Phase 1 - Globalization

Humanizing the globe

People -------------> to food

Agricultural Revolution ------------- 12000 Years ago

Food production --------> to people
Phase 2 - Globalization
Rise of Asia (10000 BCE to 200 CE)
Eurasian Integration ( 200 CE to 1350 CE) - silk route
Rise of Europe ( 1350- 1820) - Black death, Proto globalization (1450-1776) and developement of financial
intermediation in london

Proto - globalization
shutting down of silk road
three pillars: the Re nais sance (1300 to 1600s)
and
Enlightenment (1600-1700)
significant improvement in banking, finance and markets
SMith wrote wealth of nations after this
, the Age of Discovery along with colonialization
, and the Columbian Exchange.

Industrial revolution a small thing till phase two - became important in Phase 3
Phase 3 - globalization
(DICTATORSHIP OF DISTANCE WAS OVERTHROWN.)

Act 1: 1820- 1914

1) Falling trade costs - cost of transport and tariffs ( free trade forces wanting to reduce tariff in general
Phase 3 - globalization

Act 1: 1820- 1914

2) Northern industrilization and southern deindustrialization

per capita industrialization levels

Snowball effect of innovation, agglomeration and population growth
Phase 3 - globalization

Act 1: 1820- 1914

3) Urbanization
Phase 3 - globalization

Act 2: Period between two world wars

Tariff cutting began after 1933
Phase 3 - globalization

Act 3: After world war 2

First time in history - globalisation based on “rule of law” instead of rule of gun - setting up of GATT -
basically setting up rules of the trade (non-discrimination at border and behind the border, transparency,
reciprocity (snowball effect), consensus decision making

NAFTA, EU

Containerization in 1960
1. F I R S T U N B U N D L I N G
2. O L D G L O B A L I Z A T I O N
3. G R E A T D I V E R G E N C E
Second Unbundling
1) Convergence begins. Developed countries call for protectionism.

2) Comparative advantage concept has to be revised.

- Comparative advantage no more defined by national boundaries but by GVC boundaries (Honda led GVC vs

BMW led GVC

- Movement of source of comparative advantage possible due to cheap ICT costs

e.g. movement of know-how, movement of labour to the new world during age of discovery and after

columbian exchange

- Most international production not really global but inside Factory Asia, Factory Europe etc.

3) Value shifted to services

3) Value shifted to services
4) New losers and winners
- knowledge a non-rival factor, therefore rewards to capital go up
- Before second unbundling, team of productive factors nation based
- high skilled workers in developed nations gained, low skilled in developing nation
-Milanovic's results
Effect on nations other than Industrialising 6