In 2005, then-U.K. Prime Minister Tony Blair encapsulated part of this complacent view: “I hear people say we have to stop and debate globalization. You might as well debate whether autumn should follow summer.”
The Western world’s experience in the more recent past suggests that Blair was wrong. Slower growth, a financial crisis, and, in some cases, rising income inequality have triggered a globalization backlash. The U.S. no longer seems willing to sponsor 21st century versions of the post-World War II institutions that helped set the international rules of the game. Instead, the White House places more emphasis on “America First” than on internationally agreed norms. Congress, meanwhile, hopes to contain, rather than engage with, China. One result has been the onset of a trade war that’s now gone far beyond a bilateral China-U.S. spat.
To prepare for the future, it pays to study the past. In this case, we can look to the 19th century, a period shaped by a mix of colonial ambition, the hunt for natural resources, industrial concentration (in a limited number of Northern European countries whose empires had absorbed much of the world by 1900), and a transportation revolution in rail and shipping, underpinned by coal and steam.
In contrast to the late 20th century, 19th century globalization was mostly associated with income divergence between countries and regions. Annual increases in gross domestic product per capita in the West were typically above 1%. Japan made strong gains following the late-1860s Meiji Restoration. Elsewhere, progress was limited or nonexistent.
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February - March 2020