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Globalization in
Historical Perspective
Kris Mitchener
Global Fellow, UCLA
Associate Professor, Santa Clara University
Research Associate, NBER
Today: Globalization in historical
perspective
•
What is globalization?
•
How do we measure it?
•
When was the first era of globalization?
•
How does globalization affect standards of
living?
•
How does the earlier era of globalization
compare to today?
Economists define
globalization
as:
•
Increasingly close international integration
of markets for goods, services, and factors
of production
•
What are factors of production?
– Labor and capital
Why this definition of globalization?
• Measurable
•
Definition allows us to make comparisons
– Across countries
– Over time
•
…our task for today
When did globalization begin?
•
From a millennial perspective, globalization is
quite new
•
Trade and flows of capital and labor were quite
small until last few centuries
•
Markets for goods and factors of production were
not integrated
•
Big growth and integration only came during 19
th
century
• WHY?
Trade before the 19
th
Century
•
Limited to a small range of goods…in a few
markets worldwide
– Sugar, spices, tea, precious metals
– Goods with high value-bulk ratios
– Why?
•
Transportation costs were high
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What changes in the 19
th
century
to stimulate trade?
1. Transportation Costs decline
– Technological innovations canals, steamship,
railways, & storage of perishables
What changes in the 19
th
century
to stimulate trade?
1. Transportation Costs decline
– Technological innovations steamship, railways,
etc.
2. Tariff rates declined, although not
eliminated altogether
– Fall from average of 15% to 10%