History of Globalization Timeline

Thomas L. Friedman labels the period from 1492 to 1800 Globalization 1.0. In this framework, the era was driven by voyages, empire, and the initial integration of distant regions into a world system.

The nineteenth century witnessed the advent of globalization approaching its modern form. Industrialization, expanding trade, imperialism, capital flows, and labor mobility brought distant economies into closer relationship.

Technological changes during the nineteenth century lowered transportation costs and shortened travel times. Goods that had taken weeks or months to move between continents could increasingly be transported more quickly.

Nineteenth-century globalization was decisively shaped by imperialism. European empires used political control and colonial rule to secure markets, labor, resources, and strategic routes in the global South.

Image source: New Imperialism

Friedman's Globalization 2.0 spans 1800 to 2000. It encompasses industrialization, expanding world trade, improved transport, imperialism, multinational activity, and the broad development of modern global economic relationships.

The contemporary process of globalization likely developed around the middle of the nineteenth century as capital and labor became more mobile. Together with declining transport costs, these changes made the world economically smaller.

The rise in world trade between 1850 and 1914 encouraged the establishment and consolidation of direct colonial rule in the global South. Economic incentives for imperial control were closely tied to international commerce.

Image source: Colonialism

France's colonial rule over much of Africa exemplified the relationship between nineteenth-century globalization and imperialism. Colonial administration connected African territories to French political and economic networks.

The first phase of modern globalization began to break down at the beginning of the twentieth century with World War I. European-dominated networks were disrupted, and the war challenged the assumptions underlying universal commercial and political integration.

Image source: World War I

The period of globalization that ended in August 1914 was later remembered as an extraordinary episode in economic progress. World War I brought its interconnected economic order to a decisive end.

Friedman's Globalization 3.0 begins in 2000 and continues into the present. It describes a period in which technology and global economic integration further connect individuals, firms, and markets.

Some analysts argued in 2009 that the world was experiencing a period of deglobalization after years of increasing economic integration. The claim reflected concerns about weakening global economic links.

Klaus Schwab, Richard Baldwin, and Philippe Martin describe current changes from 2018 onward as Globalization 4.0. This era particularly emphasizes transformations affecting services and the evolving structure of global economic relationships.

Information flows were an important weakness of nineteenth-century globalization. Accounting standards in the United States were relatively underdeveloped, limiting the quality and comparability of information available to international investors.

In the nineteenth century, effective lenders of last resort existed in some countries but not generally at the periphery, and no international rescue packages were available to emerging economies. A century later, domestic safety nets in many emerging countries enabled governments to assume the debts of insolvent banks.

Nineteenth-century globalization operated under the fixed exchange rates of the gold standard. The system supported international payments and trade while constraining national monetary flexibility.

Image source: Gold standard

From 1890 until World War I, instability in trade was a significant problem despite the broader expansion of international commerce. The period ended with the disruption caused by the outbreak of war in 1914.

The production of merchant goods in the twentieth century largely decreased from nineteenth-century levels. At the same time, services and multinational production gained a larger role in international economic activity.

Image source: International trade

The twentieth century produced a quantum leap in multinational cooperation compared with the nineteenth century. Before 1900, international investment was largely portfolio investment, while trade-related and production-related direct investment later expanded.

Image source: Multinational corporation

Where nineteenth-century globalization operated under fixed gold-standard exchange rates, twentieth-century globalization developed under a regime of managed flexibility. This reflected changing approaches to monetary and economic management.

Compared with the nineteenth century, twentieth-century global trade included a higher share of merchant production and a growing trade in services. Production and trade by multinational firms also became increasingly important.

Commercial integration improved during the twentieth century as barriers to trade declined and transport costs decreased. These changes supported greater international exchange and helped produce postwar economic expansion and stability.

World exports rose from 8.5 percent of total gross world product in 1970 to 16.2 percent in 2001. The increase illustrates the deepening importance of international trade in the late twentieth century.

The Uruguay Round of trade negotiations ran from 1986 to 1994. It led to a treaty creating the World Trade Organization to mediate trade disputes and establish a more uniform platform for international commerce.

Image source: Uruguay Round

Following the Uruguay Round, the World Trade Organization was created to mediate trade disputes and provide common rules for international trade. Its establishment marked a major institutional development in global economic governance.

Image source: World Trade Organization

The twenty-first-century melting of the Arctic is expected to affect global trade by opening shorter maritime routes. Changes in Arctic sea ice could alter transport patterns and the geography of international commerce.

Image source: Arctic sea ice decline