History of Globalization
International Political Economy
Learning Objectives
Upon competing this chapter and activities, learners should be able to:
• Identify the origins of interrelation between international politics and
economics.
• Explain the rise and fall of three major historical periods of
globalization.
• Relate the historical roots of globalization to hegemonic stability
theory.
• Examine the three eras of globalization against the IMF’s four
dimensions
Globalization
• The term become more popular after the fall of the Soviet Union in
1990
• And settles WTO protests in 1999
hegemonic stability theory
• In IPE the association of global peace and prosperity with hegemony,
or the existence of an incredibly powerful political entity, is called
hegemonic stability theory.
Globalization
IMF states that there are four dimensions of globalization:
1- Trade
2- Movement of capital
3- Movement of People
4- Movement of Knowledge
Globalization
We will discuses this categories through several historical changes:
- Pax Mongolica
- Pax Britannica
- Pax Americana
Pax Mongolica (1206-1294)
Began in early 13th century by military campaign lead by Temujin,
known as “Genghis Khan”, the military campaign lasted 20 years and he
was able to conquer a vast territory from Eurasian to the far east of
China today.
- Military Superiority
- Small Gender Gap in the labor
Trade
Trendes in the trade:
- Decreasing in barriers of trades
- Few internal security threats
Movement of Capital
• Plundering new villages and cities brought a great wealth to nomadic
people of magnolia
• Now they had a wealth to spend
• And there were a need for emergence of new class “Traders”
• The peace (Security stability) provided by the empire created a risk
free environment for capital to grow.
Movement of People
• The empire had more racially and ethnically divers
• People with different background could outrank ethnic Mongols
• The empire enabled people to move from east to west without
restriction.
Movement of Knowledge
• First taxation system
• First standard coin (silver)
• Paper Money
• Gunpowder
• Cannon
Empire and it is downfall
• Protection of trade along silk road
• Religious tolerance
• Fight broke out for the throne
• Division among inheritance and the leaders
• Spread of bubonic plague halted trade and ended the empire
Pax Brittanica (1815-1914)
• After Defeating its European rivals, especially France (Napoleon) Britain
Emerged as the financial commercial hegemon.
• Britain’s hegemony lasted until WWI.
• In the competition with France during 17th century both established
colonies across global (North America, India, and Africa)
• At its height, the Britain empire occupied 25% of the world land.
• Britian became global power due to two factor (companies and
industries, and British Royal Army)
• The BRA contributed to the spread of “Christianity, Commerce, and
Civilization”
Trade
• In 17TH and 18th century, Britian exercised mercantilist philosophy
through control over trade and shipping.
• Mercantilism: is an economic theory that trade generate and
accumulate wealth, by means of protectionism.
• Navigation act 1651 mandate all colonies exclusively import and
export with Britain.
• Britain exported manufactured goods to colonies and imported raw
materials from them.
• Tarif, Corn Law 1820, and wheat form America
Trade
• Britian Developed intercontinental trade, especially with India by
founding East India company in 1600.
• Tea, cotton, and other raw materials were imported form India and
manufactured good were sold in higher prices in India.
• Balance of trade
• Indian purchasing power was low
Movement of Capital
• Britain were the world's first foreign investor on the large scale; they
laid the foundation of modern-day foreign investment.
• They spend lavishly on infrastructure and building projects in their
colonies, British FDI stood at 44% of the world’s FDI.
• They funded infrastructures including road and railways, and laying
submarine cables in 1820 across English channel and in 1860 across
Atlantic ocean.
• Many countries had their reservice in British treasury bills
Movement of people
• There were two type of movement of people during this period:
- Voluntarily
- Involuntary (Slave trade)
Movement of Knowledge and
Technology
• First industrial revolution 1760- 1830 (the development of steamships
and railroads allowed goods to be transported over thousands of
Kilometers)
• Second industrial revolution mechanization of manufacturing
• Invention of telegram
• Constructing Suez channel by French
Downfall of British empire
• End of the WWI
• Britian incurred many casualties.
• Destruction of the wealth and domestic assets by 24%
• Losing 25% of GDP
• Protectionism and nationalism emerged again
Pax Americana
• It started after the end of the WWII
• The Europe was devastated and their production machine were
destroyed
• In compare the US was unharmed, due to two factors; US entered war
late, and US geopolitically far away form war ground
• Marshal law in EU to restructure EU
• The rise of cold war became challenge to US globalization
Trade
• Globalization crashed after WWI.
• And the period of interwar was known as era of protectionism wihich
led to great depression and second war
• After WWII, US pioneered in promoting the idea of free trade
• Although US was the promoter but other international actors partake
in the new world order
• In 1945 United Nation (UN) was founded
• IN 1947 General Agreement on Tarif and Trade (GATT) was established
and later on turned to World Trade Organization WTO
Trade
The main purpose of this agreement was to (free the price, and reduce the
barriers of trade, and protecting intellectual property)
Four main agreement were signed:
- GATT
- General agreement on trade in Service (GATS)
- Agreements on trade- related intellectual prosperity
- And Trade related investment
Alongside with this global trade agreements many regional and local
agreements were signed and took into effect including (RTA) & (NAFTA)&
(EU) & (GCC)
Trade
• The major role of WTO is to settle trade disputes
• The main challenge for this new era of globalization were the cold
war
Movement of Capital
• A significant attempts were made by US to globalize finance and
facilitate the movement of money and capital across the border.
• 1944 Bretton Woods agreement pigged other international
currencies against dollar, the objectives were: 1) provide exchange
rate stability . 2) prevent competitive devaluation. 33) promote
economic growth
• US foreign assistant and aid contribute in growth around the world,
starting with marshal plan by providing 15 billions to reconstruct EU
and later on this aid continued to flow through USAID, later
interrupted by president Trump administration
Movement of Capital
• The aid program continued for the better part of the first two decades
of the new millennium
• Iraq, Egypt, Jordan, Afghanistan were the main recipients of this aid in
the middle east.
In addition to the US and Global Aid
- Remittances became another driver for GDP growth in some countries
Movement of People
• Migration both voluntarily and involuntarily increased.
• Personal and financial cost of migrating decreased dramatically due to
advance in technology and transportation.
• Older migrant sent remittance to their relatives to facilitate migration
• This trend surged in 1980 on
• In 1980 there were 446 migrant per million world inhabitants and this
figure reached 603 in 1990 and reached top in the 21th century
• Along with this surge many countries implemented barriers to
prevent mass migration including permits, passport, and visa
Movement of Technology and
knowledge
• In 1956 the invention of the shipping container By MM revolutionized
trade, through , reducing shipping and loading cost by 90%, shorting
port turnround time, and lessening merchandise theft.
• Banking system and sweft system
• Culture exchange
• Critic “Americanization”
Globalization 3.0
Pros:
1- Technological advancement
2- Global economic opportunities
3- Enabling business to access larger market
4- reduction in poverty
5- foster innovation
Globalization 3.0
Cons:
1– Economic inequality
2- Environmental erosion
3- Losing sovereignty and cultural identity
Loser and Winner