World Trade
Regimes II
March 13, 2013
Globalization
An important context of contemporary
international trade is the phenomenon of
globalization
Globalization: the increasing integration of
the world in terms of communications,
culture and economics
Globalization
While globalization an important context for
world trade and can serve to increase it,,
several caveats should be kept in mind:
 International trade does not depend upon
globalization– can be regional or bilateral,
and took place before globalization started.
 Globalization not a recent phenomenon, or
even a 20th century phenomenon. It has
almost never been the case that the world
has been constituted totally by small
geographical units with their own peculiar
systems.
Globalization
Integration over large areas of territory, in
the form of standardized weights, measures,
language, law, commercial practices and
other economically relevant doctrines took
place under the Roman and Chinese
empires, as well as under various Islamic
empires in the Middle East.
International Trade
It is also, of course, not the case that large scale
trading was absent before modern times.
Egyptians, Greeks, Romans, and Chinese
engaged in international trade in ancient times.
Modern international commerce (in terms of
global = east/west trade) had its beginnings in
the European Middle Ages, as merchants from
Italy and the Mediterranean area went East in
search of spice, silk and other luxury goods.
International Trade
These initial efforts were soon joined by trading
expeditions from other countries. These often
turned into commercial and colonial empires
for various European countries (Spain, the
Netherlands, Portugal, France and England).
These empires acted in general like ancient
empires in developing trade across large
geographical distances, and introducing
integration of culture, technology, law,
monetary units, weights and measures, etc.
Industrialized International
Trade
One means by which modern international
trade became more integrated (and thus
globalized) and increased in volume is
through the impact of the industrialization.
Industrialization: use of energy to power
machinery to create goods, including new
machinery.
Industrialization
 Increased
productivity and efficiency
 Increased amount of goods available for
trade
 Created new, more efficient means of
transportation and communication that
served to tie distant areas of the world
together.
British Empire
By the early 19th century, Britain had
succeeded earlier empires (Dutch, Spanish)
as the commercially and geographically
largest, encompassing India and other parts
of South Asia, an important sections of the
Middle East and Africa.
Not only was trade important among the
different parts of the British empire, but
other aspects were important anticipations
of future globalization:
British Empire
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Introduction of standard laws and practices that
were, nonetheless, could be modified by context.
Spread of British culture, language and ideologies
through the different areas of the empire
Use of machine-based transportation and
communications.
Introduction of a standard reserve currency into
which other currencies could be converted at a
set value.
Promotion of internal free trade within the imperial
area.
British military as the ultimate enforcer of order
US
After WWII and the decline of the British, the US took
over as the most important supporter of a world
economy.
Like Britain, the US supported globalization in the form
of:
 Promotion of standard rules and practices
 Spread of English and American culture
 Promotion of American political and economic
practices
 Dollar as reserve currency
 Dependence on new technology to tie together
parts of the world
 Use of military as the ultimate enforcer of order
US vs. Britain
However, the US as leader of a globalized or
globalizing world order was somewhat different
than Britain:
 Rejection of the concept of a formal,
territorial empire.
 Reliance, at least in part, on international
institutions
 Inability to enforce free trade and inconsistent
commitment to the concept itself
 Use of military to enforce a global rather than
imperial order
Integration after the Cold War
There were important limitations to considering
the world globalized economically or otherwise
before the end of the Cold War:
 Incomplete integration of former colonial
nations and newly industrializing nations as full
participants
 Soviet Union and its allies only partly
integrated due to their own system of
commercial interaction and different
economic systems
 PRC not integrated
Integration After Cold War
Globalization and world trade has rapidly
increased over the past 20 or so years:
 Fuller integration and industrialization of
developing countries (particularly India and
Southern/Latin American countries)
 Integration of Russia and PRC
 Rapid technological developments, including
computer and telephone technology and the
spread of the internet.
 Wider acceptance of market-based
economic policies and free trade principles.