Baldwin and Martin: Two Waves of Globalizaiton

BALDWIN, RE, and P MARTIN. 1999. Two Waves of Globalisation: Superficial Similarities, Fundamental Differences. NBER Working Paper.

There are differences and similarities between the two eras of globalization roughly summed up as the 19th century up to WWI and the 1960s to the present. The authors argue that trade and capital flow ratios and reductions to international transactions are among the similarities. The differences can be seen in initial conditions (the world now is substantively divided between rich and poor, previously it was mostly poor) and the ability of ideas to be traded in lieu of goods.

This article represents an incredibly thorough account of the similarities and differences between the two eras of globalization. I will not document all of this nuance here, as it would be cumbersome.

The main point of the article is that, as the title indicates, there are some similarities between the two eras, but these are mostly superficial; the differences between the eras represent fundamental differences. One reason that the eras are so different is that trade in ideas has become a cornerstone of the second wave of globalization. Another reason is that the initial conditions of the second wave of globalization are so distinct from the first wave. Thirdly, there are great constraints on policy makers with populations wanting both welfare and low taxes. Additionally, the presence of IFIs makes for a qualitatively different trajectory of the process of globalization.