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GLOBALIZATION MYTHS: SOME HISTORICAL REFLECTIONS ON INTEGRATION, INDUSTRIALIZATION AND GROWTH IN THE WORLD ECONOMY

Paul Bairoch and Richard Kozul-Wright

No. 113 March 1996

This paper was prepared for the WIDER Conference on Transnational Corporations and the Global Economy, Kings College, Cambridge (UK), September 1995. The authors would like to acknowledge the comments of Mica Panic,Paul Rayment, Rugerio Studart, Bob Rowthorn and Ha-Joon Chang on earlier drafts of this paper.

UNCTAD/OSG/DP/113

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The opinions expressed in this paper are those of the authors and do not necessarily reflect the views of UNCTAD. The designations and terminology employed are also those of the authors. UNCTAD Discussion Papers are read anonymously by at least one referee, whose commentsare taken into account before publication. Comments on this paper are invited and should be addressed to the authors, c/o Editorial Assistant, Editorial Board, Office E-9013, United Nations Conference on Trade and Development (UNCTAD), Palais des Nations, 1211 Geneva 10, Switzerland. Copies of the UNCTAD Review, Discussion Papers and Reprint Series may also be obtained from this address (Tel. No.022-907.5733, Fax No. 022-907.0043).

JEL classification: N100 and O190.

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CONTENTS Chapter Page

INTRODUCTION

1

I.

GLOBALIZATION

2

II.

TRENDS IN INTERNATIONAL PRODUCTION AND FINANCE BEFORE 1914

5

III.

INDUSTRIALIZATION AND THE NEW INTERNATIONAL DIVISION OF LABOUR

14

IV.

GROWTH AND CONVERGENCE IN THE WORLD ECONOMY BEFORE 1913

18

V.CONCLUSION

25

REFERENCES

27

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GLOBALIZATION MYTHS: SOME HISTORICAL REFLECTIONS ON INTEGRATION, INDUSTRIALIZATION AND GROWTH IN THE WORLD ECONOMY
Paul Bairoch and Richard Kozul-Wright*

It has become popular to draw a parallel between current globalization trends and the half century of international economic integration before the First World War. Indeed, some writers suggestthat current trends mark a return to this earlier period, from which they draw strong conclusions about growth prospects and convergence associated with globalization. This paper assesses this historical parallel. It accepts that many features of today's international economy are not unique. However, it is sceptical of efforts to make a direct parallel with the earlier period. In particular, thepaper shows that the period before 1913 was not one of trade liberalization, nor one of reduced expectations about the role of the State, and suggests that rapid industrial growth in some economies cannot be explained by globalization pressures. More generally, a description of this earlier period of globalization as one of rapid growth and convergence is questioned, and instead associated with uneveneconomic development, during which a very small group of countries were able to reinforce their domestic growth efforts through links to the international economy, while for others these same links did little to alter long-term growth prospects, and in some cases even hindered them.

INTRODUCTION

The "short twentieth century" has ended unexpectedly (Hobsbawm, 1994a). The economic shocks ofthe late 1960s and early 1970s not only brought to an abrupt halt three decades of unprecedented economic growth and stability, they also weakened many of the institutional structures which had come to define the century's evolution. The subsequent emergence of a neoliberal agenda in the leading industrial countries, reinforced by the fall of communism, made the removal of these same structures acondition of economic recovery and simultaneously identified a series of powerful economic forces pushing towards a new international economic order where national boundaries, State structures and domestic economic policies are of ever diminishing importance. Open markets, transnational

corporations and new information technologies have, on this account, become the new forces for economic...