Globalisation now vs Globalisation 100 years ago

HBS completed 100 years in 2008 and organised a centennial to celebrate the same. There were number of business summits and discussions.

Niali Ferguson, an economic historian spoke in one such summit on Globalisation. The pdf summary is here. It is quite a read

Neither globalization nor financial crises are new. What may  be new is that today’s highly efficient global financial system is so optimized that it appears vulnerable when unexpected events occur, which they invariably do. While most people seem surprised when financial crises take place, they shouldn’t be. Taking a long view of history—such as 100 years or more—shows that financial crises and unexpected events occur frequently. While most business leaders have not personally experienced a major financial crisis, they should consider history when developing their strategies, plans, and models, and should keep in mind that outlier events occur. When such events do occur, the consequences are often immediate and significant.

Learning economic history is very very important. Those who don’t learn it are doomed to repeat it. Unfortunately, people even learn it but just don’t give it due importance.   I recall a few comments on Niranjan’s blogwhich discusses the state of eco history (pathetic really).

Anyways here are a few interesting points on globalisation in 2008 and 1908:

When Harvard Business School was founded 100 years ago, there was in fact globalization; it was an era of Anglo globalization as the British Empire governed (directly or indirectly) about 25% of the world. Using sea lanes, there was significant global trade, there was significant financial integration, and it was a wired world that was connected by telegraph lines. In the late 1800s and early 1900s, the speed of moving information increased dramatically, while the cost of moving information fell equally dramatically

Important similarities between globalization today and 100 years ago include:

  • Free trade. Despite the restrictions that exist, there is trade of goods and services.
  • Free capital markets. Then as now, the world is financially integrated and capital flows around the globe.
  • Migration of labor. Labor continues to move, often through mass migrations. However, 100 years ago, labor was moving away from Europe; today labor is migrating to Europe.

    Important differences include:

  • Dominant world power. As it was 100 years ago, the dominant power is English-speaking: 100 years ago it was England; today it is the United States.
  • Behavior of the dominant world power. England was a “saver” and the United States is a spender/consumer.(England was viewed as the saver of last resort; the United States is the consumer of last resort.)
  • Currency. Money was gold 100 years ago. Today, there are currencies with floating exchange rates.
  • Foreign direct investment. FDI was less important 100 years ago, but is extremely important today in how companies do business in international markets.
  • Institutions. One hundred years ago, there was no global framework for international trade. Today, there are entities such as the World Trade Organization and the World Bank that work to facilitate global trade.

 Excellent stuff.

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7 Responses to “Globalisation now vs Globalisation 100 years ago”

  1. Two Questions for business leaders « Mostly Economics Says:

    […] Mostly Economics Mostly on research work in Economics and Financial System with focus on India « Globalisation now vs Globalisation 100 years ago […]

  2. bill greene Says:

    The more things change, the more they remain basically the same. This comparison could also have been made with the Phoenician world of 800-2,000BC, or the Silk Route of 300BC to 1400AD, or the days of the clipper ships just a couple hundred years ago.

    People have always managed to trade throughout the known world. There must be some inner instinct for humans to want to travel, barter, and make a buck. Globalization is as ancient as modern mankind. The major difference has been the growing complexity of financial arrangements and the impact of international political/economic institutions. There is a real question whether those two “new” trends have helped more than they have hurt, or hurt more than thery helped.

  3. Sabastiano RWENGABO Says:

    While globalisation is a process rooted in historical experiences and conjunctures, it remains the same process. It ignites opposition to, and fights against, it. It involved, and stilll involves, dominant forces over weak ones. Strong economies and states impose economic conditions and ideological directions in ways and by means meant to exploit the underdogs. Whatever the benefits – by both globilising states and economies and globalised (subdued) states and economies – the process is an uneven one. Actually, instead of preparing to reap from it, developing sotieties have viewed it as a process intended to peg them to exploitatuive capitalist systems dominated by Euro-American hegemony. They lament as globalisation forces move fast; they watch as thier knowledges and epistemes are defrauded; they criticise helpless home governments and end up resigned to this inevitable process.

  4. Sabastiano RWENGABO Says:

    Globalization and Africa’s Integration

    Rwengabo-Rutashoboroka

    Political and economic integration dominates international politics today. Three aspects of this evolving culture come into play: international political economy; international diplomacy; and neoliberal imperialism. These are shrouded into GLOBALISATION. Importantly, globalization has affected and catalysed integration processes in Africa. Globalistaion predates contemporary ICT and global networks, and is rooted in the era of mercantilist imperialism that involved the discovery and exploitation of resources from distant lands, and forging networks to ease this exploit. This process pegged Africa onto global politico-economic powers since slave trade. Three waves of domination have followed slave trade: the Anglo-Saxon dominance, pax-Americana domination and the threatening Chinese hegemony. Transnational imperialism under the rubric of neoliberalism characterised English and American domination. Africa has been, in all these eras, exploited and subdued.

    Africa responded to globalization. Resistance to colonialism and post-independence attempts at integration can be discerned. Integration had been instrumentalised by colonialists to fight their wars of imperialism. Continuous fragmentation of Africa into Anglophone, Francophone, Lusophone and Arabophone entities has left Africans pitted against themselves. You need Visa to Francophone Africa processed by a French Embassy; you will need it from British High Commission to travel to an Anglophone country. Yet these are African countries. We live with this irony.

    Contemporary pressures may be seen in the way Africa continues to be a centre of imperialist contestations in an era of globalization: religious/cultural, economic and political contestations (cf Arabo-Islamic Vs Evangelist-American religious contestations; Foreign religions Vs Indigenous religions; the West Vs the East; Chinese Vs Anglo-American interests). Mention resource struggles within the Great Lakes Region, where ethnic divides have been exploited to create conditions necessary for continuous siphoning of resources out of this Garden of Eden. There are geopolitical pressures, such as GLR and its influence on the integration in East Africa; economic considerations; and security challenges now pushing Africa into some kind of integration. Lessons from postcolonial leadership mistakes which led to the development malaise necessitate that Africans struggle for a niche in the global economy. There are also shared resources which threaten the peaceful coexistence of neighbours. Here the politics of international resources management becomes a politics of diplomatic compromises and good neighborliness, if peaceful coexistence and utilisation of these resources are to be attained.

    Contemporaneous with these pressures have been Africa’s integration struggles of post-coloniality. Today, we have the revival of East African Community; IGADD; ECOWAS; the October 22, 2008 Kampala Summit that romanticised the integration in EAC/SADC/COMESA; and the travesty of Anglophone-Francophone divide in what Rwanda and Burundi are doing by joining the East African Cooperation. We also have calls for an African Union (popularised by Libya’s Qaddafi and South Africa’s Mbeki, and heralded by Uganda’s Museveni). There are calls for business corporations to integrate, since cyber technology has eased business as a result of ICT and telecom industry. Then the Musevenic argument that Africans are closely related by blood and consanguinity, hence have similar problems and opportunities. See assignments of regional bodies to solve problems in member countries, hence AMISOM; ECOMOG; AU in Darfur; Mbeki in Zimbabwe; Nile Basin Initiative; DRC/Rwanda/Uganda Tripartite Plus Agreement in Arusha over security; name them. So what are those shared opportunities and challenges?

    Shared resources (Lakes, Rivers, Forests); Shared ideological conviction; shared security threats (say in GLR); Shared global threats (capitalism, global political and economic hegemonism); failures of neoliberal capitalism to alleviate poverty and underdevelopment; donor dependence; the global economic crisis; and general socioeconomic malaise, show that Africans have shared destinies – positive and negative – and so have shared paths to tread.

    The Writer is a Member of the Council for the Development of Social Science Research in Africa (CODESRIA), and a Research Consultant
    rweruta@yahoo.com / rweruta00@gmail.com
    +256 782 808 220 / +254 712 993 606

  5. bill greene Says:

    Sabastiano makes some excellent points, and the extent of his comments indicates both the complexity and difficulty in making economic and political progress in African nations. It is an unfortunate fact that the trillions of dollars in aid, and the plethora of “advice” dispensed, has done little to advance the well being of most Africans. Clearly, the African nations can’t wait on more of the same bad advice and harmful dole that Western nations love to dispense.

    The Annual Index of Economic Freeedom published annually by the Heritage Foundation (and another by the Fraser Institute) shows the relative economic standing of over 120 nations. There is a clear correlation between the degree of economic freedom within each country and its economic growth and prosperity. Most African countries score low on the economic freedom scale, and along with a lack of physical security, that relegates them to economic stagnation.

    In the 2005 report by the Heritage Foundation, remarkable progress is shown for Botswana and Madagascar” “Botswana’s market-led economy has one of the world’s highest average growth rates.” And, “Madagascar is the world’s most improved country. Its trade policy, fiscal burden of government, monetary policy, and informal market scores are all better.”

    These countries have improved by simply adopting the mechanical systems and institutions that allow free and open economic activity by a majority of its citizens. Dubai and Singapore are two examples where this was quickly and effectively accomplished.

    Of course, maintaining pysical security of persons and their property is a first requirement for any kind of progress. With security, and an open unburdened market economy, the genius of a nation’s people can be unleashed. This is the essence of the “Radzewicz Rule” summarized in “Common Genius” and provides a simple blue-print of why some nations prosper and others stagnate.

  6. Difference in flow of capital in the two financial globalization periods « Mostly Economics Says:

    […] in the two financial globalization periods By Amol Agrawal It is pretty well know now that there were two periods of globalization/ financial globalization. First from 1870 to First World War and second from 1970 […]

  7. Will emerging economies stop maintaining forex reserves? « Mostly Economics Says:

    […] background first. Economic Historians/Historians have pointed how the recent globalization phase is similar to the one seen in 1870-1910. The previous one was […]

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