When Did Globalization Start?

By 
KATELYN PETERS
 
 
Reviewed by 
ROBERT C. KELLY
 
Updated Aug 14, 2021

There is a fierce debate among scholars about when exactly globalization began.
Economic globalization is a historical process driven by the dual forces of innovation
and technology. In the most general sense, globalization refers to the increasing
integration of economies around the world. This heightened integration is the result of
the movement of goods, services, and capital across borders, in addition to the
movement of people and knowledge across international borders.

Some argue that globalization as a phenomenon began with the earliest human
migratory routes, or with Genghis Khan's invasions, or travel across the Silk Road.
Conquering empires throughout history resulted in the sharing of ideas, mixing of
cultures and people, and trade across those conquered lands.

KEY TAKEAWAYS

 Economic globalization is a historical process driven by the dual forces of

innovation and technology. In the most general sense, globalization refers to the
increasing integration of economies around the world.
 This heightened integration is the result of the movement of goods, services, and
capital across borders, in addition to the movement of people and knowledge
across international borders.
 Conquering empires throughout history resulted in the sharing of ideas, mixing of
cultures and people, and trade across those conquered lands.

Where It All Began?

Some lay importance to the Age of Exploration, when Europeans in the 1400s set sail
across the Atlantic, looking for shorter spice routes to China and India. Many mark the
voyages of Christopher Columbus and other sea-faring captains for opening up
commercial trade routes across the world as the beginning of globalization.

Other scholars view globalization as a far more contemporary occurrence. Many see it
in its current form as a modern phenomenon, beginning no earlier than World War II.
The term itself has been in common use since the 1980s.
Confusion also stems from the word's use as both a description of a practice and a
political ideology—the latter is frequently used in a critical sense. Globalization is also
frequently used as a synonym for the solidification and continual creep of American
dominance throughout the world.

Regardless of the differing definitions, at its core, globalization is the exchange of ideas,
capital, and goods across the world, driven by technology, whether that technology is
ships or the Internet.

The Gold Standard

Many historians claim the first wave of globalization began with the gold standard in the
1800s. Even though there was mass trade across the Atlantic, chartered trading
companies, and the slave industry, there was still no global price convergence at the
time.

Gold had been used as currency for thousands of years from when man started making
gold coins. The value of those gold coins was worth the value of the gold that made up
the coin. It wasn't until the 1800s that England started fixing the value of its currency to
specified amounts of gold.

Eventually, many countries followed suit or pegged their currencies to countries that
followed the gold standard. Gold, therefore, became the international standard currency
and could be bought or sold at a fixed price.

The 20th Century

After World War II, many nations looked to break down barriers of trade between
nations, promote free trade, and set up global organizations. The Bretton Woods
Conference in 1944 created the World Bank and the International Monetary Fund (IMF).

One view states that globalization cannot be backdated before the late 1940s—the
post-war era when the United States established itself as the economic powerhouse of
the world. This definition of globalization argues that it is largely the work of powerful
multinational corporations that have created a far-ranging set of consequences, both
positive and negative, as they spread across the world. The unprecedented ease of
travel around the globe and the development of modern communications are used to
support this view of globalization.

Other scholars claim that the century-long trend toward globalization actually reversed
by the mid-20th century, citing the collapse of the international economy during the
Great Depression (and the fragmented state of the economy that persisted through
World War II). According to Anne O. Krueger, former first deputy managing director of
the IMF, by 1960, globalization and the degree of integration of the world economy was
considerably less than it had been fifty years before.

Globalization Today

Of course, this trend has reversed again in the 21st century, an era of unprecedented
global integration. Changes in technology and international economic policies have
reduced many barriers to the free flow of goods, services, and capital.

Transport and communications costs have significantly dropped; at the same time, there
have also been reductions in tariffs (and other barriers to international trade) that have
opened up the global economy.

This opening up of the global economy has led to an overall increase in international
economic activity (and, consequently, the importance of international trade in the world
economy has also greatly increased).

In addition to more market-friendly policies and an acceleration of economic growth, a

second major evolution in the forces of globalization occurred as a result of a range of
countries—primarily Asian economies—becoming more significant economic forces in
the international economy.

Whereas in the middle of the 20th century, the United States was the primary economic
force in the international economy, by the beginning of the 21st century, the European
Union (EU), Japan, China, and India all have global significance and impact. It is
predicted that, in the future, their importance will become even greater.

The Bottom Line

Many scholars argue that parts of the world have always influenced other parts and that
the current state of affairs is a natural progression from earlier stages. The exchange of
ideas and trade has, in one form or another, existed as long as humanity has existed.

There are, of course, different marking points determining true globalization, from
ancient trade routes to modern global integration of financial market, all of which have
been made possible by the creation and development of technology.

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