Globalisation, history and development: a tale of two centuries

Author(s): Deepak Nayyar

Source: Cambridge Journal of Economics , January 2006, Vol. 30, No. 1 (January 2006),
pp. 137-159
Published by: Oxford University Press

Stable URL: https://www.jstor.org/stable/23601917

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
https://about.jstor.org/terms

Oxford University Press is collaborating with JSTOR to digitize, preserve and extend access to
Cambridge Journal of Economics

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
Cambridge Journal of Economies 2006, 30, 137-159
doi: 10.1093/cje/bei090

COMMENTARY
This section is designed for the discussion and debate of current economic problems. Contribut
new issues or comment on issues already raised are welcome.

Globalisation, history and development:

a tale of two centuries

Deepak Nayyar*

This paper situates globalisation in historical perspective to analyse its implications

for development. It sketches a picture of globalisation during the late nineteenth and
twentieth centuries. A comparison of these two epochs reveals striking parallels,
unexpected similarities and important differences. It shows that globalisation did not
lead to rapid growth and economic convergence in the world, either then or now.
Indeed, growth slowed down, and income levels diverged, while the gap between the
industrialised and developing countries widened, in both epochs. The story of
globalisation, it turns out, does not conform to the fairy tale about convergence and
development.

Key words: Globalisation, Uneven Development, Convergence, Divergence,

Exclusion
JEL classifications'. F02, 010, N00

Introduction

Globalisation means different things to different people. What is more, the word
isation is used in two ways, which is a source of some confusion. It is used in a positiv
to describe a process of integration into the world economy. It is used in a normative
prescribe a strategy of development based on rapid integration with the world econo
Even its characterisation, however, is by no means uniform. It can be described, sim
an expansion of economic activities across national boundaries. There are three econ
manifestations of this phenomenon—international trade, international investment
international finance—which also constitute its cutting edge. But there is much m
globalisation. It is about the expansion of economic transactions and the organisatio
economic activities across the political boundaries of nation states. More precisely, it
defined as a process associated with increasing economic openness, growing ec
interdependence and deepening economic integration in the world economy.

Manuscript received 14 March 2005; final version received 24 August 2005.

Address for correspondence'. Centre for Economic Studies and Planning, School of Social Sciences, J
Nehru University, New Delhi 110 067 INDIA; email: [email protected]
* I should like to thank Ram Singh for valuable assistance and Dhiraj Nayyar for helpful leads in m
for information.

©) The
The Author
Author 2006.
2006.! Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
138 D. Nayyar

Economic openness is not simply confined to trade flows, investment flows and
flows. It also extends to flows of services, technology, information and ideas acro
boundaries. But the cross-border movement of people is closely regulated an
restricted. Economic interdependence is asymmetrical. There is a high degree of i
dence among countries in the industrialised world. There is considerable dep
developing countries on the industrialised countries. There is much less interde
among countries in the developing world. It is important to note that a situ
interdependence is one where the benefits of linking and costs of delinking are
same for both partners; where such benefits and costs are unequal between par
implies a situation of dependence. Economic integration straddles national boun
liberalisation has diluted the significance of borders in economic transactions. It
an integration of markets (for goods, services, technology, financial assets and ev
on the demand side, and, in part, an integration of production (horizontal and
the supply side.
The world economy has experienced progressive international economic in
since 1950. However, there has been a marked acceleration in this process of glo
during the last quarter of the twentieth century. There is a common presumptio
present situation, when globalisation is changing the character of the world eco
altogether new and represents a fundamental departure from the past. Bu
sumption is not correct. Globalisation is not new. In fact, there was a simil
globalisation which began a century earlier, circa 1870, and gathered mome
1914, when it came to an abrupt end. In many ways, the world economy in
twenty-first century resembles the world economy in the late nineteenth century
is much that we can learn from history, for there is the past in our present (Na
This essay seeks to explore the theme of globalisation and development in
perspective. In doing so, it analyses the implications of globalisation for develop
retrospect and prospect. The structure of the paper is as follows. Section 1
a picture of globalisation during the late nineteenth century. Section 2 ou
contours of globalisation during the late twentieth century. Section 3 exam
parallels, the similarities and the differences between these two epochs of glob
Section 4 discusses the implications of globalisation for the Third World then, ar
it led to uneven development in the past. Section 5 considers the consequ
globalisation for the Third World now, concluding that it has been associat
exclusion of poor countries and poor people from the process of developm
present. The story of globalisation during the long twentieth century, it turns o
conform to the fairy tale of development, convergence and prosperity. For mu
Third World, it is about underdevelopment, divergence and exclusion.

1. The late nineteenth century

The period from 1870 to 1914 was the age of laissez faire. The movement of goods, capital
and labour across national boundaries was almost unhindered. Government intervention
in economic activity was minimal. There were, of course, differences among countries. In
general, however, these attributes were more clearly discernible in the Third World than in
the Atlantic economies. The openness of economies that characterised this era was
associated with a rapid expansion in trade, investment and finance across borders.
There was a rapid expansion of international trade from 1870 to 1913. It is estimated
that, during this period, the growth in world trade at 3.9% per annum was much faster than

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 139
the growth in world output at 2.5% per annum (Maddison, 1989). Another estimate
suggests that these growth rates were 3.5% per annum and 2.7% per annum, respectively
(Michie and Kitson, 1995). Consequently, the share of world trade in world output
registered a steady increase. This is confirmed by evidence available for select countries. In
Western Europe, the share of exports in GDP rose from 13.6% in 1870 to 18.3% in 1913
(Bairoch and Kozul-Wright, 1996). Similarly, for 16 developed countries, now in the
OECD, the share of exports in GDP rose from 18.2% in 1900 to 21.2% in 1913
(Maddison, 1989). Even among these sub-sets of countries, there were significant
variations. The export-GDP ratios in some small European economies such as Belgium,
the Netherlands and Switzerland were much higher than in the larger European economies
such as France, Germany and Italy. The export-GDP ratios were significantly lower in the
US and Japan (Maddison, 1989).
It is believed that this expansion in international trade was attributable to trade
liberalisation. It was in part, but only in part. During the first half of the nineteenth
century, free trade was practised only by Britain. Starting around 1860, trade barriers
began to come down in Europe. The Anglo-French treaty on trade was a first step. But the
tariff disarmament in Europe was driven by the most-favoured-nation clause (Kenwood
and Lougheed, 1994). However, this trade liberalisation was confined to Europe and lasted
just two decades (Bairoch, 1989). The US practised protection throughout the period
1870-1913 as average tariff levels remained in the range of 40-50% (Chang, 2002).
Between 1875 and 1913, the average level of import duties on manufactured goods rose
from 12% to 20% in France, 10% to 20% in Italy, and 5% to 13% in Germany. Much the
same was true of most other European countries (Bairoch, 1993). The only exceptions
were Britain and the Netherlands, which continued to practise free trade.
Free trade was, however, imposed on the rest of the world. Imperialism prised open
markets in the Third World, through gunboat diplomacy or colonial dominance. In 1842,
China signed a treaty with Britain which opened its market to trade and capped tariffs at
5%. In the 1840s, free trade was imposed on India by Britain and on Indonesia by the
Netherlands. In 1858, Japan signed the Shimoda-Harris treaties, persuaded by the
American gunboats of Commodore Perry, to switch from autarchy to free trade. Korea
followed the same path, through its market integration with Japan. Similar treaties, which
put a ceiling of 5% on import duties, were imposed on most Latin American countries
somewhat earlier.1 This was achieved mostly through British gunboat diplomacy. Towards
the end of the nineteenth century, however, some Third World countries turned to
protection in their quest for industrialisation.
The reality of trade policy, it would seem, did not mirror the myth of free trade. The
West practised protection wherever necessary, but imposed free trade on the Third World.
In the sphere of trade, even in 1913, the developed world is best described as 'islands of
liberalisation surrounded by a sea of protectionism', whereas the developing world is best
described as an 'ocean of liberalisation with islands of protectionism' (Bairoch and Kozul
Wright, 1996).
There was a similar expansion of international investment from 1870 to 1913. Foreign
direct investment increased rapidly during this period. And, by 1914, the stock of foreign
direct investment in the world was $14bn. An estimate made by the United Nations
suggests that this stock of foreign direct investment in the world economy was the
equivalent of 9% of world output in 1913 (UNCTAD, 1994, p. 130). The growth in

For a discussion on the advent of free trade in the Third World, see Williamson (2002).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 140 D. Nayyar

portfolio investment was even more rapid. Consequently, by 1914, the stock of lon
foreign investment in the world reached $44bn, of which S30bn, about two-thirds,
portfolio investment (UNCTAD, 1994, pp. 120-1). It is not surprising that, in this a
imperialism, Western Europe was the primary source of foreign capital. In 1914, Br
Germany and France together accounted for $33bn from a total of $44bn (Bair
Kozul-Wright, 1996). For the world as a whole, in 1914, about half of total foreign
investment went to Asia, Latin America and Africa, while the remaining half, in almost
equal parts, went to Europe and North America. The latter half was concentrated in
a small group of newly industrialising countries in North America and Europe, for some of
which it constituted as much as 50% of gross domestic investment (Panic, 1992, p. 101).
The stock of foreign investment in developing countries, direct and portfolio, rose from
$5.3bn in 1870 to $11.4bn in 1900 and $22.7bn in 1914 (Maddison, 1989, p. 30). Such
foreign investment was probably equal to about one-third of the GDP of developing
countries at the turn of the century (Maddison, 1989, pp. 30, 113). Imperialism exercised
an important influence. Between 1870 and 1914, the share of British foreign investment
going to Europe and the US dropped from 52% to 26% of the total, whereas the share of
Latin America and the British colonies rose from 33% to 55% of the total (Kenwood and
Lougheed, 1994, p. 30). And income from foreign investments constituted around 10% of
British national income (Foreman-Peck, 1983, p. 133).
The late nineteenth and early twentieth century witnessed a significant integration of
international financial markets to provide a channel for portfolio investment flows. The
cross-national ownership of securities, including government bonds, reached very high
levels during this period. In 1913, for example, foreign securities constituted 59% of all
securities traded in London. Similarly, in 1908, the corresponding proportion was 53% in
Paris (Morgenstern, 1959). It is worth noting that there was a correlation between interest
rates, exchange rates and stock prices in the leading markets. There was also an established
market for government bonds.1 In 1920, for instance, Moody's rated bonds were issued by
50 governments.2 International bank lending was substantial. Both governments and
private investors floated long-term bonds directly in the financial markets of London, Paris
and New York. Merchant banks or investment banks were the intermediaries in facilitating
these capital flows from private individuals and financial institutions, in the developed
countries of Europe, in search of long-term investments, on the one hand, to firms or
governments mostly in the newly industrialising countries or the underdeveloped countries
which issued long-term liabilities, on the other (Kregel 1994). This was so much the case
that, during the period 1880-1913, the principal capital exporter in the world economy,
Britain, ran an average current account surplus in its balance of payments, which was the
equivalent of 5% of its GDP (Keynes, 1919; Panic, 1992). And, in some years, this was as
much as 8 % of GDP. In fact, by 1914, such capital flows were in the range of 5 % of GDP in
most capital exporting countries (Bairoch and Kozul-Wright, 1996, p. 11).

2. The late twentieth century

The essential attribute of globalisation, then and now, is an increase in the degree of
openness in most countries. The three important dimensions of this phenomenon now, as
much as then, are international trade, investment and finance.

1 In 1914, as much as 70% of outstanding British and French long-term foreign investments consisted of
government bonds and railway bonds (Bloomfield, 1968, p. 4).
2 Cf., A survey of the world economy, The Economist, London, 7 October 1995.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 141
The second half of the twentieth century has witnessed a phenomenal expansion in
international trade flows. World exports increased from $61bn in 1950 to $883bn in 1975
and $6338bn in 2000. Throughout this period, the growth in world trade was significantly
higher than the growth in world output, although the gap narrowed after the mid-1970s.
Consequently, an increasing proportion of world output entered into world trade. The
share of world exports in world GDP rose from 6% in 1950 to 14.3% in 1975 and 20.2% in
2000. For the industrialised countries, this proportion increased from 13.6% in 1975 to
16.7% in 2000. For the developing countries, this proportion increased from 17.5% in
1975 to 31.2% in 2000.1
The story is almost the same for international investment flows. The stock of foreign
direct investment in the world economy increased from $68bn in 1960 to $636bn in 1980
and $6258bn in 2000. The flows of foreign direct investment in the world economy
increased from $5bn in 1960 to $55bn in 1980 and $1492bn in 2000.2 Consequently, the
stock of foreign direct investment in the world as a proportion of world output increased
from 4.4% in 1960 to 6.1% in 1980 and 20% in 2000.3 Over the same period, world
foreign direct investment flows as a proportion of world gross fixed capital formation rose
from 1.1% in 1960 to 2.3% in 1980 and 22% in 2000.4 In the industrialised countries, as
an annual average, this proportion increased from 2.3% during 1981-85 to 4.4% during
1986-90, dropped to 3.6% during 1991-95 but rose sharply to 12.8% during 1996-2000.
In the developing countries, as an annual average, this proportion rose from 2.4% during
1981-85 to 2.7% during 1986-90, but rose rapidly thereafter to 5.7% during 1991-95 and
11.7% during 1996-2000.5
The last quarter of the twentieth century witnessed an explosive growth in international
finance. The movement of finance across national boundaries is enormous—so much so
that, in terms of magnitudes, trade and investment are now dwarfed by finance. This
internationalisation of financial markets has four dimensions: foreign exchange, bank
lending, financial assets and government bonds. Consider each in turn.
In foreign exchange markets, trading was a modest $15bn per day in 1973. It rose to
$60bn per day in 1983. It soared to $590bn per day in 1989, $820bn per day in 1992,
$1190bn per day in 1995 and $1490bn per day in 1998.6 Consequently, the ratio of
worldwide transactions in foreign exchange to world exports rose from 9:1 in 1973 and
12:1 in 1983 to 80:1 in 1992, 85:1 in 1995 and 100:1 in 1998. And some absolute

1 The data on world exports cited in this paragraph, as also the data on world GDP used to calculate the
proportions, are obtained from the UNCTAD Handbook of International Trade and Development Statistics and
Handbook of Statistics, various issues. The data on GDP for country-groups are obtained from World Bank,
World Development Indicators, 2003.
2 For data on stocks and flows of foreign direct investment in the world economy, cited here, see United
Nations, Transnational Corporations and World Development, 1978, and UNCTAD, World Investment Reports
1994 and 2002.
3 UNCTAD, World Investment Report 1994, p. 130, and World Investment Report 2002, p. 328
4 UNCTAD, World Investment Report 1994, p. 130, and World Investment Report 2002, p. 319
5 The data on foreign direct investment as a percentage of gross fixed capital formation, cited in this
paragraph, are obtained from UNCTAD World Investment Report 1994, pp. 421-6, and World Investment Report
2002, pp. 319-20.
6 These statistics on the average daily turnover in foreign exchange markets are based on the Bank of
International Settlements, Survey of Foreign Exchange Activity, Basle, various issues, conducted by central
banks and reported by BIS. The surveys are triennial. The data relate to average daily turnover in the global
foreign exchange market during April each year, including spot transactions, outright forwards and foreign
exchange swaps. The figures are adjusted for double-counting and estimated-gaps in reporting. The latest
survey reports that this average daily turnover dropped to $ 1190bn in April 2001. For the purpose of
comparison in this paragraph, the values of world exports and world GDP have been converted into an
average daily figure.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 142 D. Nayyar

numbers would help situate these magnitudes in perspective. In 1997, for example,
GDP was $82bn per day, while world exports were $ 15bn per day, compared with g
foreign exchange transactions of $1490bn per day in April 1998, while the fo
exchange reserves of all central banks put together were $1550bn in 1997.
The expansion of international banking is also phenomenal. As a proportion of wo
output, net international bank loans rose from 0.7% in 1964 to 8.0% in 1980 and 13.
2000. As a proportion of world trade, net international bank loans rose from 7.5% i
to 42.6% in 1980 and 66.9% in 2000. As a proportion of world gross fixed cap
formation, net international bank loans rose from 6.2% in 1964 to 51.1% in 1980 and
62.8% in 2000.1 It is worth noting that the gross size of the international banking market,
which includes claims on (or liabilities to) banks, was more than double that of net
international bank lending. Cross-border inter-bank liabilities rose from a modest $ 455bn
in 1970 to $5560bn in 1990 and $8998bn in 2000.2
The international market for financial assets experienced a similar growth starting
somewhat later. The evidence is incomplete but revealing. Between 1980 and 1993, gross
sales and purchases of bonds and equities transacted between domestic and foreign
residents rose from less than 10% of GDP in the US, Germany and Japan to 135% of GDP
in the US, 170% of GDP in Germany and 80% of GDP in Japan. In the UK, the value of
such transactions was more than ten times that of the GDP in 1993. Similarly, between
1980 and 1993, the share of foreign bonds and equities in pension-fund assets rose from
10% to 20% in the UK, from 0.7% to 6% in the US, and from 0.5% to 9% in Japan.3 Yet
another dimension of transactions in the international market for financial assets provides
evidence on subsequent years. Cross-border mergers and acquisitions rose from $75bn in
1987 to $151bn in 1990 and $1144bn in 2000. The pace of expansion was about the same
as that of foreign direct investment inflows in the industrialised countries but somewhat
slower in the developing countries and the transition economies. The value of such cross
border mergers and acquisitions, which was about 0.5% of world GDP during the late
1980s, rose to 3.6% of world GDP in 2000.4
Government debt has also become tradable in the global market for financial assets.
Available evidence suggests that there is a growing international market for government
bonds. Between 1980 and 1992, the proportion of government bonds held by foreigners
rose from less than 1% to 43% in France, from 9% to 17% in the UK, from 10% to 27% in
Germany, while it remained steady at about 20% in the US.5
Between 1993 and 2000, the value of outstanding international bonds, as a proportion
of GDP, rose from 8% to 23% in the world economy, from 8% to 26% in the industrialised
countries and from 2% to 7% in the developing countries.6 But all international bonds do
not constitute government debt, for the global bond market is made up of public debt and

1 For data on 1964 and 1980, UNCTAD, World Investment Report 1994, p. 128. The proportions for 2000
are calculated. The statistics on international bank loans are obtained from BIS Quarterly Review, June 2003.
The data on world GDP, world exports and world gross fixed capital formation are obtained from UNCTAD
statistics.
2 Inter-bank claims/liabilities increased faster during the 1990s, so that, by 2000, gross international
lending by banks was three times net international lending by banks.
3 The proportions cited so far in this paragraph, are estimated from data compiled by BIS and IMF, and
are reported in 'A Survey of the World Economy', The Economist, London, 7 October 1995.
4 The data on cross-border mergers and acquisitions cited in this paragraph are obtained from UNCTAD,
World Investment Report 2002, p. 341. See also UNCTAD, World Investment Report 2000, pp. 106-23.
5 See 'A Survey of the World Economy', The Economist, London, 7 October 1995.
6 The data cited here are from Observatoire de la Finance and UNITAR, Economic and Financial
Globalisation: What the Numbers Say, New York and Geneva, 2003, p. 145.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 143

private debt. Evidence from another source suggests that, in 2000, public sector debt
(including debt issued by state and local governments and government-sponsored enter
prises) constituted 21% of international bonds in the world as a whole, 19% of
international bonds in the industrialised countries and 35% of international bonds in
the rest of the world.1 On the basis of these proportions, it would be reasonable to infer
that, at the end of 2000, the size of the international market for government debt was the
equivalent of 4.8% of GDP in the world economy, 5% of GDP in the industrialised
countries and 2.5% of GDP in the developing countries.

3. Two epochs of globalisation: a comparison

The preceding discussion shows that the world economy experienced a rapid internation
alisation of trade, investment and finance during the last quarter of the twentieth century,
which continues apace. It also shows that there was a similar internationalisation of trade,
investment and finance during the last quarter of the nineteenth century, which continued
until 1914. It would seem that the long twentieth century witnessed two phases of
globalisation. A comparison of these two phases reveals striking parallels. It also suggests
that there are both similarities and differences between these two phases of globalisation.
The similarities are in the underlying factors, which made globalisation possible then and
now. The differences are in the form, the nature and the depth of globalisation then and now.

3.1 The parallels

There are parallels in each of the three dimensions: trade, investment and finance. It is
important to highlight some.
It would seem that the integration of the world economy, through international trade,
was about the same at the beginning and end of the twentieth century. This is borne out by
available evidence for selected industrialised countries. In the UK, the share of exports in
GDP rose from 16.4% in 1973 to 19.7% in 2000, compared with 14.9% in 1900 and
20.9% in 1913. In France, the share of exports in GDP rose from 14.4% in 1973 to 23.1%
in 2000, compared with 12.5% in 1900 and 13.9% in 1913. In Germany, the share of
exports in GDP rose from 19.7% in 1973 to 29.4% in 2000, compared with 13.5% in 1900
and 17.5% in 1913. In Japan, the share of exports in GDP rose from 8.9% in 1973 to
10.1% in 2000, compared with 8.3% in 1900 and 12.3% in 1913. In the US, the share of
exports in GDP rose from 5% in 1973 to 8% in 2000, compared with 7.5% in 1900 and
6.1% in 1913.2 The striking thing is that the average tariff rate on imports of manufactured
goods in these industrialised countries then, with the exception of the UK, were in the
range 20-40% (Bairoch, 1993). Tariffs were much higher then but non-tariff barriers are
stronger now.
The significance of foreign direct investment in the world economy was also similar at
the beginning and at the end of the twentieth century. In 1913, the stock of foreign direct
investment in the world economy was the equivalent of 9% of world output. The stock of
foreign direct investment in the world economy as a proportion of world GDP increased
steadily from 6.1% in 1980 to 8.9% in 1990 and remained in the range of 9% through the

1 See http://www.imf.org/external/pubs/ft/icm/2001/01/eng/pdCannex.pdf p.222, which reports IMF esti

mates of the size of global bond markets in December 2000. The total value of international bonds issued for
the world as a whole was $6003.2bn, of which $1262.8bn was public debt. The total value of international
bonds issued by US, Canada, Japan and EU-15 was $5196.4bn, of which $977.3bn was public debt.
2 The proportions for 1973 and 2000 are calculated from UNCTAD and United Nations statistics on world
exports and world GDP. The estimates for 1900 and 1913 are obtained from Maddison (1989, p. 143).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 144 D. Nayyar

first half of the 1990s.1 This proportion rose sharply and surpassed its 1913 level only
late 1990s. The significance of foreign investment in the developing world is also
comparable. In 1914, the stock of foreign investment in the developing countries, direct
and portfolio, at 1980 prices, was $179bn, which was almost double the stock of foreign
direct investment in developing countries, in 1980, at $96bn.2 At the beginning of the
century, in 1900, foreign investment in developing countries, direct and portfolio, was
equal to about one-third of the GDP of developing countries.3 At the end of the century, in
2000, the stock of foreign direct investment in developing countries was about 30% of their
GDP. 4
There was a significant integration of international financial markets in the early
twentieth century which is, in some respects, comparable with the late twentieth century.
The only missing dimension then, as compared with now, was international transactions in
foreign exchange which were determined entirely by trade flows and capital flows, given the
regime of fixed exchange rates under the gold standard. The cross-national ownership of
securities, including government bonds, was similar. In 1920, Moody's rated bonds issued
by 50 governments. As late as 1985, only 15 governments were borrowing in the capital
market of the US. The number reached 50, once again, in the 1990s. In relative terms, net
international capital flows were perhaps larger at the beginning than at the end of the
twentieth century. During the period 1880 to 1913, Britain ran an average current account
surplus which was the equivalent of 5% of GDP (Panic, 1992). In contrast, since 1950, the
current account surplus of the US to begin with, or Germany or Japan in subsequent years,
did not exceed 3% of GDP.

3.2 The similarities

There are four similarities that are worth noting: the absence or the dismantling of barriers
to international economic transactions; the development of enabling technologies;
emerging forms of industrial organisation; and political hegemony or dominance.
The four decades from 1870 to 1913 were the age of laissez faire. There were almost no
restrictions on economic transactions across borders. It was believed that a virtuous circle
of rapid economic growth and international economic integration in this era created the
core of a global economy (Keynes, 1919). This was followed by three decades of conflict
and autarchy. The two World Wars and the Great Depression interspersed these troubled
times. International economic transactions were progressively constrained by barriers and
regulations that were erected during this period of economic and political conflict. These
barriers and regulations were dismantled step by step during the second half of the
twentieth century. Globalisation has followed the sequence of deregulation. Trade
liberalisation came first, which led to an unprecedented expansion of international trade
between 1950 and 1970. The liberalisation of regimes for foreign investment came next.
And there was a surge in international investment which began in the late 1960s. Financial
liberalisation came last, starting in the early 1980s. This had two dimensions: the
1 Cf., UNCTAD, World Investment Report, online database.
2 The figure for the stock of foreign direct investment in developing countries in 1980 is obtained from
UNCTAD, World Investment Report 1993, p. 248, while the estimate of the stock of foreign capital in
developing countries in 1914, at 1980 prices, is obtained from Maddison (1989, p. 30).
3 It has been estimated by Maddison (1989) that, at 1980 prices, in 1900, the stock of foreign capital in
developing countries was S108.3bn (p. 30), while the GDP of 15 selected developing countries in Asia and
Latin America was $333.8bn (p. 113).
4 UNCTAD, World Investment Report 2002, p. 329. It is worth noting that this proportion rose sharply in the
late 1990s, as it was much less at 10.2% in 1980 and 13% in 1990.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 145
deregulation of the domestic financial sector in the industrialised countries and the
introduction of convertibility on capital account in the balance of payments.1 The
globalisation of finance, at a scorching pace since the mid-1980s, is not unrelated to the
dismantling of regulations and controls.
Both phases of globalisation coincided with a technological revolution in transport and
communications which brought about an enormous reduction in the time needed, as also
the cost incurred, in traversing geographical distances. The second half of the nineteenth
century saw the advent of the steamship, the railway and the telegraph. The substitution of
steam for sails, and of iron for wooden hulls in ships, reduced ocean freight by two-thirds
between 1870 and 1900.2 The opening of the Suez Canal in 1869 halved the distance from
London to Bombay, which also brought about a sharp reduction in the cost of freight. The
decline in freight rates between 1870 and 1914 was just as dramatic on shipping routes
passing through the Black Sea and Egyptian ports.3 The spread of the railways,
everywhere, brought the hinterland of countries into the world economy. The arrival of
the telegraph revolutionised communication and shrank the world. The second half of the
twentieth century witnessed the advent of jet aircraft, computers and satellites. The
synthesis of communications technology, which is concerned with the transmission of
information, and computer technology, which is concerned with the processing of
information, has created information technology, which is remarkable in both reach and
speed. These technological developments have had an even more dramatic impact on
reducing geographical barriers. The time needed is a tiny fraction of what it was earlier.
The cost incurred has come down sharply. Obviously, enabling technologies made the
globalisation of economic activities that much easier in both phases.
Emerging forms of industrial organisation, in both phases, played a role in making
globalisation possible. In the late nineteenth century, it was the advent of mass production
which was characterised by a rigid compartmentalisation of functions and a high degree of
mechanisation. The production of perfectly interchangeable parts, the introduction of the
moving assembly line developed by Ford and methods of management evolved by Taylor
provided the foundations for this new form of industrial organisation. Mass production
realised economies of scale and led to huge cost reductions compared with craft
manufacturing. The accumulation and concentration of capital reinforced the process of
globalisation.4 In the late twentieth century, the emerging flexible production system,
shaped by the nature of the technical progress, the changing output mix and the
organisational characteristics (based on Japanese management systems), forced firms
constantly to choose between trade and investment in their drive to expand activities across
borders. The declining share of wages in production costs, the increasing importance of
proximity between producers and consumers, and the growing externalisation of services,
are bound to influence the strategies and the behaviour of firms in the continuing process of
globalisation.5

1 The latter was not simultaneous. The US, Canada, Germany and Switzerland removed restrictions on
capital movements in 1973, Britain in 1979, Japan in 1980, while France and Italy made the transition as late
as 1990.
2 Freight costs began to decline from the mid-nineteenth century but the spectacular downturn came after
1870 (Lewis, 1977).
3 See Williamson (2002). Around this time, there was another innovation, refrigeration, which had major
trade implications. In 1876, Australian meat and New Zealand butter were also being exported in large
quantities to Europe.
4 See Lewis (1978) and Chandler (1990).
5 For a detailed discussion on the relationship between forms of industrial organisation and globalisation,
see Oman (1994).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
146 D. Nayyar

The politics of hegemony or dominance is conducive to the economics of globalisa

The first phase of globalisation from 1870 to 1913 coincided with what has been des
as 'the age of empire', when Britain more or less ruled the world.1 The second phas
globalisation beginning in the early 1970s coincided with the political dominance of
as the superpower. This political dominance has grown stronger with the colla
communism and the triumph of capitalism, which has been described as 'the en
history' (Fukuyama, 1989). Apart from dominance in the realm of politics, there is an
similarity in the sphere of economics between Pax Britannica and Pax Americana. T
the existence of a reserve currency, which is the equivalent of international money: as
of account, a medium of exchange and a store of value. In the late nineteenth centu
the early twentieth century, this role was performed by the pound sterling. In the
twentieth century and the early twenty-first century, this role is being performed by
dollar, ironically enough after the collapse of the Bretton Woods system, when its st
role as a reserve currency came to an end. It would seem that, in both phases, globalis
required a dominant economic power with a national currency that was, and is, acce
as international money.

3.3 The differences

There are, also, important differences between the two phases of globalisation
important to highlight four such differences: in trade flows, in investment flows, in fin
flows and most important, perhaps, in labour flows, across national boundaries.
In the sphere of trade flows, there are differences in the composition of trade and
channels of trade. During the period from 1870 to 1913, a large proport
international trade was constituted by inter-sectoral trade, where primary commod
were exchanged for manufactured goods. The leading trading nation during th
Britain, exported manufactures to, and imported primary commodities from
veloping world (Foreman-Peck, 1983). However, the British pattern of trade was not
norm for the industrial world. For Western Europe and the US, in 1913, two-th
three-quarters of their trade was with other industrialised countries. Some of this
North trade was in primary commodities, and some of it was in manufactured
But much of this trade was, to a significant extent, based on absolute advantage der
from natural resources or climatic conditions. It is possible to discern two phase
1950. During the period 1950-75, inter-industry trade in manufactures, base
differences in factor endowments, labour productivity or technological leads an
constituted an increasing proportion of international trade (Glyn et al., 1990).
the period 1975-2000, intra-industry trade in manufactures, based on scale econ
and product differentiation, constituted an increasing proportion of international t
At first sight, it may seem that trade flows were in the domain of large internatio
firms then as much as now. There are, however, two important differences. First,
large trading firms of the nineteenth century, such as the East India Company
Royal African Company 'were like dinosaurs, large in bulk but small in brain, f
on the lush vegetations of the new worlds' (Hymer, 1972). The forerunners of what
now describe as transnational corporations were not these giant trading firms b
small workshops and the entrepreneurial firms of the late nineteenth century. Seco
during the present phase of globalisation, an increasing proportion of international

1 For a succinct and perceptive historical analysis of this period, see Hobsbawm (1987).
2 For an analysis of, and evidence on, international trade flows during this period, see Maizels (

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 147
is intra-firm trade, across national boundaries but between affiliates of the same firm. In
the early 1970s, such intra-firm trade accounted for about one-fifth of world trade, but by
the early 1990s, this proportion was one-third of world trade (UNCTAD, 1994, p. 143).
Even more important, perhaps, is the changed composition of intra-firm trade. The
second half of the twentieth century witnessed a steady decline in the importance of
primary commodities, and a sharp increase in the importance of manufactured goods and
intermediate products, in intra-firm trade.
Consider, next, investment flows, where there are differences in the geographical
destination, the sectoral distribution and the risk-form of the investment. In 1914, the
stock of long-term foreign investment in the world economy was distributed as follows:
55% in the industrialised world (30% in Europe, 25% in the US) and 45% in the
underdeveloped world (20% in Latin America and 25% in Asia and Africa). In 2000, the
stock of foreign direct investment in the world economy was distributed in a more uneven
manner: 66% in the industrialised countries and 32% in the developing countries.1
Comparable data for flows of foreign investment during the two periods are not available.
But in 2000, industrialised countries absorbed 82% of the inflows of foreign direct
investment in the world economy, whereas developing countries received only 16%.2 It is
clear that developing countries are now far less central to the process. Yet, the spatial web of
foreign direct investment is almost certainly more extensive than it was at the beginning of
this century. The principal recipients then were China, India and Indonesia in Asia, with
Argentina, Brazil and Mexico in Latin America. The number of recipients now is much
larger and the sectoral distribution is also considerably different. In 1913, the primary
sector accounted for 55% of long-term foreign investment in the world, while transport,
trade and distribution accounted for another 30%; the manufacturing sector accounted for
only 10% and much of this was concentrated in North America or Europe (Dunning,
1983). In 2000, the primary sector accounted for less than 10% of the stock of foreign
direct investment in the world, while the manufacturing sector accounted for about 35%
and the services sector for the remaining 55%.3 The nature of the risk borne by foreign
investors was discernibly different in the two phases. In the early twentieth century, such
investment was only long term: two-thirds of it was portfolio while one-third of it was
direct. In the late twentieth century, much of such long-term investment was direct,
although portfolio investment rose sharply in the 1990s.
In the sphere of financial flows, the most striking difference is the size of international
financial markets in absolute if not relative terms. There are, however, important
differences in the destination, the object, the intermediaries and the instruments. In the
last quarter of the nineteenth century, capital flows were a means of transferring investible
resources to underdeveloped countries or newly industrialising countries with the most
attractive growth opportunities. A century later, these capital flows were destined mostly
for the industrialised countries which have high deficits and high interest rates to finance
public consumption and transfer payments rather than productive investment.4 During the
first phase of globalisation from 1870 to 1913, the object of financial flows was to find

1 In 1914, the total foreign investment of $44bn was distributed as follows: $14bn in Europe, $10.5bn in
the US, $8.5bn in Latin America, and $1 lbn in Asia and Africa. See UNCTAD, World Investment Report
1994, p. 158. For data on 2000, see UNCTAD, World Investment Report 2002, pp. 310-13. The percentages do
not add up to 100, as Central and Eastern Europe accounted for the remaining 2%.
2 UNCTAD, World Investment Report 2002, pp. 303-6. Once again, Central and Eastern Europe accounted
for the remaining 2%.
3 Cf. UNCTAD, World Investment Report, online database.
4 For a comparison of the destination of such financial flows, during the two phases, see Kregel (1994).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
148 D. Nayyar

avenues for long-term investment in search of profit. During the second phase
globalisation since the early 1970s, financial flows are constituted mostly by short
capital movements, sensitive to exchange rates and interest rates, in search of capital
The intermediaries, too, are different. In the late nineteenth century, banks were th
intermediaries between lenders and borrowers in the form of bonds with very
maturities. In the current phase, institutional investors such as pension funds and
funds are more important than banks; the latter continue to act as intermediaries bu
borrow short to lend long, thus resulting in a maturity mismatch. Consequent
financial instruments need to be far more sophisticated and diversified than earlier.
late nineteenth century, there were mostly long-term bonds with sovereign guaran
provided by the imperial powers or the government in borrowing countries. In the
twentieth century, there has been an enormous amount of financial innovation throu
introduction of derivatives (futures, swaps and options). These derivatives (which a
not entirely new to the world and are reported to have existed in the seventee
eighteenth centuries: options in the Amsterdam stock exchange and futures in the
rice market) are a means of managing the financial risks associated with intern
investment. This is essential now because, unlike the earlier phase of globalisation,
a maturity mismatch, and there is no effective securitisation provided by nation s
International financial markets have simply developed the instruments to meet the n
the times. It is paradoxical that such derivatives, which have been introduced to co
risk may, in fact, increase the risk associated with international financial flows by in
the volatility of short-term capital movements.
The fundamental difference between two phases of globalisation is in the sph
labour flows. In the late nineteenth century, there were no restrictions on the mobi
people across national boundaries. Passports were seldom needed. Immigrants w
granted citizenship with ease. Between 1870 and 1914, international labour migratio
enormous. During this period, about 50 million people left Europe, of whom two-th
went to the US while the remaining one-third went to Canada, Australia, New Zeala
South Africa, Argentina and Brazil (Lewis, 1977, p. 14). This mass emigration
Europe amounted to one-eighth its population in 1900. For some countries such as B
Italy, Spain and Portugal, such migration constituted 20-40% of their population (St
1994). But that was not all. Beginning somewhat earlier, following the abolition of
in the British Empire, about 50 million people left India and China to work as inden
labour on mines, plantations and construction in Latin America, the Caribbean, Sou
Africa, Southeast Asia and other distant lands (Tinker, 1974; Lewis, 1978). The
destinations were mostly British, Dutch, French and German colonies. In the second half
of the twentieth century, there was a limited amount of international labour migration from
the developing countries to the industrialised world during the period 1950-70. This was
largely attributable to the post-war labour shortages in Europe and the post-colonial ties
embedded in a common language (Nayyar, 1994). Since then, however, international
migration has been significantly reduced because of draconian immigration laws and
restrictive consular practices.1 The only significant evidence of labour mobility during the
last quarter of the twentieth century is the temporary migration of workers to Europe, the
Middle East and East Asia. But the advent of globalisation is conducive to new forms of
labour mobility (Nayyar, 2002). The present phase of globalisation has also found
substitutes for labour mobility in the form of the trade flows and investment flows. For one

For an analysis of, and evidence on, international migration in historical perspective, see Nayyar (2002).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 149

thing, industrialised countries now import manufactured goods that embody scarce
labour: the share of developing countries in world manufactured exports rose from 5.5% in
1970 to 26.9% in 2000, while the share of manufactured exports in total exports of
developing countries rose from 18.7 in 1970 to 64.6% in 2000.1 For another, industrialised
countries export capital which employs scarce labour abroad to provide such goods. In
1992, for example, total employment in transnational corporations was 73 million, of
which 44 million were employed in the home countries, while 17 million were employed in
affiliates in industrialised countries and 12 million were employed in affiliates in developing
countries; the share of developing countries in such employment rose from one-tenth in
1985 to one-sixth in 1992 (UNCTAD, 1994, p. 175).
The first phase of globalisation in the late nineteenth century was characterised by an
integration of markets through an exchange of goods that was facilitated by the movement
of capital and labour across national boundaries. The second phase of globalisation is
characterised by an integration of production with linkages that are wider and deeper,
except for the near absence of migration. It is reflected not only in the movement of goods,
services, capital, technology, information and ideas, but also in the organisation of
economic activities across national boundaries. This is associated with a more complex—
part horizontal and part vertical—division of labour between the industrialised countries
and a few developing countries in the world economy.

4. Uneven development: the past

The ideologues believe that globalisation led to rapid industrialisation and economic
convergence in the world economy during the late nineteenth century. In their view, the
promise of the emerging global capitalist system was wasted for more than half a century, to
begin with by three decades of conflict and autarchy that followed the First World War and
subsequently, for another three decades, by the socialist path and a statist world view. The
return of globalisation in the late twentieth century is thus seen as the road to salvation.
The conclusion drawn is that globalisation now, as much as then, promises economic
prosperity for countries that join the system and economic deprivation for countries that do
not (Sachs and Warner, 1995).
This perspective extends beyond the ideologues. Some economic historians juxtapose
the past with the present. An analysis of the past provides the foundations for prescriptions
about the present. The argument runs as follows. The integration of markets through an
exchange of goods led to commodity-price convergence in the world economy during the
first epoch of globalisation. This commodity-price convergence, in turn, led to a factor
price convergence.2 It is believed that, ultimately, this process was associated with
a convergence of growth and income among the participating countries. It is worth
exploring whether this convergence hypothesis is borne out by the experience of the world
economy during the late nineteenth century.

1 These percentages have been calculated from data in UNCTAD Handbook of International Trade and
Development Statistics and Handbook of Statistics, various issues.
2 See, for example, Williamson (1996, 2002). Orthodox trade theory provides the analytical foundations
for this argument. The factor-price equalisation theorem emerged as a corollary of the Heckscher-Ohlin
formulation of comparative advantage. Samuelson (1948) considered a situation in which there is free trade
but there is no factor-mobility. The Heckscher-Ohlin assumptions about production conditions ensure
a unique relationship between the factor-price ratio and the commodity-price ratio. In this world, free trade
equalises commodity prices. If complete specialisation is ruled out, commodity-price equalisation necessarily
leads to factor-price equalisation.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
150 D. Nayyar
Available evidence suggests that there was, indeed, a commodity-price conver
The price gaps between exporting and importing countries, which were substantial
diminished rapidly until 1914, mostly because of the transport revolution.1 The co
bution of trade liberalisation in this convergence process was limited. This converg
commodity prices extended beyond the Atlantic Economy to Latin America, the M
East and Asia. It is claimed that the commodity-price convergence improved the te
trade (prices of exportables relative to prices of importables) for all countries that w
of this process. However, the improvement in the terms of trade was significant f
abundant countries and modest for land-scarce countries. From the perspective
Third World, the distribution of gains was perhaps even more asymmetrical, becau
gains accrued in large part to countries such as Argentina and Uruguay, or to the l
trading firms from the metropolis rather than the producers in the colonies.
There was some factor-price convergence during the age of globalisation from 18
1914. But this process was confined to the Atlantic economies. Indeed, much of
convergence vanishes if we include Eastern Europe and evaporates altogether if we
the Third World.2
The logic of the argument is simple enough. Globalisation led to an increase in the
of workers in land-scarce countries, where wage rates were low, and an increase in t
of land in land-abundant countries, where wage rates were high. Available evidence
that, in the period from 1870 to 1914, land-scarce Europe experienced a surge
rental ratios, while land-abundant US and Australia witnessed a sharp drop in wage
ratios.3 But that is not all. There was, also, some convergence in real wages.4 Yet, it
recognised that the convergence hypothesis is overstated, for it was confined t
countries in Europe, such as Denmark, Ireland, Norway and Sweden. There was
terms of catch-up for Italy, while Spain and Portugal witnessed a widening gap in
What is more, the Heckscher-Ohlin-Samuelson parable is not quite validated by th
nineteenth century experience. Computable general equilibrium models show th
factor-price convergence, such as it was, cannot be attributed simply to commodit
convergence, even in the Atlantic economies. In fact, commodity-price convergenc
explain only about three-tenths of real wage convergence between the US and
during the period 1870-95, and about one-tenth of the real wage convergence betw
US and Sweden during the period 1870-1910 (Williamson, 1996, p. 287). An e
metric analysis of trends in the wage-rental ratio for seven Atlantic economies pro
confirmation. The commodity-price convergence could explain just about a quarter
wage-rental convergence between the Old and New Worlds separated by the Atlanti
(O'Rourke et al., 1996).

1 For example, the difference in wheat prices between Liverpool and Chicago came down from
1870 to just 18% in 1895 and 16% in 1912. Similarly, the price spread on Egyptian cotton,
Liverpool and Alexandria, plunged from more than 40% in the 1860s to 5% in the 1890s. The story
or less the same for the raw cotton price spread between Liverpool and Bombay or the jute pric
between London and Calcutta. There were similar reductions in price gaps between London and m
South America or Southeast Asia. See Williamson (2002).
2 This is accepted even by Williamson (2002), who is the principal exponent of the hypothesis abou
convergence during the late nineteenth century.
3 In Britain, Ireland, Denmark and Sweden, on an average, the wage-rental ratio rose by 50% b
1875-79 and 1890-94 and by 27% between 1890-94 and 1910-14. In contrast, between 1870-74 an
14, the wage-rental ratio fell by 69%, on average, in the US and Australia. See Williamson (2002
4 During the period 1870-1900, as a proportion of the real wage in Britain, real wages rose from
85% in Denmark, from 73% to 89% in Ireland, from 42% to 82% in Sweden, and from 42% t
Norway. Indeed, by 1913, wages in these countries almost caught up with wages in Britain and signi
narrowed the gap with the US. Williamson (1996, pp. 284-5).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 151

The obvious question is: what explains the observed factor-price convergence in the
Atlantic economies? The answer is to be found in migration, which is simply assumed away
in the factor-price equalisation theorem. Emigration from Europe had a profound impact
on the labour market in these countries, for it lowered unemployment and raised the real
wage. Immigration into the US, in effect, augmented the labour force to exercise
a profound influence on the labour market, for it dampened real wages and employment
opportunities.1 It has been estimated that, between 1870 and 1910, mass migration
explains seven-tenths of the real wage convergence between the Atlantic economies
(Williamson 1996, p. 295). It is clear that, in the absence of mass migration across the
Atlantic, real wages would have been much lower in the Old World and much higher in the
New World.

The story about growth, it turns out, does not quite conform to the fairy tale of
acceleration and convergence. The growth was uneven over time and across space. For one
thing, growth did not accelerate. The average growth rate of 1.4% per annum for the world
economy between 1890 and 1913 was somewhat faster than that achieved in the preceding
two decades but was not significantly different from that achieved in the subsequent three
decades. It is also worth noting that during the period 1867-69 to 1889-91, GNP per
capita in Europe increased by a mere 0.2% per annum, compared with 1.1% per annum
during the preceding 25 years and 1.5% per annum during the following 25 years (Bairoch,
1989, p. 246). For another, growth did not converge. Growth rates in the developing world
were significantly lower than growth rates in the developed world, so that there was
a widening of the gap. In developing countries, the growth in GNP per capita did increase
from —0.2% per annum during 1830-1870 to 0.1% per annum during 1870-90 and 0.6%
per annum during 1890-1913. In developed countries during the same periods, the
corresponding rates were 0.6%, 1% per annum and 1.7% per annum respectively.2
It is clear that there was no convergence of growth, let alone income, across countries in
the world economy during the age of globalisation from 1870 to 1914. This era was
characterised by uneven development. Industrialisation and growth was concentrated in
a very small group of countries. In 1860, Britain, the US, France and Germany accounted
for two-fifths of industrial production in the world. By 1913, their share was more than
two-thirds of a much larger total. Similarly, in 1913, as much as 60% of world trade was
among the industrialised countries. The same economies also absorbed a disproportion
ately large share of the international capital flows for they were at the core of the gold
standard (Bairoch and Kozul-Wright, 1996). There was, in fact, a small group of
industrialising economies which experienced rapid growth and income convergence to
catch up with Britain and France. Much of it was attributable to the inclusion of the US.
Indeed, most of the gains from international economic integration of this era accrued to
the imperial countries which exported capital and imported commodities. There were
a few countries like the US and Canada—new lands with temperate climates and white

' This was, perhaps, an important factor underlying the political economy of immigration restrictions in
the US. In fact, the era of open immigration in the US came to an abrupt end with the final passage of the
Literacy Test in February 1917. For a discussion on this issue, see Nayyar (2002).
2 See Bairoch (1993). The belief that trade liberalisation was conducive to growth during this era is not
borne out by the available evidence. In continental Europe, the story was the opposite, as intensified
protectionism was associated with faster economic growth. It is significant that, during the period 1889
1913, GNP growth in Britain, which remained faithful to free trade, at 0.9% per annum, was slower than that
in continental Europe at 1.5% per annum. Indeed, the US, which did not practise free trade, experienced the
most rapid economic growth during this era, so that, by 1913, it had overtaken Britain not only in industrial
production but also in per capita income. See Bairoch (1989) and Bairoch and Kozul-Wright (1996).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 152 D. Nayyar

settlers—which also derived some benefits. In these countries, the pre-conditio

industrialisation were already being created, and international economic integr
strengthened this process. Foreign direct investment in manufacturing activities stim
by rising tariff barriers, combined with technological and managerial flows, reinfor
process. The outcome was industrialisation and development. But this did not
everywhere. Development was uneven in the industrial world. Much of souther
eastern Europe lagged behind. This meant divergence rather than convergence in te
industrialisation and growth.1 At the same time, inequality rose in the resourc
labour-scarce industrialising countries of the New World.2
Clearly, it is not correct to characterise this era of globalisation during the late nin
century as one of rapid growth across countries and convergence between countrie
fact, it was associated with uneven economic development. The industrialised co
prospered. A small group of newly industrialising countries were able to reinforce
domestic efforts through links with the international economy. But, for countries
developing world, the same integration with the world economy led to de-industria
and underdevelopment. Consequently, this epoch witnessed a growing diverge
income per capita and average living standards between the centre and the per
(Williamson, 2002).
There was, in fact, an increase in economic inequalities between countries and within
countries. The income gap between the richest and the poorest countries, for instance,
which was just 3:1 in 1820, more than doubled to 7:1 in 1870 and increased further to 11:1
in 1913 (Maddison, 1995). Countries in Asia, Africa and Latin America, particularly the
colonised ones, which were also a part of this process of globalisation, were even less
fortunate. Indeed, during the same period of rapid international economic integration,
some of the most open economies in this phase of globalisation—India, China and
Indonesia—experienced de-industrialisation and underdevelopment. We need to remind
ourselves that, in the period from 1870 to 1914, these three countries practised free trade
as much as the UK and the Netherlands, where average tariff levels were close to negligible
(3-5%); in contrast, tariff levels in Germany, Japan and France were significantly higher
(12-14%); whereas tariff levels in the US were very much higher (33%).3 What is more,
these three countries were also among the largest recipients of foreign investment
(Maddison, 1989). But their globalisation did not lead to development. The outcome
was similar elsewhere: in Asia, Africa and Latin America. So much so that, between 1860
and 1913, the share of developing countries in world manufacturing output dropped
sharply from 36.6% to 7.5%: a share that was just about one-fifth its level at the beginning
of this era (Bairoch 1982). Export-oriented production in mines, plantations and cash
crop agriculture created enclaves in these economies which were integrated with the world
economy in a vertical division of labour. But there were almost no backward linkages.
Productivity levels outside the export enclaves stagnated at low levels. They simply created
dualistic economic structures where the benefits of globalisation accrued mostly to the
outside world and in small part to the local elites.

1 See Bairoch and Kozul-Wright (1996), who show how globalisation led to uneven development in the
world economy during the period 1870-1913, not simply between the colonisers and the colonised but also
within Europe.
2 Inequality remained unchanged in countries such as Britain, France, Germany and the Netherlands that
were leaders and already industrialised. Inequality fell only in a few resource-poor labour-abundant agrarian
economies in the Old World of Europe such as Ireland, Italy, Portugal, Spain and Sweden. For a detailed
discussion, see Williamson (1997).
3 For evidence on tariffs during this era, see Maddison (1989) and Bairoch (1982).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 153
The growing inequalities between and within countries, particularly in the industrial
world, were perhaps a significant factor underlying the retreat from globalisation after
1914. The following passage, written by John Maynard Keynes at the time, vividly
highlights the benefits of globalisation for some people and some countries, those included,
but also recognises how economic and political conflicts associated with the process
stopped what had seemed irreversible at the time.
What an extraordinary episode in the economic progress of man that age was which came to an
end in August 1914. The greater part of the population, it is true, worked hard and lived at a low
standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape
was possible, for any man of capacity or character at all exceeding the average, into the middle
and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences,
comforts, and amenities beyond the compass of the richest and most powerful monarchs of other
ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the
various products of the whole earth, in such quantity as he may see fit and reasonably expect their
early delivery upon his doorstep; he could at the same moment and by the same means adventure
his wealth in the natural resources and new enterprises of any quarter of the world, and share,
without exertion or trouble, in their prospective fruits and advantages; or he could decide to
couple the security of his fortunes with the good faith of the townspeople of any substantial
municipality in any continent that fancy or information might recommend. He could secure
forthwith, if he wished it, cheap and comfortable means of transit to any country or climate
without any passport or other formality, could dispatch his servants to the neighbouring office of
a bank for such supply of the precious metals as might seem convenient, and could then proceed
to foreign quarters, without knowledge of their religion, language or customs, bearing coined
wealth upon his person, and could consider himself greatly aggrieved and much surprised at least
interference. But most important of all, he regarded this state of affairs as normal, certain, and
permanent, except in the direction of further improvement, and any deviation from it as aberrant,
scandalous and avoidable. The projects and politics of militarism and imperialism, of racial and
cultural rivalries, of monopolies, restrictions and exclusions, which were to play the serpent to
this paradise, were little more than amusement of his daily newspaper, and appeared to exercise
almost no influence at all on the ordinary course of social and economic life, the internation
alisation of which was nearly complete in practice. (Keynes, 1919, pp. 9-10).

5. Development and exclusion: the present

The process of globalisation, which gathered momentum during the last quarter of the
twentieth century, has brought about profound changes in the international context. It
could have far-reaching implications for development. The reality that has unfolded so far,
however, belies the expectations of the ideologues. The development experience of the
world economy from the early 1970s to the late 1990s, which could be termed the age of
globalisation, provides cause for concern, particularly when it is compared with the period
from the late 1940s to the early 1970s, which has been described as the golden age of
capitalism. Any such periodisation is obviously arbitrary, but it serves an analytical purpose.1
Growth did not accelerate. It slowed down. During the 1960s, the average rate of growth
of world GDP per capita was 3.5% per annum. Deceleration set in thereafter. The average

1 The quarter century that followed the Second World War was a period of unprecedented prosperity for
the world economy. It has, therefore, been described as the golden age of capitalism. See, for example, Marglin
and Schor (1990) as also Maddison (1982). The age of globalisation, however, is not a phrase that has been
used in the literature to describe the world economy during the last quarter of the twentieth century. It was
suggested in an earlier paper by the author (Nayyar, 2003), as this periodisation facilitates comparison. The
discussion that follows, in part, draws upon the argument developed in that paper. For an analysis of the
implications of globalisation for development during the last quarter of the twentieth century, see also Nayyar
(2001).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 154 D. Nayyar

rate of growth of world GDP per capita was 2.1% per annum during the 1970s,
annum during the 1980s and 1% per annum during the 1990s.1 This growth
volatile compared with the past, particularly in the developing world.2 The grow
unevenly distributed across countries. Between 1985 and 2000, the growth
capita was negative in 23 developing countries, 0.2% per annum in 14 dev
countries, 1.2% per annum in 20 developing countries, 2.2% per annum in 12 de
countries, and more than 5% per annum in just 16 developing countries. Over t
period, growth in GDP per capita was negative in 17 transition countries an
annum in 22 industrialised countries.3
Available evidence suggests a divergence, rather than convergence, in levels o
between countries and between people. Economic inequalities have increased
twentieth century as the income gap between rich and poor countries, between t
the poor in the world's population, as also between rich and poor people within
has widened. The ratio of GDP per capita in the richest country to GDP per cap
poorest country of the world rose from 35:1 in 1950 to 42:1 in 1970 and 62
The ratio of GDP per capita in the 20 richest countries to GDP per capita in the
countries of the world rose from 54:1 during 1960-62 to 121:1 during 2000-
income gap between people has also widened over time. The ratio of the average
capita in the richest quintile of the world's population to the poorest quintile in
population rose from 31:1 in 1965 to 60:1 in 1990 and 74:1 in 1997.6
Income distribution within countries also worsened. This is borne out by
trends in the distribution of income, during the period from the 1960s to the
73 countries comprising developed, developing and transitional economies. It sh
income inequality increased in 48 countries, which account for 59% of the
and 78% of the PPP-GDP in the sample of 73 countries. Income inequality remai
same in 16 countries which account for 36% of the population and 13% of the P
in the sample of 73 countries. Income inequality decreased in only nine countri
account for 5% of the population and 9% of the PPP-GDP in the sample of 73 co
(Cornia and Kiiski, 2001). The increase in income inequality was striking
industrialised countries. Between 1975 and 2000, the share of the richest 1
income rose from 8% to 17% in the US, from 8.8% to 13.3% in Canada and
to 13% in the UK (Atkinson, 2003).
The incidence of poverty increased in most countries of Latin America, the C
and Sub-Saharan Africa during the 1980s and the 1990s. Much of Eastern E

1 These figures are calculated from data on annual growth in world GDP per capita, drawn
Bank, World Development Indicators 2003, as the arithmetic mean of annual growth rates for e
2 For evidence on the volatility of growth in the world economy during the period 197 5-200
Bank, World Development Indicators 2003. For evidence on the volatility of growth in developin
during the period 1980-2000, as compared with the period 1960-80, see UNCTAD, Trade and
Report 2003, p. 59.
These growth rates are calculated from the basic data compiled by the World Bank, World D
Indicators 2003, for 124 countries (which accounted for 92% of the estimated world population
which consistent information is available over time. The growth rates for transition economies
period 1991-2001.
4 Calculated from Maddison (1995, Appendix D, pp. 194-206), which provides data on levels
capita.
5 Between 1960-62 and 2000-2002, in constant 1995 US dollars, GDP per capita in the 20 richest
countries rose from 11,417 to 32,339, while GDP per capita in the poorest 20 countries barely increased from
212 to 267 (World Bank, World Development Indicators 2003).
6 For 1965 and 1990, these ratios are obtained from UNCTAD, Trade and Development Report 1997, p. 81.
For 1997, the ratio is obtained from UNDP, Human Development Report 1999, p. 3.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 155
Central Asia experienced a sharp rise in poverty during the 1990s. However, East Asia,
Southeast Asia and South Asia experienced a steady decline in the incidence of poverty
during this period. But most of this improvement is accounted for by changes in just two
countries, with large populations, China and India.1
The employment situation during the last quarter of twentieth century provides a sharp
contrast with the preceding quarter century, during which full employment was almost the
norm in industrialised countries. Unemployment in the industrialised countries has
increased substantially since the early 1970s and remained at high levels since then. During
the 1980s and 1990s, the unemployment rate has been in the range of 10% in the European
Union and about 7% in the OECD countries. The US is the exception, where the
unemployment rate has been around 5%. In contrast, Japan has witnessed a sharp increase
in the unemployment rate from near-zero to more than 5%.2 In the developing countries,
employment creation in the organised sector continues to lag behind the growth in the
labour force, so that an increasing proportion of workers are dependent upon low
productivity and casual employment in the informal sector. Inequality in terms of wages
and incomes has registered an increase almost everywhere in the world. This has been
associated with an increasing casualisation of the workforce, for employment opportunities
in the organised sector have stagnated so that labour absorption is possible largely in the
informal sector of economies. The share of non-agricultural self-employment as a pro
portion of total non-agricultural employment, for the world economy as a whole, rose from
26% during the 1980s to 32% during the 1990s. These proportions were the same at 26%
and 32% respectively for Asia, but rose from 29% to 44% in Latin America and from 44%
to 48% in Africa. (ILO, 2002, p. 22)
It would seem that, in some important respects, the world economy fared better in the
golden age than it has in the age of globalisation. It is obviously not possible to attribute
cause and effect simply to the coincidence in time. But it is possible to think of mechanisms
through which globalisation may have accentuated inequalities. Trade liberalisation has led
to a growing wage inequality between skilled and unskilled workers, not only in
industrialised countries but also in developing countries.3 As a consequence of privatisa
tion and deregulation, capital has gained at the expense of labour, almost everywhere, for
profit shares have risen while wage shares have fallen.4 Structural reforms, which have cut
tax rates and brought flexibility to labour markets, have reinforced this trend. The mobility
of capital combined with the immobility of labour has changed the nature of the
employment relationship and has reduced the bargaining power of trade unions. The
object of managing inflation has been transformed into a near-obsession by the sensitivity
of international financial markets, so that governments have been forced to adopt
deflationary macroeconomic policies which have squeezed both growth and employment.
The excess supply of labour has repressed real wages. Financial liberalisation, which has
meant a rapid expansion of public as well as private debt, has been associated with the

1 For supporting evidence, see World Bank, World Development Report and Global Economic Prospects,
several issues.
2 Cf., OECD, Economic Outlook and Employment Outlook, Paris, 1998.
3 For evidence in support of this proposition, see UNCTAD (1997). In addition, see Wood (1994) and
Wood (1997). Stewart (2003) also suggests that trade liberalisation (associated with globalisation) provides
an explanation for rising inequality, and cites supporting evidence.
4 Some evidence on the increase in profit shares in industrialised countries and the decrease in wage shares
in developing countries is reported in UNCTAD (1997). Stewart (2003) develops a similar argument that
globalisation may have led to an increase in inequality through an increase in returns to capital as compared
with labour.

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
156 D. Nayyar

emergence of a new rentier class. And the inevitable concentration in the ownershi
financial assets has probably contributed to a worsening of income distribution.1 G
competition has driven large international firms to consolidate market power t
mergers and acquisitions which has made market structures more oligopolistic
competitive. The competition for export markets and foreign investment, betw
countries, has intensified, in what is termed 'a race to the bottom', leading to an un
distribution of gains from trade and investment.
It must also be recognised that the spread of globalisation is uneven. The exclusion
people and of countries, from the process, is a fact of life. Consider some evidence, fo
on international trade, international investment and international finance, which con
the cutting edge of globalisation.2 Industrialised countries accounted for 64% of
exports, while developing countries accounted for 32% and transitional economies f
remaining 4%. Industrialised countries accounted for 82% of foreign direct investm
inflows in the world economy, whereas developing countries accounted for 16
transitional economies for the remaining 2%. Industrialised countries accounted for
cross-border mergers and acquisitions in terms of purchases, whereas developing co
accounted for just 4% and transitional economies accounted for a mere 1%.
This sharp divide between rich and poor countries is no surprise but the spr
globalisation is just as uneven within the developing world. There are no more than a
developing countries which are an integral part of the process of globalisation: Arg
Brazil and Mexico in Latin America; China, Hong Kong, India, Indonesia, Kor
Malaysia, Singapore, Taiwan and Thailand in Asia. During the 1990s, these cou
accounted for 70% of total exports from the developing world and 75% of manufac
exports from the developing world, absorbed almost 72% of foreign direct investm
flows to the developing world and received about 90% of foreign portfolio investmen
to the developing world.3 Countries in Sub-Saharan Africa and West Asia are simply
the picture, apart from many countries in Latin America, South Asia and the Asia P
which are left out altogether. The exclusion of the least developed countries, everywh
the world, is almost complete.
The exclusion of poor countries and poor people extends beyond trade, investment
finance, in so far as their access to globalisation, in terms of communication and techn
is exceedingly limited. Indeed, the excluded are barely connected with the globalised w
For example, in 2000, the distribution of access to the Internet was most unequal: o
Internet users in the world, 75.8% were in the industrialised countries, 18.4% were in
just 4.6% in Latin America and the Caribbean, and a mere 1.2% in Africa.4 Similarly
1999, the access to telecommunications systems was most unequal: there were 1
telephone lines per 100 inhabitants in the OECD countries compared with 25 tel
lines per 100 inhabitants in the rest of the world. The difference was much greater i

1 This argument is developed in UNCTAD (1997).

2 For evidence on the share of country-groups in world exports, see UNCTAD, Trade and Devel
Report 2003. For evidence on the share of country-groups in foreign direct investment inflows, as a
border mergers and acquisitions, see UNCTAD, World Investment Report 2002.
3 The share of these 12 countries in total exports and manufactured exports from developing coun
calculated from data in UNCTAD Handbook of Statistics 2002. Their share in foreign direct inve
inflows to the developing world is calculated from data in UNCTAD World Investment Report 20
evidence on the share of these 12 countries in portfolio investment flows to the developing world relates t
period 1992-97 and is drawn from UNCTAD, World Investment Report 1998, p. 15.
4 The ITU reports that, in 2000, the number of Internet users in the world was distributed as follo
million in North America, 110.8 million in Europe, 38 million in Japan, 8.2 million in Austra
Zealand, 71.3 million in Asia, 17.7 million in Latin America and the Caribbean and 4.6 million in A

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 157
modes. In the OECD countries, for 100 people, the number of personal computers was in
the range 25-30, while the number of mobile phones was in the range 20-40. In the rest of
the world, the number of personal computers and mobile phones, for 100 people, was less
than 5.1 These are averages for the non-OECD world. Obviously, such access was probably
far less in most developing countries and minimal in the least developed countries.
The story of globalisation in the late twentieth century, it turns out, does not quite
conform to the fairy tale of growth and convergence. There is, of course, a commodity
price convergence, driven by the revolution in transport and communication and the
progressive dismantling of barriers of trade associated with a sharp reduction in tariffs.
There is no evidence of factor-price convergence. This is not surprising, because the
migration of people across national boundaries has been limited in this era. Globalisation is
conducive to some forms of labour mobility, particularly professionals and guest workers,
but these may have accentuated wage inequalities across countries or left them unchanged.
The outcome is a globalisation of prices without a globalisation of incomes.
It would seem that this era of globalisation, as much as the earlier era, is characterised by
uneven development. For a few, rich countries and rich people, it has led to prosperity. For
the many, poor countries and poor people, it has led to marginalisation if not exclusion.
The benefits have accrued essentially to the industrialised world and a small number of
developing countries. For many developing countries, and their people, the process of
integration with the world economy has not yielded benefits in terms of economic growth
or poverty reduction either because they did not create the necessary pre-conditions or
because the process of integration was too rapid. The least developed countries, as also
their people, have simply been marginalised and almost excluded from the process.
Globalisation has, indeed, created opportunities for some people and some countries
that were not even dreamed of three decades ago. But it has also introduced new risks, if
not threats, for many others. It has been associated with a deepening of poverty and an
accentuation of inequalities. The distribution of benefits and costs is unequal. There are
some winners: more in the industrialised world than in the developing world. There are
many losers: numerous both in the industrialised world and in the developing world. It is,
perhaps, necessary to identify, in broad categories, the winners and the losers.2
If we think of people, asset-owners, profit-earners, rentiers, the educated, the mobile
and those with professional, managerial or technical skills are the winners, whereas asset
less, wage-earners, debtors, the uneducated, the immobile and the semi-skilled or the
unskilled are the losers. If we think of firms, large, international, global, risk-takers and
technology-leaders are the winners, whereas small, domestic, local, risk-averse and
technology-followers are the losers. If we think of economies, capital-exporters, technol
ogy-exporters, net lenders, those with a strong physical and human infrastructure, and
those endowed with structural flexibilities are the winners, whereas capital-importers,
technology-importers, net borrowers, those with a weak physical and human infrastruc
ture, and those characterised by structural rigidities are the losers. It needs to be said that
this classification is suggestive rather than definitive, for it paints a broad-brush picture of
a more nuanced situation. But it does convey the simultaneous, yet asymmetrical, inclusion
and exclusion that characterises the process of globalisation. It is not surprising, then, that
the spread of globalisation is uneven and limited both among people and across countries.

1 See Observatoire de la France and UNITAR, Economie and Financial Globalization: What the Numbers
Say, New York and Geneva, 2003, p. 23
3 The paragraphs that follow draw upon earlier work by the author. For a more detailed discussion, see
Nayyar (2003).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
158 D. Nayyar

Globalisation has introduced a new dimension to the exclusion of people from dev
ment. Exclusion is no longer simply about the inability to satisfy basic human needs in te
food, clothing, shelter, health care and education for large numbers of people. It is much
complicated. For the consumption patterns and lifestyles of the rich associated
globalisation have powerful demonstration effects. People everywhere, even the poo
the excluded, are exposed to these consumption possibility frontiers because the ele
media has spread the consumerist message far and wide. This creates both expectati
aspirations. But the simple fact of life is that those who do not have the incomes cann
goods and services in the market. Thus, when the paradise of consumerism is unatt
which is the case for common people, it only creates frustration or alienation. The reac
people who experience such exclusion differs. Some seek short cuts to the consu
paradise through drugs, crime or violence. Some seek refuge in ethnic identities, cu
chauvinism or religious fundamentalism. Such assertion of traditional or indigenous v
often the only thing that poor people can assert, for it brings an identity and meaning t
lives. Outcomes do not always take these extreme forms. But globalisation inevitably t
erode social stability.1 Thus, economic integration with the world outside may accen
social tensions or provoke social fragmentation within countries.

Bibliography
Atkinson, A. B. 2003. 'Income Inequality in OECD Countries: Notes and Explanations',
mimeo, Oxford
Bairoch, P. 1982. International industrialization levels from 1750 to 1980, Journal of European
Economic History, vol. 11, 269-310
Bairoch, P. 1989. The paradoxes of economic history, European Economic Review, vol. 33, 225^19
Bairoch, P. 1993. Economics and World History: Myths and Paradoxes, Chicago, University of
Chicago Press
Bairoch, P. and Kozul-Wright, R. 1996. 'Globalization Myths: Some Historical Reflections on
Integration, Industrialization and Growth in the World Economy', Discussion Paper 13,
Geneva, UNCTAD
Bloomfield, A. 1968. Patterns of Fluctuations in International Investment Before 1914, Princeton
Studies in International Finance, 21, Princeton, Princeton University Press
Chandler, A. 1990. Economies of Scale and Scope, Cambridge, Harvard University Press
Chang, H. J. 2002. Kicking Away the Ladder: Development Strategy in Historical Perspective,
London, Anthem Press
Cornia, G. A. and Kiiski, S. 2001. 'Trends in Income Distribution in the Post World War II
Period: Evidence and Interpretation', WIDER Discussion Paper No: 89, Helsinki, UNU—
WIDER
Dunning, J. H. 1983. Changes in the level and structure of international pro
pp. 84-139 in Casson, M. (ed.), The Growth of International Business, London, Allen
Foreman-Peck, J. 1983. A History of the World Economy: International Economic Relat
1850, Brighton, Wheatsheaf Books
Fukuyama, F. 1989. The end of history, The National Interest, vol. 16, 3-18
Glyn, A. et al 1990. The rise and fall of the golden age, pp. 39-125 in Marglin, S. and
(eds), The Golden Age of Capitalism, Oxford, Clarendon Press
Hobsbawm, E. 1987. The Age of Empire, London, Weidenfeld & Nicolson
Hymer, S. 1972. The multinational corporation and the law of uneven development,
in Bhagwati, J. (ed.), Economics and World Order from the 1970s to the 1990s, London, M
ILO 2002. Women and Men in the Informal Economy, Geneva, International Labour O

1 The argument about reactions in the form of chauvinism or fundamentalism is set out by
(1996). The hypothesis that there are actual or potential sources of tension between global market
stability is developed, at some length, by Rodrik (1997).

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms
 Globalisation, history and development 159

Kenwood, A. G. and Lougheed, A. L. 1994. The Growth of the International Economy: 1829-1990,
London, Routledge
Keynes, J. M. 1919. The Economic Consequences of the Peace, London, Macmillan
Kregel, J. 1994. Capital flows: globalisation of production and financing development, UNCTAD
Review, 23-38
Lewis, W. A. 1977. Growth and Fluctuations: 1870-1913, London, Allen & Unwin
Lewis, W. A. 1978. Evolution of the International Economic Order, Princeton, N.J., Princeton
University Press
Maddison, A. 1982. Phases of Capitalist Development, Oxford, Oxford University Press
Maddison, A. 1989. The World Economy in the Twentieth Century, Paris, OECD
Maddison, A. 1995. Monitoring the World Economy: 1820-1992, Paris, OECD
Maizels, A. 1963. Industrial Growth and World Trade, Cambridge, Cambridge University Press
Marglin, S. and Schor, J. (eds) 1990. The Golden Age of Capitalism, Oxford, Clarendon Press
Michie, J. and Kitson, M. 1995. Trade and growth: an historical perspective, in Mitchie, J. and
Smith, J. G. (eds), Managing the Global Economy, Oxford, Oxford University Press
Morgenstern, O. 1959. International Financial Transaction and Business Cycles, Princeton, N.J.,
Princeton University Press
Nayyar, D. 1994. Migration, Remittances and Capital Flows, Delhi, Oxford University Press
Nayyar, D. 1995. Globalization: the past in our present, presidential address to the Indian
Economic Association, reprinted in Indian Economic Journal, vol. 43, 1-18
Nayyar, D. 2001. Globalization: What does it mean for development? pp. 1-25 in Jomo, K. S.
and Nagaraj, S. (eds), Globalization versus Development, London, Palgrave
Nayyar, D. 2002. Cross-border movements of people, pp. 144-73 in Nayyar, D. (ed.), Governing
Globalization: Issues and Institutions, Oxford, Oxford University Press
Nayyar, D. 2003. Globalization and development strategies, in Toye, J. (ed.), Trade and
Development: Directions for the 21st Century, Cheltenham, Edward Elgar
O'Rourke, K. H., Taylor, A. M. and Williamson, J. G. 1996. Factor-price convergence in the late
nineteenth century, International Economic Review, vol. 37, 499-530
Oman, C. 1994. Globalization and Régionalisation, Paris, OECD
Panic, M. 1992. European Monetary Union: Lessons from the Classical Gold Standard, London,
Macmillan
Rodrik, D. 1997. Has Globalization Gone Too Far?, Washington, D.C., Institute for Internati
Economics
Sachs, J. and Warner, A. 1995. Economic reform and the process of global integration. Brookings
Papers on Economic Activity, no. 1, 1-118
Samuelson, P. A. 1948. International trade and the equalisation of factor prices, Economic
Journal, vol. 58, 163-84
Stalker, P. 1994. The Work of Strangers: A Survey of International Labour Migration, Geneva,
International Labour Office
Stewart, F. 2003. Income distribution and development, in Toye, J. (ed.), Trade and Development:
Directions for the 21st Century, Cheltenham, Edward Elgar
Streeten, P. 1996. Governance of the global economy, Paper presented to a Conference on
Globalization and Citizenship, 9-11 December, Geneva, UNRISD
Tinker, H. 1974. A New System of Slavery: The Export of Indian Labour Overseas, 1830-1920,
Oxford, Oxford University Press
UNCTAD 1994. World Investment Report 1994, Geneva, United Nations
UNCTAD 1997. Trade and Development Report 1997, Geneva, United Nations
UNCTAD 2002. World Investment Report 2002, Geneva, United Nations
Williamson, J. G. 1996. Globalization, convergence and history, Journal of Economic History, vol.
56, 277-306
Williamson, J. G. 1997. Globalization and inequality, past and present, The World Bank Research
Observer, vol. 12, 117-35
Williamson, J. G. 2002. Land, labor, and globalization in the Third World, 1870-1940, Journal of
Economic History, vol. 62, 55-85
Wood, A. 1994. North-South Trade, Employment and Inequality, Oxford, Clarendon Press
Wood, A. 1997. Openness and wage inequality in developing countries, The Latin American
challenge to East Asian conventional wisdom, World Bank Economic Review, vol. 11, no. 1,33-57

This content downloaded from

203.123.34.114 on Thu, 07 Nov 2024 08:27:22 UTC
All use subject to https://about.jstor.org/terms