Nayyar: Globalisation, History and Development

Nayyar, D. 2006. Globalisation, history and development: a tale of two centuries. CPES.

"This paper situates globalization in historical perspective to analyze its implications for development. IT sketches a picture of globalization during the late nineteenth and twentieth centuries. A comparison of these two epochs reveals striking parallels, unexpected similarities and important differences. It shows that globalization did not lead to rapid growth and economic convergence in the world, either then or now. Indeed, growth slowed down, and income levels diverged, while the gap between the industrialized and developing countries widened, in both epochs. The story of globalization, it turns out, does not conform to the fairy tale about convergence and development" (137).

The author notes that the word globalization is used in both a descriptive and a normative sense: one is more passively attempting to explore a deepening global integration and the other is prescribing a development method. It can be explained as increasingly intense economic transactions across national borders occurring through one of the following: international trade, investment or finance. "More precisely, it can be defined as a process associated with increasing economic openness, growing economic interdependence and deepening economic integration in the world economy" (137).

The history of globalization before 1914 is explored. Trade openness increased dramatically in the years leading up to the Great War, in fact, more substantively than global economic output. However, it was not the case that this openness was entirely voluntary: many countries were coerced to join the international trading regime through gunboat diplomacy.

In the latter half of the 20th century, international openness to economic exchange also experienced rapid growth. This is true when explored through the metric of international trade or international finance/investment.

The two periods are compared: "There are four similarities that are worth noting: the absence or the dismantling of barriers to international economic transactions; the development of enabling technologies; emerging forms of industrial organization; and political hegemony or dominance" (144). "There are, also, important differences between the two phases of globalization. It is important to highlight four such differences: in trade flows, in investment flows, in financial flows and most important, perhaps, in labour flows, across national boundaries" (146).