When did globalization begin?

In the 1990s, with the explosion of cross-border finance?  In the 1950s, with the Bretton Woods regime and its institutions (GATT and the IMF)?  During the 19th century, under the classical gold standard?  In the 17th century with chartered trading companies shipping everything from slaves to spices across the globe?  Or around 1000, with its extensive transcontinental trade in pepper, horses, silk, and textiles?

All of the above, and none of the above.  The closer one looks in history, the more difficult it becomes to identify a clear point of transition towards globalization.  (Retreats from globalization--such as occurred during the Napoleonic Wars or the interwar period in the 20th century--are considerably easier to identify).  On the other hand, even today the world economy remains a lot less globalized than we often take it to be--at least when measured by the economist's yardstick for market integration, the degree of price convergence across national markets.  See my colleague Robert Lawrence's estimates, for example.

The conventional wisdom is that the first era of globalization began in the 19th century--with Britain's repeal of its Corn Laws in 1846 and the spread of the gold standard.  The title of this post comes from an article by Kevin O'Rourke and Jeffrey Williamson who showed that there was limited price convergence globally prior to the 19th century despite the relatively rapid increase in intercontinental trade spurred by the discovery of the New World, the establishment of chartered trading companies, and the Atlantic slave trade (Europ. Rev. Econ. Hist., 2002).  What made the difference in the 19th century was not just liberalization and greater competition,  but what O'Rourke and Williamson call a transport revolution--the significant decline in oceanic freight costs.  As a a result, the growth rate of trade volumes more than tripled, as is shown in a table from a later O'Rourke-Williamson article:

But a more recent paper complicates this picture significantly.  In a 2009 article in the same journal (Europ. Rev. Econ. Hist.), Klas Rönnbäck shows that there may have been notable price convergence in many commodity markets prior to the 19th century.  To my mind, though, the evidence he presents is not entirely convincing because Rönnbäck focuses too much on absolute price differences, instead of relative (or percentage) differences.  The former are not a very good guide when the level of prices changes over time.

Here is the picture for sugar, for example:

  

At first sight, the picture seems to show significant convergence in prices in the second half of the 17th century, but this is an optical illusion due to the general decline in sugar prices during that period.  It would have been easier to see this if the vertical axis was in logs.  In any case, Rönnbäck has cast some doubt on a strict 19th century view of globalization.

Two lessons, then, for today.  First, as special as it may have seemed, the last quarter century of globalization did not really represent a qualitative break with the past: it was what we have had for a very long time, experienced perhaps a bit more intensely. 

And second, short of war, we are unlikely to see a drastic reversal in globalization.  Economic globalization has been going on for far too long for even the crash of 2008 to derail.

Comments

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I would add the advent of the computer technology to your list. Computers added a unique element that never existed before - to know and transfer the world's information as never before.

[Philip Walker]

"When did globalization begin? Around 1000, with its extensive transcontinental trade in pepper, horses, silk, and textiles?"

Heck, even the *Romans* had trade routes with China and India, and that was in 1AD.

[Jason]

On the contrary, I think that financial globalization in the last 30 years is a *distinct* qualitative break from the past.

For example, the volume of foreign exchange turnover worldwide has gone from $17 trillion in 1979 to $300 trillion in 1995 (see the BIS Annual reports). Likewise, the size of the international banking market as a share of world output has expanded dramatically over that time, from 1% in 1969 to 37% in 1991 (see UNCTAD, 1994). And these are just two random examples; you can find many others if you look. While pre-WW2 data for these things is generally nonexistent, I can bet that current levels of financial globalization have not previously been experienced.

Trade is not the story of globalization. Finance is. We're learning that far more clearly now.

[Ejaz Ghani]

Globalization of service which is the tip of the iceberg (Blinder 2006). It is being driven by technology, transportability, and tradability, the 3Ts.

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Advent of steamship.

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Nationalbank SNB direktor Thomas Jordan

SEHR GROSSE KRISE

Es sei durchaus möglich, dass 2010 insgesamt ein Jahr der wirtschaftlichen Stagnation werde, sagte er in einem Interview mit der «NZZ am Sonntag». Ein Rückgang des BIP von 2,5 bis 3 Prozent, wie sie die SNB für 2009 prognostiziert habe, bedeute die stärkste Kontraktion der Schweizer Wirtschaft seit 1975. «Trotzdem sind die Risiken bei unserer Prognose weiterhin nach unten gerichtet», sagte Jordan weiter.

Die SNB wolle resolut eine Aufwertung des Frankens gegen den Euro verhindern, falls die Schweizer Währung wieder zum «sicheren Hafen» werde, sagte Jordan der Zeitung, und weiter: «Wir handeln proaktiv, um die Deflationsgefahr in der Schweiz zu bannen, die mit einer Aufwertung verbunden wäre.» Damit könne eine für die Schweizer Wirtschaft schädliche Entwicklung gar nicht erst entstehen. Denn die derzeitige Rezession sei eine «sehr grosse Krise». Man müsse schon in die 1930-er Jahre zurückgehen, um Vergleichbares zu finden: «Wir haben eine scharfe Rezession und ein Risiko, in eine deflationäre Spirale zu geraten, das heisst eine längere Phase mit negativen Inflationsraten. Dies würde zu einer Situation führen, in der niemand mehr investiert oder dauerhafte Konsumgüter kauft, weil alle auf weiter fallende Preise warten», sagte Jordan.

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Die Sachsen Bank

hat in ihrem ersten Geschäftsjahr Erlöse von 43,1 Millionen Euro erwirtschaftet. Für dieses und die kommenden Jahre plant sie ein jeweils zweistelliges Wachstum bei Erlösen und Volumina. „Die Sachsen Bank ist in Mitteldeutschland angekommen und ich bin überzeugt davon, dass wir unser Potenzial noch lange nicht ausgeschöpft haben“, sagte der Vorstandsvorsitzende Harald R. Pfab am Montag in Leipzig. Die frühere Sächsische Landesbank stand 2007 nach riskanten Geschäften einer Tochter auf dem US-Hypothekenmarkt vor dem Aus und gehört seit einem Jahr zur Landesbank Baden-Württemberg (LBBW).

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Are we referring to a specific industry, technology or what? Globalization did not occur until all nations traded or had the ability to trade with one another.

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PARIS CRISIS

Paris, the most-visited city in the world, is getting clobbered by a sharp downturn in global travel. International passenger arrivals at the city's two airports were down 8.1 percent year-on-year in February, and hotel occupancy rates dropped 10 percent. Even visits to the Eiffel Tower have fallen 7 percent from last year. (Overall, the US Commerce Dept. figures visits by Americans to Europe tumbled 7 percent last year.)

That's putting a big dent in the city's $13.2 billion-a-year hotel and restaurant business, which, along with other tourism-related activities, employs 12.1 percent of the city's population. "It's a catastrophe," says Bertrand LeCourt, president of l'Hôtellerie Familiale, a hotel owners' association.

Empty Rooms and Tables

It's not just sightseers who are staying away. Business travel held up relatively well during 2008, because many conventions and trade shows were planned well in advance. But now it's slumping, too. "February really scared us," said Gérard Cros, owner of the Sport Hotel, a 95-year-old establishment near the Bois de Vincennes that caters to business travelers. Occupancy at the hotel in February was down 10 percent from a year earlier, Cros says.

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DIKTATORGELD-MONEY-ADAGE.com

Aufschrei gegen Verarmung und Inflation: Eine Werbekampagne in Simbabwe fällt durch Kreativität auf, in den USA sind Swimmingpools steuerlich vorteilhaft und Schönheits-OPs in Mode.

Adage.com, ein amerikanisches Internet-Portal für die Werbeindustrie, präsentiert wöchentlich die fünf kreativsten Kampagnen. Simbabwe - ein Land, das unter Diktator Robert Mugabe eher für Negativschlagzeilen sorgt, kam dabei unerwarteterweise zu Ehren. Denn die Werbeaktion der simbabwischen Zeitung The Zimbabwean kam auf den dritten Platz. Die öffentlich ausgehängten Plakate bestehen aus Original-Geldscheinen, die alle nichts mehr wert sind.

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Steinbrück sieht Bedarf an 200 Milliarden Euro

Nach Ansicht von Fachleuten brauchen Banken Bad Banks für abwertungsbedrohte, komplexe Wertpapiere. Spezialisten sollen sich dort eine Meinung über den Wert der oft mit Forderungen besicherten Schuldverschreibungen verschaffen und sie dann möglichst am Kapitalmarkt verkaufen. Steinbrück aber denkt wegen des hohen Verlustrisikos für den Bund offenbar nur an Staatshilfen zur Auslagerung vorübergehend illiquider Wertpapiere wie Staats- und Unternehmensanleihen. Falls alle Wertpapiere, die Banken loswerden wollten, mit Staatsgarantien gegen Verluste abgeschirmt würden, seien mehr als 200 Milliarden Euro nötig, sagt Steinbrück. Dieser Betrag sei nicht vermittelbar. Wie aber die Abgrenzung zwischen „giftigen“ und „nur vorübergehend illiquiden“ Papieren erfolgen soll, ist unklar.

Die Dimensionen sind riesig. Die um die Dresdner Bank erweiterte Commerzbank hat 55 Milliarden Euro schwer verkäufliche Wertpapiere in eine interne Einheit ausgelagert. Die öffentlich-rechtlichen Landesbanken West LB und die HSH Nordbank wollen 87 Milliarden und 100 Milliarden Euro an Vermögenswerten in eine Abwicklungsbank abspalten. Allerdings muss die Commerzbank für ihre Wertpapiere Eigenkapital vorhalten. Die beiden Landesbanken müssten ihr nach hohen Wertverlusten aufgezehrtes Eigenkapital auf je zwei Banken verteilen.

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UBS NUTZE

Die Schweizer Großbank UBS zieht mit einem radikalen Stellenabbau Konsequenzen aus einem weiteren Milliardenverlust im ersten Quartal. Den Planungen des neuen Konzernchefs Oswald Grübel zufolge sollen 2010 noch 67.500 Personen für den Konzern arbeiten, 8.700 Stellen werden im laufenden Jahr gestrichen. Ende März dieses Jahres beschäftigte die UBS rund 76.200 Mitarbeiter. Seit Jahresbeginn hat die Bank bereits 1600 Stellen gestrichen.

In der Schweiz gingen 2500 Stellen verloren, erklärte ein Sprecher. Die Großbank nutze zudem die natürliche Fluktuation. Es bestehe ein Sozialplan. Bis Ende 2010 will die Bank 3,5 bis 4,0 Milliarden Franken im Vergleich zu 2008 einsparen. Die Kapitalquote sinkt vermutlich auf zehn Prozent, nachdem es zum Jahreswechsel noch 11,5 Prozent gewesen waren.

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Swiss bank to cut 8,700 jobs
UBS, Switzerland's biggest bank, has said it will cut 8,700 jobs worldwide by the end of next year, after reporting first quarter losses. UBS said on Wednesday it would need to shrink its workforce in order to reduce costs, after its losses reached about $1.75bn for the first three months of this year. The bank, which has been hit hard by the financial downturn, said it will "adapt its size to the changed market conditions and lower levels of business.'' It said the bank...

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INTEL

Die Wirtschaftsflaute hat dem weltgrößten Chiphersteller Intel auch zu Jahresbeginn das Geschäft vermiest. Trotz eines Gewinn- und Umsatzeinbruchs schnitt der US-Konzern aber nicht so schlecht ab wie von Experten befürchtet.

Der Branchenprimus sieht zudem eine Trendwende in der Absatzkrise auf dem PC-Markt. Intels Überschuss stürzte im ersten Quartal im Vergleich zum Vorjahr um mehr als die Hälfte auf 647 Millionen Dollar ab. Der Umsatz fiel um mehr als ein Viertel auf 7,1 Milliarden Dollar (5,4 Mrd Euro), wie der Konzern am Dienstag nach US-Börsenschluss am Sitz im kalifornischen Santa Clara mitteilte. Etwa auf dieser Höhe sollen die Erlöse laut Intels Planungen auch im laufenden Quartal liegen.

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HERTIE

Der Insolvenzverwalter will das Geschäft dagegen fortführen. Herties Mitarbeitern wurde erst vor Ostern mitgeteilt, dass Bähr «während und über die Ostertage hinaus» mit Investoren weiter verhandelt. Bei dem Gläubiger-Treffen sei es auch um die Sicherung der Arbeitsplätze gegangen, hieß es.

Die Absichtserklärung sei Bedingung für eine Vereinbarung zwischen dem Investor und dem derzeitigen Hauptvermieter, Hertie-Eigentümer Mercatoria Acquisitions BV (MABV), sagte ein MABV-Vertreter der dpa. Falls es keine Einigung zwischen MABV und dem Investor gebe, müsse Hertie geschlossen werden. Über konkrete Fristen hätten sich die Gläubiger aber nicht einigen können. Die Gläubiger vereinbarten striktes Stillschweigen über den Inhalt ihres Treffens.

Das Amtsgericht Essen hatte am 1. März die Insolvenz sieben Monate nach Anmeldung eröffnet und einen Zeitplan beschlossen. Danach müssen alle offenen Rechnungen bis Ende April dem Insolvenzverwalter gemeldet werden. Nach dpa-Informationen gibt es rund 3000 Gläubiger. Am 20. Mai tagt die Gläubigerversammlung. Auf der Tagesordnung stehen unter anderem die Wahl von Insolvenzverwalter und Gläubigerausschuss, eine Finanzübersicht sowie der Verkauf an einen Investor oder die Zerschlagung des Unternehmens. Das Amtsgericht prüft schließlich die angemeldeten Forderungen am 8. Juni.

[raivo pommer-eesti.]

Dass die Schweizer Börse wie die meisten europäischen Aktienmärkte am Mittwoch nur knapp im Minus liegt, hat sie vornehmlich einer Aktie zu verdanken. Denn ohne die hohen Kursgewinne des Anteilsscheines des weltgrößten Agrarchemiekonzerns Syngenta wäre das Minus nach Punkten etwa doppelt so hoch.

Während der Index SMI 0,25 Prozent verliert, kann die Syngenta-Aktie um mehr als 7 Prozent zulegen, nachdem das Unternehmen Geschäftszahlen für das erste Quartal vorgelegt hat, die von Analysten als solide eingestuft werden, allzumal Syngenta die Gewinnprognose für 2009 bestätigte.

Deutlicher Umsatzrückgang

Das ist auf den ersten Blick einmal mehr wenig nachvollziehbar, bekommt das Unternehmen doch mittlerweile die Wirtschaftskrise sichtbar zu spüren. Der Umsatz ging um 4 Prozent auf 3,6 Milliarden Dollar zurück, wohingegen Analysten im Durchschnitt mit 3,8 Milliarden Dollar gerechnet hatten. Mit Pflanzenschutzmitteln setzte Syngenta 3 Prozent weniger um als im Vorjahreszeitraum, im Saatgutgeschäft war ein Rückgang von 6 Prozent auf 1,05 Milliarden Dollar zu verbuchen. Beide Bereiche lagen damit unter den Schätzungen der Analysten.

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