They followed the policy of import
substituting industrialization which involved
withdrawing from the world trade as much as
possible.
 Third Wave of Globalization
• From the 1980s onwards began the third wave
of globalization.
• What makes the third wave different is the
increased participation of developing
countries.
• China and India who between themselves
account for one-third of humanity began to
open up their economies to world trade.
 Third Wave of Globalization
• Such a change was a part of their move to more
market oriented economy initiated by China in
1979 and India in 1991.
• Similar initiatives took place in many other
Asian, Africans and Latin American countries.
• As a result of adopting international trade and
investments, China went from being an
insignificant player in international trade in 1979
to being the world’s biggest exporter today.
 Third Wave of Globalization
• It is also considered the workshop of the world since
such a big chunk of consumer goods that we
consume are made in China.
• Cross national trade and services made possible by
the internet is now a growing component of global
trade.
• It often takes the form of outsourcing of white collar
work such as graphic design, computer programming
and customer service from rich countries to India
and Phillipines.
• Thanks You.