HOW DID GLOBALISATION OCCUR?
Published June 18, 2020, 3:05 p.m. by Moderator
Globalisation can be described as the integration of individual national economies into a united world economy. Globalisation occurred in two phases; the first phase occurred between 1900 and 1914. The second phase started after the Second World War and has lasted to date (Ortiz-Ospina, Beltekian and Roser, 2019).
International trade boomed between 1870 and 1914 largely due to minimal government oversight. During this period, international trade rose at annual rate of 3.9%. Developed countries saw a rise in exports from 18.2% in 1900 to 21.2% in 1913. The United Kingdom and France signed the ‘Anglo-French’ treaty which lifted trade barriers between the two countries. The trade concessions were only confined within Europe. The United States did not lift its trade barriers and tariffs on exports and its tariffs ranged between 40% - 50% (Siddiqui 2016, 427 - 429).
European powers like the United Kingdom, France, Belgium, Netherlands, Portugal, and Spain established colonies in Africa, Asia and South America and subsequently imposed free trade policies on them. India was the centre of the British’s empire international trade. The Suez Canal in Egypt was built to facilitate the movement of raw materials from Africa and India to Europe.
In 1842, the United Kingdom forced China to sign a trade treaty that opened the Chinese market to European products. Trade tariffs were kept as low as 5%. Netherlands removed all trade tariffs in Indonesia. In 1958, Japan signed the “The Commodore Perry and Shimoda-Harris” treaty which opened the Japanese market to American products (Siddiqui 2016, 430).
The United Kingdom adopted free trade while its economy was quite advanced compared to its European neighbours. Free trade was extended to the "colonies" not to assist those nations but as a source of cheap labour and raw materials. After the Second World War, industrialization further spurred international trade. In 2008, the global financial crisis that started in the United States as a housing crisis turned into a full blown global financial crisis (Harris et al 2013, 499).
Ortiz-Ospina, E., Beltekian, D. and Roser, M. (2019). Trade and Globalization. [online] Our World in Data. Available at: https://ourworldindata.org/trade-and-globalization [Accessed 20 Mar. 2019].
Siddiqui, K. 2016, "International Trade, WTO and Economic Development", World Review of Political Economy, vol. 7, no. 4, pp. 424-450.