Economic Dimension

The economic dimensions of globalization While the globalization process is a complex and multidimensional phenomenon, some of its most visible and influential aspects are economic in nature. This chapter contains an analysis, from a global standpoint, of major trends in trade, investment, finance, macroeconomic regimes and international labour mobility. This analysis covers a long period in history, from the last quarter of the nineteenth century to the present, and is structured according to the successive phases of globalization identified in the preceding chapter.
The first section focuses on the development of trade and investment flows among the principal regions of the world, with emphasis on the variable relationship between the expansion of trade and economic growth, the emergence of integrated production systems underpinning the operations of transnational corporations, the primary challenges faced by developing countries as a result of these global trends and the creation of an international institutional framework in the area of trade. The second section contains an analysis of the most important changes that have taken place in international finance and macroeconomic regimes. After reviewing major historical developments in this area, the study focuses on the volatility and contagion which have characterized capital flows in the third phase of globalization, and finally analyses the magnitude and composition of capital flows to developing countries.
Chapter 2PART I: GLOBAL OUTLOOK
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The last section presents an overview of the phenomenon of international labour migration. It includes a comparison of the relative magnitude of migratory flows and the regulatory environment in which they took place during the different phases of globalization, as well as the various global patterns of origin and destination of migrants.
I. International trade and investment
1. International trade and economic growth: a variable historical relationship Throughout the nineteenth century, world trade expanded rapidly, outpacing world GDP, which also grew briskly (see figure 2.1). This expansion can be traced to a number of factors, including the first industrial revolutions and the consequent drop in transport costs, the “pax
Britannica” imposed at the end of the Napoleonic wars and the replacement of the principles of mercantilist regulation with those of free enterprise.
Figure 2.1
TRADE AND GLOBAL OUTPUT, 1870-1998
A. Growth in world output and exports of goods
B. Ratio of exports to world GDP
Source: Angus Maddison, The World Economy. A Millennial Perspective, Paris, Organisation for Economic