Globalization of Trade:

Agreement: General growth 1820-1880.

Many Believe: Growth continues to 1913. Decline from 1913-1945.

Chase-Dunn: Finds decline from 1880-1903, followed by new cycle of growth until late 20s.

(Chase-Dunn's method reduces errors due to exchange rates, and may give more emphasis to US and other countries with growing populations and large domestic markets).

Most Data: Finds a growth in trade in the late 20s, nearly to peaks of 1900s.

Capital Flows and Migration continued to increase 1880-1913, and reached high levels again in the 1920s.

Barriers to all flows also increased in the 1920s.

Non-West: Proportion of trade seems to have decreased in late nineteenth century and increased after turn of century to 1930s, especially primary exports and manufacturing imports. Manufacturing exports may have also grown although proportional manufacturing capability seems to have declined.

1930s: Barriers all increased and flows all decreased.

What's at Stake?

1) Williamson and World Bank call 1870s to 1913 the "belle epoque" when trade flourished, economies grew and converged. 1913-1945 is the "dark age" of anti-globalization policies and poor economic performance.

But if we take 1920s boom into account:

Most flows and economic growth seem to have flourished despite increasing tariffs from 1880s to 1930 (although gold standard before 1913 may have encouraged flows).

Convergence did not take place despite globalization in 1920s.

Implicit is question of whether Depression followed period of globalization or deglobalization

And if we accept Chase-Dunn's graph:

19c. convergence happened during period of slower globalization.

 2) Arguments for globalization boom in 1880-1913 and a decline in interwar years emphasize North Atlantic data. How does globalization appear from a more global perspective?

Most flows increased in non-west. Real wages did not--i.e. inequality persisted.

 

Prices of primary resources declined, to detriment of non-West.

 

High interest rates and dividends made investment attractive in non-West.

 

Contemporiaries in 1920s and 30s argued that industrialization caused less need for trade as economies became more self sufficient. But Non-Western markets and primary resources became increasingly important.

 

Implicit is question of whether globalization leads to convergence or divergence in all situations--of whether investment and export trade is always a positive thing.