What are the 6 waves of globalization? /CropBox [ 87.12000 246.96000 508.10000 842 ] The Three Waves of Globalization is an exploratory history only. 4 0 obj As we can see, this is consistent with the theory: after opening to trade, the relative prices of major exports such as silk increased (Japan exported what was cheap for them to produce and which was valuable abroad), while the relative price of imports such as sugar declined (they imported what was relatively more difficult for them to produce, but was cheap abroad). 17 0 obj Also, adding to the complexity, countries often rely on measurement protocols that are developed alongside these approaches and concepts that are not perfectly compatible to begin with. Inconsistent attribution of trade partners: how is the origin and final destination of merchandise established? This figure shows the increasingly important role of trade between developing countries (South-South trade), vis-a-vis trade between developed and developing countries (North-South trade). /CropBox [ 87.12000 246.96000 508.10000 842 ] Preface Acknowledgements Part I: Globalizing Knowledge 1. ;WP&x(){# ,+]C@!tuRi=\6S~Ts%QDW+]&s'^S(ECvsWQEapqYhGWKRp$B5]A~a:q!BN'\o+mfk~AxX388%#/8=4xNKo{18Rja_df;{0DwS.a,SOaDXlx | .Qr.&%, ;-Ioe&iPiPU?L,B 9rHOugR!gJ{TX"N{6El]K8zDk_-.bp^Wzcyry{s9=S{BVV]r9tr\qmS6,?\wW`EH[Q# /Parent 1 0 R Regarding levels, as one would expect, in high income countries food still accounts for a much smaller share of merchandise exports than in most low- and middle-income-countries. /Contents 34 0 R But in practice this is rarely the case because of differences in valuation. /CropBox [ 87.12000 246.96000 508.10000 842 ] Using the option labeled relative, at the bottom of the chart, you can see the proportional contribution of each region to total Western European exports. Empires of Disadvantage 7. European Economic Review, 52(4), 667-699. Porto, G (2006). See: (i) Feenstra, R. C., & Weinstein, D. E. (2017). /Type /Page These estimates are in constant prices (i.e. /CropBox [ 0 0 421 595 ] /Type /ExtGState 19 0 obj >> Which wave of /Contents 64 0 R /MediaBox [ 0 0 595.22000 842 ] 26 0 obj Its important to mention here that the economist Jonathan Rothwell recently wrote a paper suggesting these findings are the result of a statistical illusion. As the final step, the data are also converted to Classification of Products by Activity (CPA) products to better align with National Accounts statistics, such as in national Supply-Use tables. You can read more about it here: http://www.oecd.org/sdd/its/statistical-insights-merchandise-trade-statistics-without-asymmetries.htm In addition to the OECD, other sources also use corrections. << /Type /Page Rothwells critique received some attention from the media, but Autor and coauthors provided a reply, which I think successfully refutes this claim. If we consider all pairs of countries that engage in trade around the world, we find that in the majority of cases, there is a bilateral relationship today: Most countries that export goods to a country, also import goods from the same country. Struggles for Survival and Wellbeing Part II: The First Wave of Globalization 3. First, there has been a substantial decrease in the relative importance of food exports since 1960s in most countries (although globally in the last decade it has gone up slightly). >> (2016). /Filter /FlateDecode The chart, from UNCTADs World Investment Report 2018 Investment and New Industrial Policies, shows trends of gross exports, broken down into domestic and foreign value added. endobj >> << I6F)uh+ILX2C6(CXM&6[c= Je8Y$V;!5m|R 4sW[6t$1>JkK%6b%~nBK2g)/hn#|m)1e6ipjm2$TmNm{&&G/'#$ /Type /Page Indeed, if you compare the chart showing the global trade openness index and the chart showing global merchandise exports as share of GDP, you find that the former is almost twice as large as the latter. endobj What are the different ideologies of globalization? endobj /MediaBox [ 0 0 595.22000 842 ] /MediaBox [ 0 0 595.22000 842 ] Magyari, I. /MediaBox [ 0 0 595.22000 842 ] /Type /Page Now the same fate could face our third wave if we ignore the social and historical . endobj And this is true, to varying degrees, across all countries and years. If trade is causally linked to economic growth, we would expect that trade liberalization episodes also lead to firms becoming more productive in the medium, and even short run. Lets now zoom in on country-level trends over this long and dynamic period. tumultuous changes underway today. At the individual level, comparative advantage explains why you might want to delegate tasks to someone else, even if you can do those tasks better and faster than them. continued to be high - averaging 6 per cent for the 2000-07 period. (Stanford users can avoid this Captcha by logging in.). The printed version is published in 3 volumes: Africa, Asia, Oceania The Americas Europe. You can read more about these economic concepts, and the related predictions from economic theory, in Chapter 18 of the textbook The Economy: Economics for a Changing World. The evidence from India shows that (i) discussions that only look at winners in poor countries and losers in rich countries miss the point that the gains from trade are unequally distributed within both sets of countries; and (ii) context-specific factors, like worker mobility across sectors and geographic regions, are crucial to understand the impact of trade on incomes. /Parent 1 0 R 1 0 obj /Rotate 0 Struggles for Survival and Wellbeing Part II: The First Wave of Globalization 3. 7 0 obj /Resources 139 0 R As we can see, bilateral trade is becoming increasingly common (the middle portion has grown substantially). Even when two sources have identical trade estimates, inconsistencies in published data can arise from differences in exchange rates. All the software and code that we write is open source and made available via GitHub under the permissive MIT license. Chief similarities include aggregate trade and capital flow ratios, and the importance of reductions in barriers to international transactions. (2004). The available evidence shows that, for some groups of people, trade has a negative effect on wages and employment opportunities; and at the same time it has a large positive effect via lower consumer prices and increased availability of products. There are different ways of capturing this correlation. /GS1 36 0 R Foreign value added in trade peaked in 20102012 after two decades of continuous increase. The fact that trade diminishes with distance is also corroborated by data of trade intensity within countries. globalization, integration of the world's economies, politics, and cultures. Pavcnik, N. (2002). This means that job losses in some regions subsidized new jobs in other parts of the country. The vertical position of the dots represents the percent change in manufacturing employment for working age population; and the horizontal position represents the predicted exposure to rising imports (exposure varies across regions depending on the local weight of different industries). At least six historical waves, beginning with the spread of world religions, may be identified. The Canadian Journal of Economics / Revue Canadienne DEconomique, 43(1), 41-62. << /Parent 1 0 R Journal of Political Economy, 112(1), 48-67. doi:1. /Resources 120 0 R The forgone opportunities of production are key to understand this concept. 5 0 obj An attempt is made to systematize the effects of globalizations on different world regions and. This creates an intricate network of economic interactions that cover the whole world. 2 0 obj (2007). << Add country For example, in a recent high-profile report, researchers attributed mismatches in bilateral trade data to illicit financial flows through trade misinvoicing (or trade-based money laundering). After the Second World War trade within Europe rebounded, and from the 1990s onwards exceeded the highest levels of the first wave of globalization. TJ2rw.lR5IU}UW\sSI'6Q+>6ZV[R{Zfnk=mzzW3Se|Jc,aiFi.{hVypCm+ Zkd wFMh>]u`!gD Structural Gravity Equations with Intensive and Extensive Margins. Leonor Freire Costa, Nuno Palma, and Jaime Reis, who compiled and published the original data shown here, argue that trade, also in this period, had a substantial positive impact on the economy.20. the value of merchandise trade as a share of global economic output). /Contents 80 0 R This interactive chart shows trade in services as share of GDP across countries and regions.). The implication is that trade has an impact on everyone. Growth econometrics. The following visualization, from the UN World Development Report (2009), plots the fraction of total world trade that is accounted for by intra-industry trade, by type of goods. Licenses: All visualizations, data, and articles produced by Our World in Data are open access under the Creative Commons BY license. /Contents 103 0 R Available at: https://www.researchgate.net/publication/49518195_Trading_Data_Evaluating_Our_Assumptions_and_Coding_Rules, The NBER-UN trade data and documentation is available at http://cid.econ.ucdavis.edu/data/undata/undata.html, Further information on CEPIIs methodology can be found at http://www.cepii.fr/PDF_PUB/wp/2016/wp2016-14.pdf. /Resources 40 0 R Here is an overview of the main points we cover below. /Parent 1 0 R The interactive visualization shows this.23. /Resources 79 0 R Manova, Kalina. /MediaBox [ 0 0 595.22000 842 ] Developing Global Consciousness 2. These theories postulate that all nations can gain from trade if each specializes in producing what they are relatively more efficient at producing, based on their strengths. << That it is logically true need not be argued before a mathematician; that is is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them. (NB. #1 Ancient Civilization (beginning-late Middle Ages): >Thousands of years of trade, migration, and conquest #2 European Age of Exploration (1400s-1800s) >Europeans conquer vast parts of Asia, Africa, and Latin America ~Spreads capitalism to these areas ~Results in economic interdependency ~Beginnings of global politics and global trade #3 >> /CropBox [ 87.12000 246.96000 508.10000 842 ] The following visualization presents a compilation of available trade estimates, showing the evolution of world exports and imports as a share of global economic output. For more details about general and special trade see: http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:General_and_special_trade_systems. Retrieved from http://www.jstor.org/stable/40389555. The second wave started after the Second World War, and is still continuing. Globalization has a significant impact on our lives. endobj 2009. An attempt is made to systematize the effects of globalizations on different world regions and social actors. Today, the value of exported goods around the world is close to 25%. /Rotate 0 15 0 obj (2004). In the past two decades China has been a key driver of this dynamic: the UN Human Development Report (2013) estimates that between 1992 and 2011, Chinas trade with Sub-Saharan Africa rose from $1 billion to more than $140 billion. /Contents 82 0 R The concept of comparative advantage predicts that if all countries had identical endowments and institutions, then there would be little incentives for specialization, because the opportunity cost of producing any good would be the same in every country. Lets now take a look at trade in monetary terms this tells us the importance of trade in absolute, rather than relative terms. >> (NB. The rich countries in this chart are: Australia, Austria, Belgium, Canada, Cyprus, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the United States. /Type /Page endobj 10.1 Future Forecast of the Global Millimeter Wave Equipment Market from 2023-2030 Segment by Region 10.2 Global Millimeter Wave Equipment Production and Growth Rate Forecast by Type (2023-2030 . The visualization here shows, through a series of maps, the geographic distribution of French firms that export to Frances neighboring countries. /Font << Frankel, J. Image: Wikipedia /Type /Page /Rotate 0 Atkin and coauthors use a uniquely rich dataset from Mexico, and find that the arrival of global retail chains led to reductions in the incomes of traditional retail sector workers, but had little impact on average municipality-level incomes or employment; and led to lower costs of living for both rich and poor households. Topalova, P. (2010). The following visualizations provides a comparison of intercontinental trade, in per capita terms, for different countries. But what about trade relative to total economic output? Available online here. Available online here. >> >> Early Global Transformations 4. Atkin, David, Benjamin Faber, and Marco Gonzalez-Navarro. If all asymmetries were coming from CIF-FOB differences, then we should only see positive values in the chart (recall that, unlike FOB values, CIF values include the cost of transportation, so CIF values are larger). /MediaBox [ 0 0 595.22000 842 ] << The data hubs from several large international organizations publish and maintain extensive cross-country datasets on international trade. Differences in import and export valuations: are transactions valued at FOB or CIF prices? Journal of Political Economy, 125(4), 1040-1074. The first wave started in the 19th century, and came to an end with the beginning of the First World War. The chart here gives you an idea of how large import-export asymmetries are. Help us do this work by making a donation. You can read more about it in this report: Harrison, Anne (2013) FOB/CIF Issue in Merchandise Trade/Transport of Goods in BPM6 and the 2008 SNA, Twenty-Fifth Meeting of the IMF Committee on Balance of Payments Statistics, Washington, D.C. The first "Great Wave of Globalization," during the late 19th and early 20th centuries, witnessed a historically unprecedented rise in spatial economic integration. It presents a scatter diagram of the net exports in 1869 graphed in relation to the change in prices from 185153 to 1869. But as this chart shows, the share of services in total global exports has increased, from 17% in 1979 to 24% in 2017. The differences in the chart here, which are both positive and negative, suggest that there is more going on than differences in FOB vs CIF values. /Resources 81 0 R The distinction is often made because goods simply being transported through a country (i.e. /Contents 47 0 R endstream The first wave started in the 19th century, and came to an end with the beginning of the First World War. German-born American economist Theodore Levitt has been credited with having coined the term globalization in a 1983 article titled "The Globalization of Markets." There is evidence suggesting this is often the case. This will help you see that, over the long run, growth has roughly followed an exponential path. Trade transactions include goods (tangible products that are physically shipped across borders by road, rail, water, or air) and services (intangible commodities, such as tourism, financial services, and legal advice). /Contents 62 0 R For example: We see that 48% of the total value of Indian exports in 2014 went to Asian countries. /Rotate 0 /CropBox [ 87.12000 246.96000 508.10000 842 ] Other issues: Time of recording, confidentiality policies, product classification, deliberate misinvoicing for illicit purposes. Alcal, F., & Ciccone, A. This reveals that, despite the great variation between countries, there is a common trend: Over the last couple of decades trade openness has gone up in most countries. ), The most famous study looking at this question is Autor, Dorn and Hanson (2013): The China syndrome: Local labor market effects of import competition in the United States.8. << 25 0 obj The colors reflect the percentage of firms which export to each specific country. << Developing Global Consciousness 2. The imported goods and services incorporated in a countrys exports are a key indicator of economic integration they tell us something about global value chains, where the different stages of the production process are located across different countries. The chart above shows how much more trade we have today relative to a century ago. Melitz, J. In Italy, for example, Eurostat figures of the value of exported goods in 2015 are 10% higher than the merchandise trade figures published by the OECD. Leonor Freire Costa, Nuno Palma, and Jaime Reis (2015) The great escape? Yet the baker probably has a comparative advantage in baking, because the opportunity cost of baking is much higher for the pilot. /FontFamily (Times New Roman) /CropBox [ 87.12000 246.96000 508.10000 842 ] >> >> /Rotate 0 31 0 obj And the second lesson is that, because of statistical glitches, researchers and policymakers should always take analysis of trade data with a pinch of salt. Related research entries in Our World in Data: The integration of national economies into a global economic system has been one of the most important developments of the last century. In the late 1970s, North-South agreements accounted for more than half of all agreements in 2010, they accounted for about one quarter. /Type /Page /MediaBox [ 0 0 595.22000 842 ] /CropBox [ 87.12000 246.96000 508.10000 842 ] /ExtGState << This is a classic example of the so-called instrumental variable approach. The contribution of the empire to Portugals economic growth, 15001800 Leonor Freire Costa Nuno Palma Jaime Reis European Review of Economic History, Volume 19, Issue 1, 1 February 2015, Pages 122, https://doi.org/10.1093/ereh/heu019. The resulting globalization was obvious in the numbers. endobj Precisely because of the difficulty that arises when trying to establish the origin and final destination of merchandise, some sources distinguish between national and dyadic (i.e. Trefler, D. (2004). The first lesson is that, for most users of trade data out there, there is no obvious way of choosing between sources. In 1990, the share was about 25%. The production chains for these goods and services are becoming increasingly complex and global. Compilers guide on European statistics on international trade in goods. /Contents 136 0 R 39 0 obj Implosion Part IV: THE THIRD WAVE OF GLOBALIZATION. These figures, produced by the World Bank, correspond to the Standard International Trade Classification, in which food includes, among other goods, live animals, beverages, tobacco, coffee, oils, and fats. << /Parent 1 0 R But of course efficiency is not the only relevant consideration here. /Parent 1 0 R Three important sources are: In the visualization here we provide a comparison of the data published by several of the sources listed above, country by country, since 1955 up until today. US Census Bureau, Center for Economic Studies. At some universities you can access the online version of the books where data tables can be downloaded as ePDFs and Excel files. /CropBox [ 87.12000 246.96000 508.10000 842 ] << /Type /Page In a similar way, if we look at country-level data from the last half century we find that there is also a correlation between economic growth and trade: countries with higher rates of GDP growth also tend to have higher rates of growth in trade as a share of output. For example, for China in 2010, the estimated total value of goods exports was $1.48 trillion according to World Bank Data, but it was $1.58 trillion according to WTO Data. Today, about 30% of the value of global exports comes from foreign inputs. This pattern of trade is important because the scope for specialization increases if countries are able to exchange intermediate goods (e.g. >> This period saw the spread of international trade, built on . >> In other countries the opposite is true: In Nigeria and Venezuela services accounted for around 2% and 3% of exports, respectively, in 2014. Bloom, N., Draca, M., & Van Reenen, J. On the whole, Magyari finds that although Chinese imports may have reduced employment within some establishments, these losses were more than offset by gains in employment within the same firms in other places. Other papers have applied the same approach to richer cross-country data, and they have found similar results. American Economic Review, 94(4), 870-895. The higher the index the larger the influence of trade on domestic economic activities. Klasing and Milionis (2014), which is one of the sources in the chart, published an additional set of estimates under an alternative specification. This chart shows that growth in Western European trade throughout the 19th century was largely driven by trade within the region: In the period 1830-1900 intra-European exports went from 1% of GDP to 10% of GDP; and this meant that the relative weight of intra-European exports doubled over the period (in the relative view you can see the changing composition of exports by destination, and you can check that the weight of intra-European trade went from about one third to about two thirds over the period). 2016. /Resources 112 0 R Among the potential growth-enhancing factors that may come from greater global economic integration are: Competition (firms that fail to adopt new technologies and cut costs are more likely to fail and to be replaced by more dynamic firms); Economies of scale (firms that can export to the world face larger demand, and under the right conditions, they can operate at larger scales where the price per unit of product is lower); Learning and innovation (firms that trade gain more experience and exposure to develop and adopt technologies and industry standards from foreign competitors).2. Integration in the goods markets is measured here through the trade openness index, which is defined by the sum of exports and imports as share of GDP. This shows that over the last hundred years of economic growth, there has been more than proportional growth in global trade. And there are also large bilateral discrepancies within sources. But this is hardly a consolation for those who are worse off. The weight of trade in the US economy, for example, is much lower than in other rich countries. Globalization's first wave, which lasted from 1870 to 1914, is viewed today as the embodiment of the liberal open economic paradigm. >> /Rotate 0 The next graph, from Broadberry and ORourke (2010)21, shows another perspective on the integration of the global economy and plots the evolution of three indicators measuring integration acrossdifferent markets specifically goods, labor, and capital markets. << >> @D}Z"Ilu+J`Q&Q y9FZu9N]A Is globalization an engine of economic development? Giuseppe Berlingieri, Holger Breinlich, Swati Dhingra, for example, investigate the consumer benefits from trade agreements implemented by the EU between 1993 and 2013; and they find that these trade agreements increased the quality of available products, which translated into a cumulative reduction in consumer prices equivalent to savings of 24 billion per year for EU consumers.18. For example, the evidence shows that producers in exporting countries often need credit in order to engage in trade. << >> From a historical perspective, there have been two waves of globalization. There a three reasons. /Contents 84 0 R From a historical perspective, there have been two waves of globalization. Over the last two centuries trade has grown remarkably, completely transforming the global economy. stream Another common source of measurement error relates to the inconsistent attribution of trade partners. endobj So households are affected both as consumers and as wage earners. The main takeaway here are the country-specific trends, which are positive and more pronounced than in the charts showing shares of GDP. /MediaBox [ 0 0 595.22000 842 ] /CropBox [ 87.12000 246.96000 508.10000 842 ] The fundamental difference lies in the impact that these reductions had on trade in goods versus trade in ideas. << Asymmetries in international trade statistics are large and they arise for a variety of reasons. 48uEojg3q3{Y? The second wave of globalization began in 1944 and ended in 1971 (Piketty 2014; Palley 2018 ). The indicators in this chart are indexed, so they show changes relative to the levels of integration observed in 1900. Online here. The visualization here is one of the key charts from their paper. A key example is Alcal and Ciccone (2004).4, This body of evidence suggests trade is indeed one of the factors driving national average incomes (GDP per capita) and macroeconomic productivity (GDP per worker) over the long run.5. /Pages 1 0 R Here is the same chart but showing imports, rather than exports.). /MediaBox [ 0 0 595.22000 842 ] /MediaBox [ 0 0 595.22000 842 ] The so-called trade openness index is an economic metric calculated as the ratio of countrys total trade (the sum of exports plus imports) to the countrys gross domestic product. Understanding this transformative process is important because trade has generated gains, but it has also had important distributional consequences. A Direct Test of the Theory of Comparative Advantage: The Case of Japan. The online access is here. /Contents 88 0 R You can plot trends by region using the option /Resources 48 0 R You have the permission to use, distribute, and reproduce these in any medium, provided the source and authors are credited. /Ascent 891 The OECD approach consists of four steps, which they describe as follows: First, data are collected and organized, and imports are converted to FOB prices to match the valuation of exports. Following this logic, Frankel and Romer find evidence of a strong impact of trade on economic growth. This is an excerpt from https://www.wto.org/english/res_e/reser_e/cadv_e.htm), Bernhofen, D., & Brown, J. (2005). The list of modules is expected to grow over time. The second globalization wave has in its dynamics scientific revolutions and industrialization. Trade diminishes with distance. /Rotate 0 /MediaBox [ 0 0 595.22000 842 ] When it comes to academic studies estimating the impact of trade on GDP growth, the most cited paper is Frankel and Romer (1999).3. (NB. /Type /Page As can be seen, financially developed economies those with more dynamic private credit markets typically outperform exporters with less evolved financial institutions. Each country tells a different story. These projects tend to rely on data from one or more of the sources above; and they typically process and merge series in order to improve coverage and consistency. According to Steger, there are three main types of globalisms (ideologies that endow the concept of globalization with particular values and meanings): market . (ii) Fajgelbaum, P. D., & Khandelwal, A. K. (2016). Its the same data, but plotted with stacked series.). 27 0 obj /Parent 1 0 R >> /MediaBox [ 0 0 595.22000 842 ] endobj India is shown by default, but you can switch country using the option Change entity. /CropBox [ 87.12000 246.96000 508.10000 842 ] This topic page can be cited as: All visualizations, data, and code produced by Our World in Data are completely open access under the Creative Commons BY license. Up to 1870, the sum of worldwide exports accounted for less than 10% of global output. This is not surprising: most countries today produce more than a couple of decades ago; and at the same time they trade more of what they produce. endobj Retail globalization and household welfare: Evidence from mexico. Journal of Political Economy 126.1 (2018): 1-73. /Resources 93 0 R Our articles and data visualizations rely on work from many different people and organizations. /FontStretch /Normal Broadly speaking, the principle of comparative advantage postulates that all nations can gain from trade if each specializes in producing what they are relatively more efficient at producing, and import the rest: do what you do best, import the rest.24. So companies that outsourced jobs to China often ended up closing some lines of business, but at the same time expanded other lines elsewhere in the US. Broadberry and ORourke (2010) The Cambridge Economic History of Modern Europe: Volume 2, 1870 to the Present. /CropBox [ 87.12000 246.96000 508.10000 842 ] 20 0 obj In theory, for example, the exports of country A to country B should mirror the imports of country B from country A. Some of these institutions are fairly obvious (e.g. /Parent 1 0 R /Subtype /TrueType >> Its not the case that the effects are restricted to workers from industries in the trade sector; or to consumers who buy imported goods. The next chart plots the value of trade in goods relative to GDP (i.e. You can find more details about this in this OECD Statistics Briefing. Even if you focus on what seems to be the same indicator for the same year in the same country, discrepancies are large. International regulations and organizations to support economic integration at the global level were created after World War II. This evidence comes from different political and economic contexts, and includes both micro and macro measures of efficiency. On theories explaining the success of the gravity equation. /Type /Page Online here. << They require nothing less than concerted, planet-wide action if we are to secure a long-term future. Each dot is a small region (a commuting zone to be precise). Similarly, for the period 1960-2015, the World Banks World Development Indicators published an alternative set of estimates, which are similar but not identical to those included from the Penn World Tables (9.1). /Parent 1 0 R /Rotate 0
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