Globalisation is a historical process that began with the first movement of people

out of Africa into other parts of the world. Travelling short or long distances,
migrants, merchants and others have delivered their ideas, customs and products to
new lands. The melding, borrowing and adaptation of outside influences are found
in many areas of human life.
What is Globalization?

The Peterson Institute for International Economics offers a reminder about an

age-old process: “Globalisation encourages each country to specialise in what it
produces best using the least amount of resources’’. Globalisation refers to the
process of integration of countries with the world economy. The term
'globalisation' was introduced by a German–American economist named Theodore
Levitt. It enables the coming together of individuals, corporations and resources
from different countries. The unique characteristics of globalisation have allowed
people with diverse backgrounds to interact freely. It is the vehicle that has helped
global trade scale new heights in the last few decades.
Silk roads (1st century BC-5th century AD, and 13th-14th
centuries AD)
People have been trading goods for almost as long as they’ve been around. But as of the 1st
century BC, a remarkable phenomenon occurred. For the first time in history, luxury products
from China started to appear on the other edge of the Eurasian continent – in Rome. They got
there after being hauled for thousands of miles along the Silk Road. Trade had stopped being a
local or regional affair and started to become global.
That is not to say globalisation had started in earnest. Silk was mostly a luxury good, and so were
the spices that were added to the intercontinental trade between Asia and Europe. As a
percentage of the total economy, the value of these exports was tiny, and many middlemen were
involved to get the goods to their destination. But global trade links were established, and for
those involved, it was a goldmine. From purchase price to final sales price, the multiple went in
the dozens.The Silk Road could prosper in part because two great empires dominated much of
the route. If trade was interrupted, it was most often because of blockades by local enemies of
Rome or China. If the Silk Road eventually closed, as it did after several centuries, the fall of the
empires had everything to do with it. And when it reopened in Marco Polo’s late medieval time,
it was because of the rise of a new hegemonic empire: the Mongols. It is a pattern we’ll see
throughout the history of trade: it thrives when nations protect it, it falls when they don’t.
Spice routes (7th-15th centuries)
The next chapter in trade happened thanks to Islamic merchants. As the new religion spread in
all directions from its Arabian heartland in the 7th century, so did trade. The founder of Islam,
the prophet Mohammed, was famously a merchant, as was his wife Khadija. Trade was thus in
the DNA of the new religion and its followers, and that showed. By the early 9th century,
Muslim traders already dominated Mediterranean and Indian Ocean trade; afterwards, they could
be found as far east as Indonesia, which over time became a Muslim-majority country, and as far
west as Moorish Spain.
The main focus of Islamic trade in those Middle Ages were spices. Unlike silk, spices were
traded mainly by sea since ancient times. But by the medieval era they had become the true focus
of international trade. Chief among them were the cloves, nutmeg and mace from the fabled
Spice islands – the Maluku islands in Indonesia. They were extremely expensive and in high
demand, also in Europe. But as with silk, they remained a luxury product, and trade remained
relatively low volume. Globalisation still didn’t take off, but the original Belt (sea route) and
Road (Silk Road) of trade between East and West did now exist.
Age of Discovery (15th-18th centuries)
Truly global trade kicked off in the Age of Discovery. It was in this era, from the end of the 15th
century onwards, that European explorers connected East and West – and accidentally discovered
the Americas. Aided by the discoveries of the so-called “Scientific Revolution” in the fields of
astronomy, mechanics, physics and shipping, the Portuguese, Spanish and later the Dutch and the
English first “discovered”, then subjugated, and finally integrated new lands in their economies.
The Age of Discovery rocked the world. The most (in)famous “discovery” is that of America by
Columbus, which all but ended pre-Columbian civilizations. But the most consequential
exploration was the circumnavigation by Magellan: it opened the door to the Spice islands,
cutting out Arab and Italian middlemen. While trade once again remained small compared to
total GDP, it certainly altered people’s lives. Potatoes, tomatoes, coffee and chocolate were
introduced in Europe, and the price of spices fell steeply.
Yet economists today still don’t truly regard this era as one of true globalisation. Trade certainly
started to become global, and it had even been the main reason for starting the Age of Discovery.
But the resulting global economy was still very much siloed and lopsided. The European empires
set up global supply chains, but mostly with those colonies they owned. Moreover, their colonial
model was chiefly one of exploitation, including the shameful legacy of the slave trade. The
empires thus created both a mercantilist and a colonial economy, but not a truly globalised one.

The Industrial Revolution in Britain propelled the first wave of globalisation

First wave of globalisation (19th century-1914)

This started to change with the first wave of globalisation, which roughly occurred over the
century ending in 1914. By the end of the 18th century, Great Britain had started to dominate the
world both geographically, through the establishment of the British Empire, and technologically,
with innovations like the steam engine, the industrial weaving machine and more. It was the era
of the First Industrial Revolution.
steamships and trains could transport goods over thousands of miles, both within countries and
across countries. On the other hand, its industrialization allowed Britain to make products that
were in demand all over the world, like iron, textiles and manufactured goods. “With its
advanced industrial technologies,” the BBC recently wrote, looking back to the era, “Britain was
able to attack a huge and rapidly expanding international market.”

The world wars

It was a situation that was bound to end in a major crisis, and it did. In 1914, the outbreak of
World War I brought an end to just about everything the burgeoning high society of the West had
gotten so used to, including globalisation. The ravage was complete. Millions of soldiers died in
battle, millions of civilians died as collateral damage, war replaced trade, destruction replaced
construction, and countries closed their borders yet again.

Second and third wave of globalisation

The story of globalisation, however, was not over. The end of World War II marked a new
beginning for the global economy. Under the leadership of a new hegemon, the United States of
America, and aided by the technologies of the Second Industrial Revolution, like the car and the
plane, global trade started to rise once again. At first, this happened in two separate tracks, as the
Iron Curtain divided the world into two spheres of influence. But as of 1989, when the Iron
Curtain fell, globalisation became a truly global phenomenon.
In the early decades after World War II, institutions like the European Union, and other free trade
vehicles championed by the US were responsible for much of the increase in international trade.
In the Soviet Union, there was a similar increase in trade, albeit through centralised planning
rather than the free market. The effect was profound. Worldwide, trade once again rose to 1914
levels: in 1989, export once again counted for 14% of global GDP. It was paired with a steep rise
in middle-class incomes in the West.

Globalisation 4.0
That brings us to today, when a new wave of globalisation is once again upon us. In a world
increasingly dominated by two global powers, the US and China, the new frontier of
globalisation is the cyber world. The digital economy, in its infancy during the third wave of
globalisation, is now becoming a force to reckon with through e-commerce, digital services, 3D
printing. It is further enabled by artificial intelligence, but threatened by cross-border hacking
and cyberattacks.
While the old Silk Road thrived on the exports of luxurious silk by camel and donkey,
at the same time, negative globalisation is expanding too through the global effect of climate
change. Pollution in one part of the world leads to extreme weather events in another. And the
cutting of forests in the few “green lungs” the world has left, like the Amazon rainforest, has a
further devastating effect on not just the world’s biodiversity, but its capacity to cope with
hazardous greenhouse gas emissions. But technological advancement is something we cannot get
away with, thus at present globalisation is still evolving.
Characteristics of Globalisation
This concept has enabled economies of scale for companies in production and distribution. It has
also encouraged outsourcing and technology transfer among companies and countries, thus
increasing their interdependence on each other. The main characteristics of globalisation are
listed below:

1. Free Trade – Globalisation has helped improve trade volumes between nations with
minimal interference. The reason is that governments are not micromanaging every
minute aspect of business transactions. The Gross Domestic Product (GDP) of countries
that have accepted globalisation has also increased significantly, thus bringing in greater
prosperity. It has also resulted in better cooperation between governments that leads to
further improvement in trade.
2. Liberalisation – One of the main characteristics of globalisation is the improvement in
the business climate for corporations. It has helped entrepreneurs to set up businesses and
transact both within and outside the country. The rules and regulations for companies are
relaxed significantly to allow for more trade between nations due to globalisation.
Flexibility in trade regulations pushes governments to make further concessions to
industries. Both Liberalisation and Globalisation are dependent on each other.
3. Increase in Employment – Every industry is responsible for generating both direct and
indirect jobs. And when production increases, it has a positive effect on employment.
Globalisation helps companies increase their production capacity and set up operations in
different parts of the world. It also helps boost work opportunities in countries where
these corporations have set up operations.
4. Increased connectivity between nations – Globalisation has helped countries improve
trade relations with each other. It has increased interaction between people and
businesses. Better connectivity also boosts a country’s economy and enhances the
standard of living for its citizens.
5. Interdependence – With the advent of globalisation, countries have become more reliant
on each other. Businesses get the opportunity to import cheaper raw materials to produce
their commodities. They are also being allowed to export to countries that have more
demand for their finished goods. It has helped reduce trading barriers and build overall
economic prosperity.
6. Cultural Exchange – Improvement in people to people contacts have encouraged the
intermingling of cultural practices and customs. It has allowed people to exchange ideas,
behaviours and values with other countries. Communities are less isolated as a result of
globalisation. For example, several American eateries have penetrated different parts of
the world. Similarly, cuisine from far off countries is now readily available in the United
States.
7. Urbanisation – One of the consequences of globalisation is the increase in urban centres.
When many foreign/local companies set up businesses in a particular area, it becomes a
hotbed of economic activity. The people who work in those companies need
infrastructure near their workplace in terms of housing, transport, shops and other
establishments. Globalisation leads to the building of urban centres in and around
industrial areas.
 8. Standard of Living – With increased economic activity and opportunities for
employment, people have more money in their pockets. They also have more options to
choose from because of improved job opportunities. It is one of the main reasons why
globalisation allows more and more people to improve their standard of living.
9. Production Cost – In a globalised world, companies are free to establish their operations
in areas where the cost of production is low. The cheap availability of land, labour and
raw materials has become very important. So it makes sense for companies to go where
these resources are present in abundant quantities and at discounted rates. It helps them
gain over their rivals by lowering costs and improving profit margins.
10. Outsourcing – One of the characteristics of globalisation is that it allows companies to
bring in third parties from outside the country to manage specific processes. They take
this step to reduce internal costs, improve the quality of services or both. Outsourcing is a
boon for several human resource-rich countries that are looking to generate employment.
Countries like India and the Philippines have benefitted immensely as a result of this
practice.

Conclusion
Globalisation has helped nations integrate their economy with the rest of the world, and it has
reduced barriers to trade and increased economic activity manifold. It has also led to cultural,
social and technological exchanges that have helped governments tackle internal and external
challenges with greater efficiency.