When Did Globalization Begin - Essay Example

Globalization Introduction According to O’Rourke and Williamson (1994) Globalization refers to the interconnection between regional and national economies via the trading of products and services, movement of capital, workers and technology across borders. In this context, globalization can be associated with market integration, which occurs when the prices of similar goods or services, in different geographical locations, tend to converge. There are a range of questions researchers have always sought their answers in vain. The questions include how globalization began, where it began, how it spread, and the forces that led to globalization. Evidently, there are a number of researchers that have had varied opinions concerning the subject and through analysing such varied opinions, it is possible to arrive at reliable conclusion on the subject of globalization. This paper, therefore, seeks to analyse various studies with a view to address the subject of globalization. When did globalization begin? According to Gupta (2006) globalization has its roots in the 16th century. According to this reseacher, the 16th century trading centres were focused primarily around Greek cultures, China, Ottoman Empire and increasingly in European nations. At the time, there was no avenue that could enable the traders to meet easier with the exception of physically travelling to these international market locations. With the increase in trade interaction between these trading powers, there arose a need to build an efficient transport network. As argued by Gupta, this initiative culminated in the construction of the Silk Road linking all the localities between China and the Roman Empire. Critics hold that, the decision of Gupta to give this figure as a whole rather than disintegrate it according to all participant nations leaves a lot to be desired in terms of the reliability of his source. The outstanding shortcomings of Gupta connotation concern the trading party that benefitted the most from the construction of this road. Critics argue that trade in this period cannot be termed as globalization. They cite the fact that only a number of nations and empires participated in the trading activity. This rationale cannot be downplayed. One thing to content with is that it is indispensable that the nations and empires that were trading were a small minority in relation to the global population at that time. However, these critics fail to consider that fact that these relative minimal trading activities were the precipitates of globalization. Recognition is due solely on the foundation of the importance of the projected trading figures and the distances that were covered. Trading at that time entailed crossing of numerous cultural divides, vast empires across Europe, Asia and Africa. The absence of a coherent transport infrastructure necessitated the inclusion of several successive trading groups. As such, this trading activity has been termed as the first phase of globalization. Providing historical backing, O’Rourke and Williamson (2002) is of the view that, up until the 17th century, trade was primarily conducted within the confines of the European continent and the linking sea trade routes. Europe primarily because of its silver deposits and, thus had control of silver. At that time, these precious metals were used as the preferred mode of payment. Other than trading in precious metals, the other main goods for trade were items of luxury. Moreover, O’Rourke and Williamson are of the view that it was not up until late into the 17th century that intercontinental trade started to surpass long distance trade within Europe. However, the failures of these authors to detail numerical statistics to support their assertion provide ground to dispute their source of information. Regardless of this, their assertion is in line with the assertion of peer reviewed sources. Prior to that, Europe was just another trading partner amongst many, especially China and the Ottoman Empire, in the commercial regions in Asia. Long distance trade greatly surpassed intercontinental trade for various reasons. These features, primarily, were the reduction of transportation costs, intervention of the middle men and international conflicts. The primary goods of trade that were imported into Europe were silk, tea, spices, sugar, drugs, perfumes and gold (O’Rourke and Williamson 2002). Since the authors illustrate the main goods of trade at that time, a note is made that these goods were primarily natural goods. The existence of globalization in this 16th century is compounded by the existence of price convergence. However, Allen (2001) notes that price convergence were significantly higher in the 17th century. Highlighting the rationale behind his assertion, he asserts that it was mostly evident in prices of both labour and goods. The relative discrepancy that underlines the different descriptions of globalization arise from the fact a number, in fact, most historians, overlook the evidence of the presence, or absence, of price convergence. The historians rather thoughtlessly rely on evidence of port histories, the collapse of trading routes and the recorded trading volume. As such, economists and not wholly rely on the inferences provided by historians on the inception of globalization. This is hinged on the fact that globalization is wholly dependent on the actions of the global commodity market (O’Rourke, K.H., and J.G. Williamson 2002). Clearly, the rise in trade is owed to globalization forces and not simply the increase in demographic figures. According to O’Rourke and Williamson (2002), the first sign of globalization has to be the existence of price convergence between European member states and other trading partners. The authors continue to elucidate that, in noting this price convergence over time, the presence of economic growth of the respective nation states is acknowledged. This argument is rather convincing as it shows the difference between pre-globalization and pro-globalization. According to Broadberry and Gupta (2006) Globalization in the first phase, created a demand for goods and a subsequent supply of these goods. It, therefore, sparked an increase in the respective per capita incomes of global economies. Additionally, a rise in the rate of population growth was witnessed. The subsequent demand for these goods far outstripped the demand of the natural commodities. Broadberry and Gupta (2006) believe that globalization is verified with the widening income gap between the Europe and Asia. This is a convincing assertion given that globalization in the world today is sited as causing a large income gap between first world and third world countries. Additionally, this scenario was repeated when the rest of the world is put into context. Rafael Dobado-Gonzalez (2012) affirms that the level of economic integration was steadily rising as compared to the earlier years. This is yet another sign of the beginning of globalization. However, Rafael does not give comparative data in support of his assertion. What caused globalziation Different researchers have held varied opinions as to what caused globalization. Acemoglu, Johnson and Robinson (2005) are of the view that in the 16th century, the volume of trade attributed to long distance trade had a higher growth rate as compared to both European population and the European economic output. Starting in the later part of the 17th century, the transatlantic trade grew greater than the rate of between Asia and Europe. These researchers with the support of Flynn and Giraldez (2004) hold that a factor that drove globalization was the various conquests by European powers into unchartered lands around the globe, specifically the sub-Saharan Africa, realized valuable natural resources. According to Acemoglu, Johnson and Robinson (2005), these natural resources, chief of which was coal, fuelled trade and capitalist investment between Asia, Americas, Europe and the remaining part of world: more specifically their colonies and the United States of America. This way, Europe acted as the world’s bunker whereby all other nation states were in a position to prosper via this trade. According to Flynn and Giraldez (2004) Globalization in this period, was also propagated by the advent of localism. This factor was further coupled by the improvements in maritime technology. This enabled easy navigation of sea vessels. As such, the time at sea was significantly reduced and thus the rate of trade improved tremendously. The rate and extent of the global flows were positively impacted by this discipline. The initial sign of advancement in maritime technology was witnessed with the circumnavigation of the earth by Christopher Columbus and Vasco Da Gama travel. O’Rourke and Williamson (2002), as well hold that Immigration was one of the key forces that drove globalization. According to these group of researchers, the number of slaves who were transported from Africa to be traded in Americas increased thus the country was able to produce the tropical goods to be transported from America to Europe. The per capita income of Europe experienced significant growth only at the second half of the 17th century however, the income of the elite had been steadily growing. Their wealth is primarily sourced from the growth of the state and population growth arising from immigration. As such, they were able to purchase a significant portion of the traded goods. The growth in trade between Europe and other continents was mainly achieved via the increased purchasing power of the elite. With enough historical backing, it is certain that this clearly verifies the assertion of a relation between income and globalization inequality. The first wave of globalization experienced a stability of prices irrespective of the fact that these goods were being transported across different continents (O’Rourke and Williamson, 1994). Moreover, there was increase in trading volumes and through animalising such factors it is evident that prices were able to maintain stability due to the increase in trading volumes. Additionally, the mining of silver became profitable over an extended period of time. This is hinged on the fact that there was an increasing demand for monetary requirements. According to Flynn and Giraldez (2004), Institutional change in Europe was a wave of globalization. When European institutions underwent change, the overall effect was to reduce the transaction costs that were being incurred in the long distance trade. Thus, this resulted in the promotion of an enabling environment for trade. These institutional changes are exemplified by the creation of stock capital abroad and giving commercial needs higher precedence in relation to military expansion and strategies. O his part, Rafael Dobado-Gonzalez (2012) pointed out that globalization was driven by the expansion of Europe in the 16th century. The assertion is that given that the continent primarily expanded, economically due to their control of the supply of silver, this might be have been the primary means of payment at the time. It provides a lot of logic to give this research a backing considering that in a world where the core trading items were precious metals, it is prudent that Europe would have got a chance to expand. Evidently, the only other commodities were items of luxury. This implies that the trade was mainly centred among Asia, Europe and America was increasingly becoming a significant trading partner. References Acemoglu, D., S. Johnson, K., & J.A. Robinson, J.A., 2005. The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth.  American Economic Review 95(3), 546-79. Allen, R., 2001. The Great Divergence in European Wages and Prices from the Middle Ages to the First World War, Explorations in Economic History 38, 411–447. Broadberry, S., & Gupta, B., 2006. The Early Modern Great Divergence: Wages, Prices and Economic Development in Europe and Asia, 1500-1800, Economic History Review, 59: 2-31. Flynn D. O. & Giraldez, H., 2004. “Path Dependence, Time Lags, and the Birth of Globalization”, European Review of Economic History, 8: 81-108 Gupta, S. B. a. B., 2006. The early modern great divergence. Economic History Review, Volume 1, pp. 2-31. O’Rourke, K.H., & Williamson, J.G., 1994. Late 19th Century Anglo-American Factor Price. Journal of Economic History, Vol. 54, No. 4: 892-916. O’Rourke, K.H., & Williamson, J.G., 2002. After Columbus: Explaining the Global Trade Boom 1500–1800. Journal of Economic History 62(2), 417-56. O’Rourke, K.H, & Williamson, J.G., 2002. When Did Globalization Begin? European Review of Economic History 6(1), 23-50. Rafael Dobado-Gonzalez, A. G.-H. a. D. E. G., 2012. The integration of Foreign Markets in the Eighteenth Century. The Journal of Economic History, 72(3), pp. 671-708. Read More