Wolf Globalisation

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    IS TODAYS GLOBALISATION DIFFERENT

    FROM WHAT HAS GONE BEFORE?

    Martin Wolf1

    Is the globalisation of today really different from anything that has gone before and, if so,

    in what way? Even well-informed contemporary observers assume that todays

    globalisation is quite new. The purpose of the present paper is to assess how far and in

    what way - this is true.

    In an excellent discussion of globalisation and global governance, Vincent Cable, former

    chief economist of Shell and head of the international economics programme of Londons

    Royal Institute of International Affairs and now a Liberal Democrat member of parliament,

    argues (1999, 15) that:

    [W]ith all the necessary qualifications to the hyperbole about globalisation,

    something important is happening: two overlapping trends of considerable

    momentum.

    One is technological, the speeding up of communications. Many

    communications improvements have been taking place over the last half-

    century, but the contemporary speed of change, the enlargement of capacity

    for information (and capital) transmission and the proliferation of

    communications media have not been experienced before.

    1 Associate Editor and Chief Economics Commentator,Financial Times, London

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    The other is a change in the policy environment: a liberalisation

    revolution, a freeing up of markets and reduction in the role of government

    in terms of ownership and control over production of goods and services.

    As Figure 1 indicates, the process of integration was powerful in the 1990s, JUST as Mr

    Cable argues. Moreover, this has been a continuation of post-war trends. The share of trade

    in global output increased from about 7 per cent in 1950 to over 20 per cent by the mid-

    1990s. Between 1950 and 1998, the volume of world production rose by 530 per cent and

    of world output of manufactures by 820 per cent. Over the same period, the volume of

    world merchandise exports rose by 1,840 per cent and the volume of world exports of

    manufactures by 3,500 per cent.

    The history of globalisation

    It is easy to assume that what we experience today is unprecedented, as Mr Cable himself

    does. But globalisation itself is certainly not new. It has been a dominant theme of the

    history of the past five hundred years. It can be said to have begun with the voyages of

    European discovery of the 15th and 16th centuries. In the last decade of the 15 th century,

    Christopher Columbus reached the Americas and the Portuguese entered the Indian Ocean.

    Since then peoples that had been previously been isolated have become increasingly

    closely interconnected. This has been true of relations among the civilisations of the

    Eurasian land-mass. It has been still truer of relations between Eurasia and the hitherto

    largely - or entirely - isolated continents of Africa, the Americas and Australasia. Humanity

    has become aware both of itself and of the globe, as a whole.2

    2 Jared Diamond (1997) provides a brilliant explanation of why ecological advantages gave the inhabitantsof the Eurasian land mass a decisive advantage over inhabitants of other continents in the development ofsophisticated economies and states. Maddison (2001, 23) discusses the technological advances that gave the

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    This process of growing interconnection began when a number of peripheral European

    countries Portugal, Spain, the Netherlands, Britain and France - exploited their superior

    military organisation and technology, partly developed in intra-European conflict, to

    achieve control over much of the world. From the beginning, they sought wealth through

    plunder and trade.

    Out of their quest came great empires. In the long run, commerce proved more enduring

    and more fruitful: empires came and then went, as the costs of control rose and the rewards

    fell; but trade and investment remained. The ultimate result was the incorporation of much

    of the world into an economic system whose centre was, until the 20 th century, Europe, then

    Europe and North America, and today, though dominated by the west, includes advanced

    east Asian countries, particularly Japan.3

    The one-way arrow of technology

    Globalisation then is a long-term historical process, not something that began yesterday.

    Behind it have been huge and progressive declines in the costs of transport and

    communications. Without the advances of the worlds of sails and of steam, of aircraft and

    the motor vehicle, of the telegraph, the telephone, the satellite and the Internet, global

    integration could never have happened. Before the modern age, the worlds most important

    global trading route was probably the Silk Road. By the standards of what followed, the

    communication and commerce this facilitated was a brook to the Amazon.

    European powers mastery of the sea.

    3 William H McNeill (1982) argues that the last millennium as a whole and the second part of themillennium, in particular, was the period when market processes remade the world, in alliance with theincreasingly powerful states that growing wealth and improving technology brought forth.

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    The fall in costs of transport and communications is a consequence, as well as a cause, of

    market-led integration. In the economic jargon, it is endogenous. Science and technology

    have developed in response to economic opportunities and have then, in turn, created new

    ones. This was true of the Portuguese advances in navigation of the 15 th century, just as it

    was of the telecommunications revolution of the late 20th. These economic forces have, in

    turn, been strongly influenced by the ambitions of governments. Chinas decision to turn

    away from inter-continental trade while Europe was turning towards it ensured a half-

    millennium of western technological as well as economic domination.4

    While transport and communications technologies improved substantially from the 15th to

    the 18th centuries, developments in the 19th and 20th were far more rapid and dramatic. Just

    as the rate of growth of the world economy accelerated sharply in the 19th century, so did

    the rate of decline in costs of transport and communications. Indeed, it is difficult to think

    of the industrial revolution except in terms of transport and communications. The steam

    train, the steam ship and the intercontinental telegraph cable are as symbolic of progress in

    the 19th century as the motor car, telephones, radio, aircraft, television and the internet are

    of the 20th.

    There were substantial and continuing reductions in costs of transport and communications

    throughout the 19th and early 20th centuries (Figure 2). Harley (1980) estimates that the cost

    of shipping a bushel of wheat from New York to Liverpool was halved between 1830 and

    1880 and then halved again between 1880 and 1914. The first transatlantic cable was laid

    4 William H. McNeill (1982, 42-48) discusses the growth of the Chinese navy and its subsequentabandonment in the 15th century. From 1371 to 1567, sailing to foreign lands was forbidden by the imperialcourt.

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    in 1866. By the turn of the century, the world was cabled, reducing communication times

    from months to minutes.

    There were huge further improvements in technology and concomitant reductions in the

    costs of transport and communications in the 20th century (see Figure 3). The cost of a

    three-minute telephone call from New York to London fell from about $250 in 1930 to a

    few cents today in current prices (Cairncross 1997). The number of voice paths across the

    Atlantic has risen from 100,000 in 1986 to over 2m today. The number of Internet hosts has

    risen from 5,000 in 1986 to perhaps 100m now. The implication is that the potential for the

    international flow of information, in particular, and so for the integration of production,

    sales and finance across borders has grown consistently and rapidly and by orders of

    magnitude - over the past two centuries.

    Ups and downs of globalisation

    If technology were the only force driving globalisation, we would have seen a continuous

    advance over the past two centuries. In fact, we have not. The story is intriguingly

    different. There was a large increase in economic globalisation in the 19th century, reaching

    its peak in the Edwardian age. Then, with the two world wars and the Great Depression,

    came a massive relapse. This was then followed by another rise in globalisation or, more

    prosaically, international economic integration - over the past half century.

    Trade

    First, as is shown in Table 1, ratios of trade to GDP in money terms reached high levels for

    several of the then advanced economies by 1910, before collapsing in the malign

    environment of the great depression and the Second World War. For almost all of the

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    advanced countries (the most significant exception being Japan) trade ratios are now

    somewhat higher than ever before. But they are not all that much higher. Among the big

    countries, the most important exception to the general rule that openness is not vastly

    greater today than a century ago is the United States, with a trade ratio of 11 per cent in

    1910 and 24 per cent in 1995. That may explain the relatively greater controversy about

    globalisation in that country. A similar case is Italy, with a trade ratio of 28 per cent in

    1910 and 49 per cent in 1995.

    The evidence for trade in money terms (or current prices) is somewhat misleading,

    however, as is shown by the data in constant prices in Table 2. These data confirm the

    picture of a decline in trade intensity between 1913 and 1950. But it shows the world much

    more integrated at the end of the 20th century than it had been at the beginning. The

    explanation for this is the progressive decline in the relative prices of tradable goods,

    particularly manufactures, where much of the productivity growth of the century was

    concentrated. The picture of dynamism of world trade ever since the second world war,

    exceeding even that of the pre-first-world war period, is reinforced by Table 3.

    The overall conclusion on trade then is that the world is more integrated today than ever

    before, after a collapse in the first half of the 20th century. This conclusion is reinforced

    when one takes into account the composition of world trade, with a very high level of intra-

    industry trade in manufactures, as production processes have been integrated across the

    globe.

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    Capital

    Second, capital market integration was already highly advanced in the late 19th century,

    before collapsing in the inter-war period. As a share of gross domestic product the capital

    outflow from the UK at an average of 4.6 per cent of GDP between 1870 and 1913 - has

    no contemporary parallels among the larger economies, even Japan (see Table 4). At its

    peak, British overseas investment ran at 9 per cent of GDP (Bordo, Eichengreen and Kim

    1998, 4). The same was true for the capital importers. Argentina, for example, ran a current

    account deficit averaging 18.7 per cent of GDP between 1870 and 1889 and 6.2 per cent of

    GDP between 1890 and 1913 (Baldwin and Martin, 8). More revealing perhaps, the

    correlation between domestic investment and savings a measure of self-sufficiency in

    savings was lower between 1880 and 1910 than in any subsequent period, up to 1990 (See

    Figure 4). A related point is made in Figure 5, which shows that the gross value of the

    foreign capital stock in todays developing countries is lower today, as a share of the

    recipients GDP than it was in 1914. This reflects the slow recovery of such investment in

    developing countries after the collapse in the first half of the 20th century. This is partly

    explained by the deliberate refusal of most newly independent countries to accept inward

    investment in the early years of independence.

    The composition of capital flows has also changed. Capital mobility is today much greater

    for short-term instruments than it was in the earlier period. This is well demonstrated by the

    turnover of the foreign exchange market, at several hundred trillion dollars a year. Nothing

    similar has happened before, which explains the huge rise in foreign assets as a share of

    world GDP over the past two decades (see Table 5). Moreover, the composition of long-

    term flows was also somewhat different in the earlier period from todays (Bordo,

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    Eichengreen and Kim 1998, 16-18): investment was more in tangible assets than in

    intangible ones; by far the greater part of the earlier flows took the form of bonds, while

    today stocks and bonds are of roughly equal importance; portfolio flows predominated over

    direct investment in the earlier period, while direct investment has greatly exceeded

    portfolio investment since the Second World War; and, finally, before 1914 direct

    investment was largely undertaken by free-standing companies, particularly in mining and

    transportation, while today multi-national companies predominate, with a very large

    proportion of their investment in services (Baldwin and Martin 1999, 19).

    On balance, however, it is difficult to argue that overall capital mobility is much greater

    today than it was a century ago, even though there have been big changes in its

    composition.

    People

    Third, Hirst and Thompson (1999, 23) note that the greatest era for recorded voluntary

    mass migration was the century after 1815. Around 60m people left Europe for the

    Americas, Oceania, and South and East Africa. An estimated 10m voluntarily migrated

    from Russia to Central Asia and Siberia. A million went from Southern Europe to North

    America. About 12m Chinese and 6m Japanese left their homelands and emigrated to east

    and South Asia. One and a half million left India for South East Asia and South and West

    Africa.

    Baldwin and Martin (1999, 19) note that during the 1890s, a high point for population

    movement, the inflows of people into the US were equal to 9 per cent of the initial

    population equivalent to an immigration of 25m today (see Table 6). In Argentina, the

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    comparable figure was 26 per cent; in Australia, it was 17 per cent. In the same decade, the

    UKs outflow was 5 per cent of the initial population, Spains was 6 per cent and Swedens

    was 7 per cent. In the 1990s, however, the US was the only country in the world with a

    high immigration rate equal to about 4 per cent of the initial population over the decade.

    Assessment

    Thus, for all the changes that have occurred over the course of a century, neither the

    markets for goods and services nor those for factors of production are significantly more

    integrated today than they were a century earlier: they seem to be somewhat more

    integrated for trade than they were, at least in the advanced countries (though not yet in

    most developing countries), no more integrated for capital, despite the important changes in

    the composition of capital flows, and far less integrated for labour.

    Role of policy

    If technology has consistently increased the potential for global exchange, but that is not, in

    fact, what has happened an explanation must be found in policy. Globalisation is, it

    appears, chosen more than it is destined. So what has happened to trade policy, policy

    towards capital mobility and controls on movements of people over the past century?

    Trade

    In trade policy, 19th century liberalisation diffused from the United Kingdom to the

    continent between 1846 and 1870. However, protectionism returned to continental Europe

    after 1878 and never left the United States (see Table 7). There has again been substantial

    liberalisation throughout the world over the past two decades. This followed a long period,

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    after the Second World War, when the advanced countries liberalised their trade barriers,

    while the developing countries and members of the socialist bloc did not. By the early

    1980s, however, acceptance of the superiority of liberal trade over protectionism had

    become global. By the late-1990s, no significant country had a government with a

    commitment to protection as a principle. Exceptions are pariah states, such as North Korea

    and Iraq. The liberalisation that occurred in China, India and the countries of the former

    Soviet Union, in the course of the 1990s, was a powerful indicator of this change in

    opinion. Today, high protection of merchandise trade is largely restricted to manufactures

    in developing countries and agricultural commodities in the advanced countries, though

    protection of services, particularly financial services also remains high in many developing

    countries

    Capital

    Capital markets were open in the 19th and early 20th centuries, partly because governments

    did not have the means to control capital flows, even if they had wished to do so. Controls

    over capital flows were then introduced (and, with ups and downs, intensified) between

    1914 and 1945. Liberalisation of capital flows commenced in a restricted number of

    advanced countries during the 1950s and 1960s. However, the big wave of liberalisation

    began in the late 1970s, spreading across the high-income countries, much of the

    developing world and the former communist countries. Notwithstanding a very large

    number of financial crises over this period, this trend has remained intact.5 Developing

    5 Financial crises were also common in the pre-1914 period. But the recent ones seem to have been moredestructive, probably because of the impact of collapsing exchange rates (Bordo, Eichengreen and Irwin1999, 53).

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    countries that tried desperately to keep private foreign capital out of their economies two

    decades ago are now trying, as desperately, to draw it back in.

    People

    While trade and some capital flows are arguably more liberally treated and bigger in

    relation to global economic activity, the reverse is unquestionably true for movement of

    people. All the high-income countries operate controls on immigration that vary between

    tight and very tight. The mass mobility of people is largely in the form of refugees moving

    among (or even within) relatively poor countries. An exception is the movement (largely

    illegal) of Mexicans into the United States.

    Nevertheless, there has been some important liberalisation of movement of people among

    high-income countries. The most important example is the liberalisation that has occurred

    within the European Union, where movement of people is one of the four freedoms

    guaranteed by the founding treaties.

    Assessment

    If we are to understand the apparently limited increase in the extent of globalisation but

    rather the ups and downs of a century we must look at policy. The reaction to the

    disasters of the first half of the 20th century was to close down international economic

    interdependence. Then in the second half, there was a steady opening of barriers to

    movement of goods, services and capital, though far less so of people. What has happened

    reflects this pattern of liberalisation.

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    Novelties of todays globalisation

    It would be wrong, however, to see the world as having gone through nothing more than a

    long cycle of first closing and then re-opening economies. Mr Cable is right in important

    respects. First and perhaps most important in the long run, technology does offer

    opportunities for integration never seen before. Second, other changes have also occurred

    that make todays world of globalisation different from the late 19 th century in certain

    important respects.

    The decline and fall of world money

    The first difference is negative for globalisation namely the loss of the stability and

    predictability inherent in the move from the gold standard of the 1870-1914 era to the

    generalised floating of today. As Table 8 shows, international monetary history has been

    extraordinarily complex, as governments have struggled to cope with the international

    implications of the post-first world war move to managed money. The gold standard seems

    to have been exceptionally successful in encouraging long-term capital flows, particularly

    bond finance. Moreover, the vast scale of short-term finance is probably both a

    consequence of exchange-rate instability and an important contributory cause.

    Rise of the multi-national company

    The second difference is positive for globalisation: it is the dominant role of multi-national

    companies in organising todays structure of production and exchange (see Table 9). The

    rise of the multi-national company in manufacturing and services reflects several important

    economic changes of the past century.

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    One is the rise of the corporation itself an organisational form that was still relatively new

    in the 19th century. Another is the need of all countries for access to the technological know

    how and markets controlled by big corporations. Yet another is the ability of corporations

    to exploit modern communications and production technology to organise the chain of

    production within the firm, but across frontiers. A well-known by-product has been the

    universal increase in intra-industry trade. The incentive for organising such chains of

    production has also been increased by the growth in wage gaps among countries across the

    last century.

    Rise of global institutions

    A third novelty is also positive for globalisation: it is the rise of global institutions. Just as

    multi-national companies organise private exchange, so international institutions organise

    and discipline the international face of national policy. The World Trade Organisation, the

    International Monetary Fund, the World Bank, the European Union, the North American

    Free Trade Arrangement and so forth underpin habits of co-operation among states and

    consolidate commitments to liberalise. The 19th century was a world of unilateral policy.

    The late 20th was, by comparison, a world of multilateral policy.

    Rise of the welfare state

    The final big difference is perhaps neutral for globalisation: it is the changing role of the

    state between today and a century ago. The rising regulatory and welfare role of the state is

    probably somewhat hostile to globalisation, since it implies an increasingly exclusive

    concern with the welfare of citizens that has accompanied democracy. Public spending has,

    on average, quadrupled as a share of GDP in advanced countries, from 12 per cent in 1913

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    to 46 per cent in the 1990s. At the same time, there has been a relative decline in the

    importance of the warfare state, which probably increases the ability of states, at least

    democratic ones, to co-operate with one another. But just as the old liberal order was

    brought down by the clash between international integration and nationalism, so does the

    same threat exist today, if to a different and more limited extent.

    Conclusions

    1. Cost of transport and communications fell fast in the 19th century and continued to fall

    further in the 20

    th

    century. The potential for rewarding international exchange has

    grown correspondingly, as protagonists of globalisation argue.

    2. Yet, there has been no linear relationship between these technological developments

    and global economic integration. On the contrary, despite continued falls in costs of

    transport and communications in the first half of the 20th century, integration went into

    reverse, in all respects: trade, the movement of people and the movement of capital all

    became less free. A new era of globalisation began with the liberalisation of the

    postwar era and accelerated, while becoming increasingly global, in the 1980s and

    1990s. But this did not include the movement of people, to anything like the extent of

    the late 19th century.

    3. The level of economic integration today is both different from that of a century ago and

    further advanced in important respects, notably in trade and in the scale of gross capital

    movements. However, it is difficult to accept that it is totally different in nature.

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    4. There have been some fundamental changes, mostly favourable to sustained

    integration, since the late 19th century. These changes are political, organisational and

    technological

    5. Policy and the institutions that underpin it have been the principal determinant of the

    extent and pace of integration. Globalisation is not pre-destined, but chosen.

    Correspondingly, states, far from being at the mercy of omnipotent forces of

    globalisation, are free to choose whether or not to open their economies to the rest of

    the world.

    6. Last but not least, all the periods of rapid economic growth have been accompanied by

    increased integration (Table 10). Whether the next two or three decades are successful

    for the population of the globe will depend both on how far integration proceeds and on

    how well it is managed.

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    REFERENCES

    Bairoch, Paul. 1989. European Trade Policy, 1815-1914, in P.Mathias and S. Pollard

    (eds). Cambridge Economic History of Europe, Volume VII. Cambridge, Cambridge

    University Press.

    Baldwin, Richard and Philippe Martin. January 1999. Two Waves of Globalisation:

    Superficial Similarities, Fundamental Differences. National Bureau of Economic Research

    Working Paper 6904.

    Bordo, Michael D, Barry Eichengreen and Jongwoo Kim. September 1998. Was there

    Really an Earlier Period of Inernational Financial Integration Comparable to Todays?

    National Bureau of Economic Research Working Paper 6738.

    Bordo, Michael D, Barry Eichengreen and Douglas Irwin. 1999. Is Globalization Today

    Really Different than Globalization a Hundred Years Ago? National Bureau of Economic

    Research Working Paper 7195.

    Cable, Vincent. 1999. Globalisation and Global Governance. Royal Institute of

    International Affairs, London.

    Cairncross, Frances. 1997. The Death of Distance. Orion, London.

    Crafts, Nicholas. Globalisation and Growth in the Twentieth Century. 2000. IMF Working

    Paper WP/00/44. Washington D.C., International Monetary Fund.

    Diamond, Jared. 1997. Guns, Germs and Steel: the Fate of Human Societies. W.W. Norton

    & Company, New York and London.

    Green, A and M. Urquhart. 1976. Factor and commodity flows in the international

    economy of 1817-1914.Journal of World Economic History, 36, pp. 217-252.

    Harley. C. 1980. Transportation, the world wheat trade and the Kuznets cycle, 1850-1913,Explorations in Economic History, 17, pp. 218-250.

    Hirst, Paul and Grahame Thompson. 1999. Globalization in Question: the International

    Economy and the Possibilities of Governance, 2nd edition. Polity Press, Cambridge.

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    McNeill, William H. 1982. The Pursuit of Power: Technology, Armed Force, and Society

    since A.D. 1000. The University of Chicago Press, Chicago.

    Maddison, Angus. 2001. The World Economy: a Millennial Perspective. OECD

    Development Centre, Paris.

    Taylor, A. 1996. International Capital Mobility in History: the Savings-Investment

    Relationship. Working Paper 5743. National Bureau of Economic Research Working

    Paper 5743.

    United Nations. 2000. World Investment Report. UN, New York and Geneva.

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    FIGURE 1

    INTEGRATION OF T HE WORLD ECONOM

    1990s

    3.6

    6.07.0

    15%

    20%

    0.0%

    5.0%

    10.0%

    15.0%

    20.0%

    25.0%

    W orld Output W orld Trade in

    Goods

    W orld Trade in

    S ervices

    Foreign Direct

    Investment

    Internet

    Connections

    Monthly Growth R ateMonthly Growth R ate

    S ource: WTO

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    19

    FIGURE 2

    TRANSPORT COSTS, 1830-1910

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100

    1830 1850 1880 1910

    Wheat Bar Iron Iron Goods Cotton thread Cotton Textile

    Source: Bairoch (1989)

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    20

    FIGURE 3

    TRANSPORTATION VERSUS COMMUNICATION COSTS, 1920-1950

    0

    20

    40

    60

    80

    100

    120

    1920 1930 1940 1950 1969 1970 1980 1990

    Ocean freight Air Transatlantic phone SatelliteSource: World Bank

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    21

    FIGURE 4

    CORRELATION BETWEEN DOMESTIC INVESTMENT AND SAVINGS SINCE

    1870

    0.0

    0.2

    0.4

    0.6

    0.8

    1.0

    1.2

    1870-79 1880-89 1890-99 1900-09 1910-19 1920-29 1930-39 1940-49 1950-59 1960-69 1970-79 1980-89

    Source: Taylor (1996)

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    FIGURE 5

    GROSS VALUE OF FOREIGN CAPITAL STOCK IN

    DEVELOPING COUNTRIES OF AFRICA, ASIA AND

    LATIN AMERICA, 1870-1998

    $40.1

    $235.4

    $63.2

    $495.2

    $3,030.7

    $0.0

    $500.0

    $1,000.0

    $1,500.0

    $2,000.0

    $2,500.0

    $3,000.0

    $3,500.0

    1870 1914 1950 1973 1998

    0.0%

    5.0%

    10.0%

    15.0%

    20.0%

    25.0%

    30.0%

    35.0%

    Stock in 1990 prices ($bn)

    Stock as share of developing country GDP

    Source: Maddison (2001)

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    TABLE 1

    TOTAL TRADE TO GDP(current prices, per cent)

    1870 1910 1950 1995

    UK 41 44 30 57

    France 33 35 23 43

    Germany 37 38 27 46

    Italy 21 28 21 49

    Denmark 52 69 53 64

    US 14 11 9 24

    Canada 30 30 37 71

    Japan 10 30 19 17

    Source: Baldwin and Martin (1999)

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    TABLE 2

    TOTAL TRADE TO GDP(constant prices, per cent)

    Region 1870 1913 1950 1973 1998

    Western Europe 8.8 14.1 8.7 18.7 35.8

    Western Offshoots 3.3 4.7 3.8 6.3 12.7

    Eastern Europe and

    former USSR

    1.6 2.5 2.1 6.2 13.2

    Latin America 9.7 9.0 6.0 4.7 9.7

    Asia 1.7 3.4 4.2 9.6 12.6

    Africa 5.8 20 15.1 18.4 14.8

    World 4.6 7.9 5.5 10.5 17.2

    Source: Maddison (2001)

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    TABLE 3

    GROWTH IN VOLUME OF MERCHANDISE EXPORTS,WORLD AND MAJOR REGIONS, 1870-1998

    (annual average compound growth rates, per cent)

    Region 1870-1913 1913-50 1950-73 1973-98

    Western Europe 3.24 -0.14 8.38 4.79

    Western Offshoots 4.71 2.27 6.26 5.92

    Eastern Europe and

    former USSR

    3.37 1.43 9.81 2.52

    Latin America 3.29 2.29 4.28 6.03

    Asia 2.79 1.64 9.97 5.95

    Africa 4.37 1.90 5.34 1.87

    World 3.4 0.90 7.88 5.07

    Source: Maddison (2001)

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    TABLE 4

    CAPITAL FLOWS SINCE 1870

    (average absolute value of current account as per cent of

    GDP)

    UK USA Argentina Australia Canada France Germany Italy Japan

    1870-1889

    4.6 0.7 18.7 8.2 7.0 2.4 1.7 1.2 0.6

    1890-1913

    4.6 1.0 6.2 4.1 7.0 1.3 1.5 1.8 2.4

    1919-1926

    2.7 1.7 4.9 4.2 2.5 2.8 2.4 4.2 2.1

    1927-1931

    1.9 0.7 3.7 5.9 2.7 1.4 2.0 1.5 0.6

    1932-1939

    1.1` 0.4 1.6 1.7 2.6 1.0 0.6 0.7 1.0

    1947-1959

    1.2 0.6 2.3 3.4 2.3 1.5 2.0 1.4 1.3

    1960-1973

    0.8 0.5 1.0 2.3 1.2 0.6 1.0 2.1 1.0

    1974-1989

    1.5 1.4 1.9 3.6 1.7 0.8 2.1 1.3 1.8

    1989-1996

    2.6 1.2 2.0 4.5 4.0 0.7 2.7 1.6 2.1

    Source: Taylor (1996)

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    TABLE 5

    FOREIGN ASSETS OVER WORLD GDP (per cent)

    1870 6.9

    1900 18.6

    1914 17.5

    1930 8.4

    1945 4.9

    1960 6.4

    1980 17.7

    1995 56.8

    Source: Crafts (2000)

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    TABLE 6

    DECADAL MIGRATION

    (per cent of initial population, 1880-1910)

    Per cent of initialpopulations

    1880s 1890s 1900s

    Senders

    UK -3.05 -5.2 -2.04

    Italy -1.65 -3.37 -4.87

    Spain -1.51 -6.01 -5.18

    Sweden -2.90 -7.20 -3.51

    Portugal -3.52 -4.16 -5.94

    Receivers

    US 5.69 8.94 4.02

    Canada 2.27 4.89 3.71

    Australia 11.28 16.59 0.77

    Argentina 4.50 25.60 9.50

    Brazil 1.98 3.82 8.44

    N.Zealand 53.52 4.08 4.15

    Source: Green & Urquhart (1976)

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    TABLE 7

    AVERAGE TARIFFS ON IMPORTED MANUFACTURED GOODS

    (per cent)

    1875 1913 1931 1950 Pre-UruguayRound

    Post-UruguayRound

    France 12-15 20 30 18 -- --

    Germany 4-6 17 21 26 -- --

    Italy 8-10 18 46 25 -- --

    UK 0 0 n.a. 23 -- --

    EU -- -- -- -- 5.7 3.6

    US 40-50 44 48 14 4.6 3.0

    Source: Bordo, Eichengreen and Irwin (1999)

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    TABLE 8

    HISTORY OF MONETARY AND EXCHANGE-RATE REGIMES

    REGIME PERIOD

    I. International Gold Standard 1879-1914

    II. Interwar instability 1918-1939

    Floating 1918-1925

    Return to gold 1925-1931

    Return to Floating 1931-1939

    III. Semi-fixed rate dollar standard 1945-1971

    Establishing convertibility 1945-1958

    Bretton Woods system proper 1958-1971

    IV. Floating rate dollar standard 1971-1984

    Failure to agree 1971-1974

    Return to floating 1974-1984

    V. EMS and greater D-Mark zone 1979-1993

    VI. Plaza-Louvre intervention accords 1985-1993

    VII. Towards Renewed Floating and Emu 1993-

    Broad multilateral surveillance 1993-1997

    End of dollar pegs 1997-

    Monetary union in the EU 1999-

    Source: Hirst and Thompson (1999, 33)

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    TABLE 9

    RISE AND RISE OF MULTI-NATIONAL COMPANIES(Selected Indicators of FDI and International Production

    billions of dollars and percentages)

    1982 1990 1999

    FDI inward stock 594 1,761 4,772

    Sales of foreignaffiliates

    2,462 5,503 13,564

    Gross product offoreign affiliates

    565 1,419 3,045

    Exports of foreignaffiliates

    637 1,165 3,167

    GDP at factor cost 10,611 21,473 30,061

    Exports of goodsand non-factorservices

    2,041 4,173 6,892

    Source: UN (2000)

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    TABLE 10

    PERFORMANCE IN THE THREE MOST SUCCESSFUL PHASES

    IN THE CAPITALIST EPOCH(annual average compound growth rate of GDP per head)

    1950-73

    Golden Age

    1973-98

    Neo-Liberal Order

    1870-1913

    Liberal Order

    Western Europe 4.08 1.78 1.32

    Western Offshoots 2.44 1.94 1.81

    Japan 8.05 2.34 1.48

    Resurgent Asia 2.61 4.18 0.38

    Advanced capitalist

    and resurgent Asia

    2.93 1.91 1.36

    Faltering Economies 2.94 -0.21 1.16

    World 2.93 1.33 1.30

    Source: Maddison (2001)