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Mitchner - Today Globalization in historical perspective...

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1 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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2 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%
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