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Many think that globalization is a recentdevelopment, but its origins go backto the early 19th century. This fact is

apparent from a new study by sociologistChristopher Chase-Dunn of the University ofCalifornia at Riverside and his colleagues.Their data, which are based on the relationbetween imports and gross domestic product,show that the initial wave of globalization be-gan about 1830 and peaked about 1880. Dur-ing this time, international commerce, withthe abandonment of mercantilism, first be-came a force in the lives of ordinary people.Before the 19th century, international tradewas a paltry affair mostly confined to luxuries,such as spices and tobacco. This early wave isassociated with the growth of railroads, moreefficient ocean transport,and the political victory ofmanufacturing and tradinginterests over those of thelandowners, signaled by the1846 repeal of the Britishcorn laws. (Those laws im-posed duties on importedcorn and thereby kept priceshigh.) The second wave co-incided with the rise of elec-tricity and steel around1900 and peaked in the1920s. The current wavebegan after World War II asa result of the creation of in-ternational institutions such as the GeneralAgreement on Tariffs and Trade, the prede-cessor of the World Trade Organization.

Decreasing costs of transport and com-munication underlie the long-range increasein world trade, but no satisfactory reason ex-plains the wave pattern. Chase-Dunn cites“hegemonic stability,” in which a great powerprovides stable conditions. The first and thirdcoincide with, respectively, the eras of Britishand U.S. hegemony, but, as he notes, the theo-ry does not account for the second wave, whichoccurred when Britain was in relative declineand the U.S. had not yet asserted its power.

During most of the 19th and early 20thcenturies, America did not follow Britain’s

free-trade policy but instead imposed high tar-iffs to protect manufacturing. The U.S. be-came more open to imports only after WorldWar II. But it still lagged behind other majorcountries in trade participation—not surpris-ing considering its vast domestic market,which could supply a larger variety of de-mands than smaller economies could. Never-theless, the greater involvement of the U.S. hasbeen the primary factor in world trade ex-pansion since World War II.

In the long run it is very likely that inter-national trade will continue to expand as thecosts of transport and communication con-tinue to decline. Perhaps the most formidableobstacle to trade growth in the near future isfailure to reform government practices that

foster doubt and mistrust. Transparency In-ternational, an organization funded by sever-al European governments, polls well-informedindividuals in more than 100 countries regard-ing the extent of misuse of public power forprivate benefit. Its 2003 report shows that trustin the institutions of industrial nations averages7.3 out of a perfect score of 10; developingcountries average only 2.3. How governmentsdeal with this issue of integrity could largelydetermine the next phase of worldwide trade.

Next: Globalization’s winners and losers.

Rodger Doyle can be reached atrdoyle2@adelphia.net

Trade GlobalizationIT IS NEARLY TWO CENTURIES OLD AND LIKELY TO CONTINUE BY RODGER DOYLE

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The 12 Percent of Largest World Goods Trading and ServicesCountries in 2000

Imports Exports

U.S. 18.7 14.1

Germany 8.1 8.3

Japan 6.3 7.2

U.K. 5.5 5.2

France 4.6 5.0

Canada 3.6 4.1

Italy 3.7 3.9

China* 2.6 3.3

Netherlands 3.2 3.4

Belgium 2.7 3.0

Korea 2.5 2.7

Spain 2.3 2.2

* E x c l u d e s s e r v i c e s , w h i c h a c c o u n tf o r a b o u t 2 0 p e r c e n t o f

i n t e r n a t i o n a l t r a d e w o r l d w i d e .

S O U R C E S : I n t e r n a t i o n a l T r a d eS t a t i s t i c s Y e a r b o o k , 2 0 0 0 , U n i t e d

N a t i o n s ; O E C D S t a t i s t i c s o nI n t e r n a t i o n a l T r a d e i n S e r v i c e s ,

1 9 9 9 – 2 0 0 0 .

BIG-TIMEPLAYERS

WORLD

SOURCE: Christopher Chase-Dunn et al., 2000. Data are shown as five-year moving averages.

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Year1920 1960 2000

Third wave

Second wave

First wave of globalization

Trade Globalization since 1795:Waves of Integration in the World-System. Christopher Chase-Dunn,

Yukio Kawano and Benjamin D.Brewer in American Sociological

Review, Vol. 65, No. 1, pages 77–95; February 2000.

Globalization, Trade, andDevelopment: Some Lessons from History. Alan M. Taylor.

National Bureau of EconomicResearch working paper 9326;

November 2002.

FURTHERREADING

COPYRIGHT 2003 SCIENTIFIC AMERICAN, INC.