Globalisation in the Late 19th and Early 21st Centuries: A Comparison of the Impact of Innovation

Background/Scope

This research will examine many aspects of economic globalization. There are several types of globalization, but the kind of globalization that we want to deal here is on the economy of nations – the world economy to be specific. Globalization is a general term and it has always been understood as something that is global, worldwide, or something that involves the internet.

The first part of the paper will focus on globalization in general. Understanding of globalization at first was that it only involved economy and transmigration. But then it evolved into a much broader term.

Definitions will first be provided. Due to variety of views and perceptions, globalization has many definitions. Therefore, several definitions will be introduced. After that we will talk about history of globalization – how it all started.

As time goes by, globalization takes so many forms and encounters changes and innovations. These changes and innovations and their impact to organizations and man’s activities will be given ample time for discussion.

Following brief historical background of globalization, we will have a short introduction about economic globalization – the type of globalization that we want to focus on. Then we will discuss the impact of the innovations on globalization in different centuries. We will focus on comparing the effects of the innovations, how similar and/or different they were in different time periods. Modernity transformed globalization, and soon it became apparent that innovations had a significant impact on fast development of globalization.

Research questions and objectives

• Effectively define globalization and the innovations brought about from the different time periods, such as the 19^th century up to the twenty-first century.
• Explain the concepts of globalization and the innovations of the different time periods. Bring to light if these innovations affected the fast development of economic globalization.
• Gather evidence and discuss the impact of the innovations that have evolved as time went by.

Key research questions

• How did globalization appear? How did it come to being?
• What are the innovations of the 19^th century globalization as compared to the 20th-21st century globalization?
• How do these innovations impact the economy itself? How do they change the course of people’s lives?
• What effect similar innovations had on globalization in different times? How similar and/or different these effects were?

Methodology

The proposed approach to be followed is a review of the literature which can be from books, journals, and the internet. Studies and researches of different authors can be sourced from the library, online library and other print materials. There is a range of literature on globalization, and studies and researches can provide a clear view of globalisation and the impact of innovations. From the supply of literature, the next thing to do is to simplify things by focusing on the main innovations that have been instituted and how these impact the activities of men. After the literature review, the dissertation can be started with the following outline:

• Introduction/Summary/Abstract
• Aims, objectives, and relevant matters about globalization
• Background Literature

The age of globalisation: how it started, definitions, concepts; innovations in the 19^th century; the Information Revolution; Globalization of the twenty-first century.

• Methodology

How this research will be carried out. Arguments and issues identified.

• History of globalization

The beginning, how it all started, the discovery of world routes

• Innovations of the 19^th century
• Twentieth- and twenty-first century innovations

Economic globalization in Europe, containerization, outsourcing, the internet and Information Technology, the World Wide Web

• Comparison of impact of innovations on globalization in 19^th with 20-21^st centuries. Bring to light differences and/or similarities in effects of 19^th century innovations and 20-21^st centuries on the rapid development of economic globalization.
• Discussion/Conclusion

Expected Outcome

The outcome of the research should provide a clear understanding of the general term globalization and the many misunderstood views about it. The project should identify and clearly describe those innovations that had major impact on the development of economic globalization in 19^th and 20-21^st centuries. Comparison of the effects of these innovations should bring to light importance of innovations in the globalization’s evolution. This research will help to form conclusion where a personal judgement can be presented. Based on the evidences and facts on hand – whether innovations had great effect on globalization or not and how differently they affected economic globalization in different times, we can presume how globalisation might react on incoming innovations and how it will evolve in the future. What threats and opportunities can it bring to us?

Abstract

Historical data on globalization leads us to the period before routes and land discoveries were successfully accomplished by Christopher Columbus in 1492 and Vasco da Gama in 1498. Some authors commented that this is globalization’s big bang. However, there is really no evidence or empirical study to prove globalization’s big bang. Globalization was started when man realized he had to move from one place to another, and one of the reasons for the movement is economic in nature.

It is said that globalization is a process inherent to life. Transmigration is a part of man’s quest to find the unknown, to seek for fulfilment and glory.

Economic globalization is the main focus of this dissertation. Generally, globalisation is economic in nature although there are other aspects of disciplines that globalisation has had an impact with.

The start of economic globalisation was in the early 19^th century until the beginning of World War I in 1914. After the war, economic changes and upheavals started to emerge.

Globalisation encountered more challenges and changes with the advent of technology, computers, Information Technology, and the internet. It is said that globalisation is synonymous with the internet. Commerce and trade, politics, and all sorts of disciplines are being conducted and made easy through the internet. Globalisation has become ‘more global’ through the internet and the World Wide Web.

Globalisation is also facing numerous challenges, such as protectionism, neo-liberalism, and complaints by groups against exploitation of human and natural resources by transnational corporations. Present remarkable innovations include the establishment of multilateral organizations: the World Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank Group, and the rise of regional trade agreements.

After discussing the ideas and facts on globalisation, a great portion was focused on the innovations of globalisation, which covered those from the 19^th century innovations up to the 20^th– and 21^st century innovations. The evolution therefore of globalisation is most influenced by these innovations which are characterized by changes, inventions and discoveries, and probably, time.

Introduction

Globalisation has been a phenomenon affecting world business and economy since the centuries after Columbus and Da Gama started their voyages from the Mediterranean and the Cape of Good Hope. It is a part of world history, in the conduct of world trade and commerce, including political practices of nation-states. Globalisation is inherent to life while transmigration is a human characteristic.

Globalisation has gained attention and momentum these past decades due to the advent of high technology and effective means of communication. There are many other areas of interest that can be talked about when it comes to globalisation because this is a subject that covers various areas of discipline.

This paper will delve on economic globalisation and will conduct some analyses on various researches and studies on the area, as well as the innovations introduced. More particularly this covers early globalisation such as those in the late 19th century up to the early 21st century, and a comparison of the impact of innovations during these periods.

This includes the different ideas and opinion of authors and scholars from other nationalities. For example, while this paper discussed studies and researches of American and European scholars, we also incorporated some ideas from the Russian perspectives in the context of globalisation. In the study of the voluminous literature available, whether from printed materials or from the web, we found that the more we acquired knowledge, the more our ideas became complex and complicated.

The point here is that we cannot arrive at a definite definition of globalisation, but can explain only the entire concept, including, but not limited to the advantages, disadvantages, and the parallel explanations by different scholars and researchers on the subject. Some scholars agree that there is no universally accepted definition of globalisation.

Historically, globalisation began to influence man’s activities for as long as voyagers started to find routes for commerce and trade. Political power was one of the ambitious considerations to go global. After the series of discoveries of lands and routes, from the Mediterranean and around the Cape of Good Hope, globalisation spread like wild fire, and influenced every activity of man.

Synonymous terms emerged such as internationalization, liberalization, competitiveness amongst businesses, and so forth. Communism and capitalism are two of the ideologies that shape how we perceive globalisation. The Russians, after the collapse of communism, view globalisation differently from the way authors of capitalist orientation look at it.

Literature Review

Economically, proponents of globalisation expect it to increase growth, decrease inequality and poverty across people and countries. Politically, socially and culturally, they hope that it will decrease differences, reduce xenophobia and lead to a global consciousness where the nation state is no longer the main unit of identity for individuals.

Opponents of globalisation or those who oppose it for ideological reasons, argue that the socioeconomic costs of globalisation are too high and the benefits are inequitably distributed. Politically, they claim that globalisation has simply acted as a vehicle for American hegemony, and to a handful of powerful transnational corporations. (Giusta et al., 2006, p. xiii)

There are beliefs in globalisation that this paper will attempt to explain or understand. The poor only have to open up in order to gain from globalisation. It seems that everything turns to a miracle. A country only needs to open up its borders, reduce tariff rates, attract foreign capital, and then the poor will become rich.

“..The poor and the rich gain one-for-one from openness” (Dollar and Kray, 2000, cited in Milanovic, 2003, p. 55).

How true and how can this be proved will be discussed in the following pages.

Definitions

There are conflicting ideas and concepts on globalisation, while at the same time, there are positive and negative connotations and outcomes of globalisation; thus we are providing various definitions from different authors in this particular discipline.

In the words of Bartelson (2000, p. 181), “Understanding the ambiguity of the concept of globalisation is crucial to understanding the emergence of globalisation as a fact. Yet this requires that we adopt an attitude to concepts slightly different from the underwriting practices of definition within the social sciences.”

Ideological interpretations of globalisation view it as “a process of cultural standardization in which a global media reinforces sameness and homogeneity around predominantly American models” (Giusta et al., 2006, p. xiii).

Another definition is by Giddens (1990, as cited in Giusta et al, 2006, p. xiii) who coined the term time-space distantiation, which refers to technological progress which “the friction of space has been overcome to accommodate social interaction.” Time and distance have been reduced by globalization through the emergence of the internet.

Held (1999, p. 2, as cited in Giusta, p. xiii) described globalisation as the “widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural, the financial, to the spiritual.”

McGrew (2000, p. 347) emphasizes that globalisation is a “worldwide connectivity and the deepening enmeshment of societies in a web of flows of capital labour, ideas, images, weapons, criminal activity and pollution” (Giusta et al, 2006, p. xiii).

Robertson (1992) stressed the two main aspects of globalisation which are “world compression and the intensification of global consciousness” (Giusta, 2006, p. xiii). World compression implies that the way we live our lives has immediate implications for people on the other side of the globe, while global consciousness is highlighted when we speak in terms of world order, international recessions and global biodiversity.

Harvard professors Robert Keohane and Joseph Nye differentiate between globalism, globalisation, and de-globalisation (Wells, 2003, p. 1).

Globalism “is a state of the world involving networks of interdependence at multi-continental distances. These networks can be linked through flows and influences of capital and goods, information and ideas, people and force, as well as environmentally and biologically relevant substances” (Wells, 2003, p. 2).

Globalisation and de-globalisation can be explained in their positive and negative connotations – they represent an increase and decrease of globalism, respectively. Globalisation results in deeper and/or geographically more complete globalism. A deeper globalism means more points of connection and the resulting integration. (Wells, 2003, p. 3)

Globalisation refers to a situation wherein industrial and commercial companies as well as financial institutions increasingly operate transnationally, in other words, beyond national borders. This is further characterized by mergers and acquisitions of industrial, commercial and financial companies, leading to an increase in the global role of large, multinational companies and to a lessening of the role of nation-states. (Bairoch, 2000, p. 197)

The point of the above definition is that activities or operations of global organizations are beyond national borders and the role of nation-states is lessened. There is a ‘slowing down’ of the role of the nation-state, or simply the government and its instrumentalities.

More notions of this now-controversial term:

• “Contemporary business ideology pictures globalisation as a galloping homogenization of the world in which all now participate on equal terms” (Connell, 2007, p. 12). Globalisation widens the playing field for organisations and businesses.
• “Globalisation is the integration of the political, economic and cultural activities of geographically and/or nationally separated peoples; it is not a discernible event of challenge, is not new, but is accelerating.” (Wells, 2003, p. 2).
• Globalisation is also seen as a “little more than an expression of capitalist ideology” (Ferguson, 1992, cited in Bartelson, 2000, p. 181). This definition is influenced by the fact that capitalists play a major role in a free trade with minimal intervention from governments of nations. In fact, the governments of these nation-states are part of the global world itself.
• Economists define it as the “international economic integration that can be pursued through policies of ‘openness’, the liberalization of trade, investment and finance, leading to an ‘open economy’” (Van Der Bly, 2005, p. 875).

Kagarlitski and Dugin (Kagarlitski, 2001, cited in Rozanova, 2003, p. 51), who define globalisation in the context of the Russian experience, believe that “the very term globalisation, just like most other terms coined by the modern information media, is ambiguous, profoundly demagogical and fundamentally misleading.”

According to the Russian definition, globalisation “is an expression of the capitalist view because it attempts to impart objective character to reflect the positions of transnational corporations, which are trying to solidify their dominant position” (Rozanova, 2003, p. 51).

The Russians interpret it as just substituting the concept of globalisation for the theory of neoliberalism, which now has been discredited from the eyes of the public.

Russian globalisation studies have complex ideas and opinions from authors and scholars. Rozanova (2003, p. 650) supports the claim that “the concept of self-determination, and political self-determination in particular, is the key instrument in the analysis of Russia’s role and place in the globalizing world.”

Definitions of globalisation according to Russian scholars are influenced by the communist experience, and the subsequent collapse of communism in the USSR and Eastern European countries in 1989.

The theoretician Giddens (1990, p. 64, cited in Raab et al, 2008, p. 597) defines globalisation as “the intensification of world-wide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.” This is stating the existence of the global world which can be interpreted as the virtual world.

There is also the phrase global village. Many authors and scholars would like to express it as saying that the world is now living in a global village, narrowed down or has been made small (but limitless) by the interconnectedness of things because of computers, the internet or the World Wide Web. Communication and the conduct of business can now be made possible to anyone anywhere for as long as he/she has a computer. With technological innovations being introduced everyday, relatively every minute of the day, computers are ordinary inventions.

Communication is the most important discovery benefiting globalisation. Some say this is limitless or endless. Others say it’s an entirely different ball game (Levitt, 1983, p. 20.)

Theorists like Held (2000, p. 55, cited in Raab et al., 2008, p. 597) and his colleagues conceptualize globalisation as “a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions – assessed in terms of their extensity, intensity, velocity and impact – generating transcontinental or interregional flows and networks of activity, interaction, and the exercise of power.”

Historical Perspectives

The Beginning

From the beginning, man’s activities have been characterized by trans-migration from one corner of the planet to wherever he could set foot and as far as his crude means of transportation could bring him. In modern times, human globalisation entered an accelerated phase in which the process gained widespread usage as an international term with many interpretations. In the historical perspective, globalisation started just after a series of discoveries of lands and routes leading to improvement and widening of commerce, trade, and political influences amongst peoples of the more civilized world.

Wells (2003, p. 5) states that some historians point to the voyages of Christopher Columbus in 1492 and Vasco da Gama in 1498 as globalisation’s “big bang”. However, empirical evidence has not produced a consensus on globalisation’s impact for any of these early events, but historians universally agree and the data support that in modern times there is significant economic globalisation beginning in the 19^th century and lasting until 1914, the beginning of World War I.

Before Vasco da Gama explored those routes, the Muslims controlled the Red Sea, the Persian Gulf, and the overland routes linking these waterways with the Mediterranean. Later, Christians gained advantage by using force. Then from 1914 to 1944, the world was in a period of rapid economic de-globalisation. The period began and ended with world war, interspersed with a worldwide wave of anti-trade protectionism which aimed to shelter nations from wide cyclical economic swings. (Wells, 2003, p. 7)

These were trades conducted by continents or big countries at the time, much different from those conducted before the early land discoveries of Columbus and Vasco da Gama. As soon as routes were discovered, more trades were conducted between countries

When the Old and the New Worlds met, globalisation began. The concept was new but the practical application was being done by people conducting commerce and trade and even political ambitions started to give light.

When the city of Manila in the Far East, across the Pacific was founded, this was linked to the Americas, Europe and other countries in the West (Flynn and Giraldez, 1995, cited in Findlay and O’Rourke, 2003, p. 16). This was known as the Galleon Trade which linked Manila and Mexico and to the rest of the Americas.

There was then the “price revolution of the sixteenth century” because of the influx of large amounts of silver injected in the circuits of world trade. This was further marked by shifts in economy in what Kindleberger (1996, cited in Findlay and O’Rourke, 2003, p. 16) called the “economic primacy.”

Globalisation was introduced to the world at the “point of a gun”. This is reminiscent of the Christianization of some areas of the globe by Spanish friars, for example the Christianization of the Philippines. It was said that many were globalized by means of violence. Criminal syndicates including and organized crimes started in this period.

Two-Phased Globalization

Bairoch (2000) described a two-phased globalisation. He said that “a first phase of globalization began as early as the second half of the 19^th century and was completed with the beginning of the First World War” (p. 198).

But the present phase of globalisation is not clear among researchers. Some researchers, Bairoch states, point to either mid-1970s or the beginning of the 1980s. “For those emphasizing the generalization of the capitalist system, dating globalism is easier and prefers a later date: the collapse of Communism in the USSR and Eastern European countries, in other words, in 1989” (Bairoch, p. 198).

Russian scholars regard globalisation as a process which began in the last quarter of the 20^th century as a result of a qualitative shift in the technological basis of humankind’s existence, one which marks the beginning of a transition to a postindustrial, information society. They speak of globalisation not as a world-historic process, but as developments that have been taking place recently, at imperialism’s highest point, in the political, economic and other spheres. They do not define globalisation as a world event but as a way of ideology’s furtherance. (Rozanova, 2003, p. 650)

Economic Globalisation

Globalisation is seen or perceived by many authors and scientists as economically orientated. Globalisation points to the economic environment of a particular place, or the world in general. Economic globalisation has been affected and shaped by many factors: technological innovations, new inventions, modern ideologies or ‘isms’, or what might be called innovations of ideologies.

Globalisation is characterized by economic interdependence of countries, transactions that ignore geographic borders, and “rapid and widespread diffusion of technology” (Citrin and Fischer, 2000, p. 19).

Bożyk (2006) briefly explains what economic globalisation is:

“Globalisation of the world economy denotes a process based on the formation of a single market for goods, services and factors of production, including capital, labour, technology and natural resources, covering all countries and economic regions. From a theoretical point of view, globalisation means an unlimited access to these markets for all interested businesses regardless of country of origin and economic region” (p. 1).

Applying the definitions of globalisation provided in the earlier part of this paper, it would seem that economic globalisation and globalisation in general can be interchanged. In the context of the explanations provided, these are two subjects with synonymous connotations.

19th Century Globalisation

Nineteenth century globalization has reference to what Milanovic (2003) called the “Atlantic economy”. This refers to the exchange of goods, migration, and capital flows between Western Europe and Northern America.

Milanovic (2003, p 55) says that ‘Colonialism, pillage, and slavery became a part of globalisation, more important than migration of Irish peasants to the United States, or the voluntary transfer of British funds to Argentina.’

There were different economic perspectives in Europe and the New World during the 19^th century: Europe was labour-abundant and land scarce, while the New World was labour-scarce and land-abundant. The effect on wages therefore was that it was low in Europe and high in the New World, at the same time land rent were high in Europe and low in the New World. During this time, agriculture was a determinant factor – cheap grain was coming in from the United States.

Williamson (1995, cited in O’Rourke, 2000, p. 45) said that during this time international real wage converged, meaning European wages were catching up with the rest of New World wages. Unskilled New World workers were deteriorating, which meant there was increasing inequality.

O’Rourke (2000, p. 45) argues:

“Between 1870 and 1913 the ratio of unskilled wages to GDP per capita declined at an annual rate of 1.22% in Australia, and 1.45% in the United States in a manner sharply reminiscent of the rising inequality levels which have been experienced recently throughout the OECD.”

In other parts of the world land prices increased tremendously – 400% in Australia between 1870 and 1910, and by over 250% in the United States, but there were subsequent drops in France, Sweden and Britain, by over 50%.

19^th Century Innovations

Industrial Revolution

Before the outset of international migration, there was the industrial revolution in England which is associated with capital intensive plant and equipment, steam power, factories and new equipment for the manufacture of goods. These had potential impact upon macroeconomic indicators and productivity estimates. However, these inventions or innovations were still new and did not have too much attention or following from a number of sectors and regions of Britain before 1850. Later, new products and new outputs and inputs, changes in organisation of production, and the skills and talents of the workers and even in management became a dominant factor of change in the period.

The manufacturing industry in Britain spread beyond and the economy in and around the area was affected, to include aspects of agriculture, finance and even international trade. The industrial sector was never isolated from the rest of economic forces. These innovations affected productivity and the implications for work, for leisure and consumption, for workers, the family economy, and the world economy in general.

International Migration

Chiswick and Hatton (2003, p. 65) state that “International migration influences economic growth, patterns of trade, income distribution, and the distribution of political power within and between countries.”

When the New World began, international migration shifted to that direction. Production then accelerated where the people were converging. The demographic characteristics and the labour supply of the two countries, i.e., where people came from and where they were going to, were affected.

There was manifold increase in output and trade between Western European countries and their overseas counterparts such as the United States, Canada, Australia, and New Zealand. Millions of Italian, Polish, or Irish migrants traversed the Atlantic in search of a better life, bringing moreover a wage and income convergence between Europe and the United States by putting a downward pressure on wages in the United States, and allowing European wages to go up (O’Rourke & Williamson, 1999, cited in Milanovic, 2003, p. 57).

O’Rourke, Taylor and Williamson (1996, cited in O’Rourke, 2000, p. 46) conducted a study using econometric evidence for a panel of late 19^th century economies and found the relative correlation between agricultural goods and industrial goods, and wage-rental ratios: “agricultural goods, relative to industrial goods, had the expected negative effect on wage-rental ratios in 5 of their seven countries, the exceptions being Australia and Denmark” (p. 46).

During this period, trade had important effects on factor price ratios and on wages. Prices on agricultural and manufactured goods also impacted on land rents in the same panel of countries in O’Rourke and colleagues’ (1997) study. They also found a strong impact of agricultural and manufactured goods prices.

In the European context, the introduction of cheap American grain could have displaced agricultural labour, and reduced nominal wages, impacting on the cost of living and real wages. But in Britain’s case, it was different.

O’Rourke and Williamson (1994, cited in O’Rourke, 2000, p. 46) found that declining commodity price gaps in agricultural and industrial between Britain and the New World boosted British real wages by over 20% in the years 1870 and 1913. However, Anglo-American commodity market did not affect much on American wages.

The implication in the above study of O’Rourke (1997) and colleagues is that the ‘grain invasion’, i.e. cheap grain from the United States, had a minor impact on economy-wide wages in Britain because of its lower agricultural employment, but cheap food boosted living standards, in contrast to other economies such as France where cheap grain lowered real wages.

Innovations in trade had ambiguous effects on European real wages, but globalisation unambiguously raised European living standards, and lowered New World living standards.

The important aspect here is migration. In a study using econometric methods, Taylor and Williamson (1997, cited in O’Rourke, 2000, p. 46) found that the emigration raised Irish real wages by 32%, Italian by 28%, and Norwegian by 10%. Nevertheless, there were other negative results: immigration lowered Argentine real wages by 21%, Australian 15%, Canadian by 16%, and American by 8%.

In this study, international capital markets did not boost living standards in underdeveloped economies because capital was comparably seeking out abundant resources rather than abundant labour.

“International capital flows may have been a force for divergence during this period, rather than convergence” (O’Rourke, 2000, p 47).

Economic Integration

According to Collier and Dollar (2002, p. 25), there was economic integration starting around 1870 but the flows in trade, migration, and capital were not sufficient to warrant the term globalisation, as in 1980 up to the turn of the century.

Because of the advancement of transportation, all these flows started to integrate; meaning the world economies globalized, as in our discussion on the two-phased globalisation. Between 1914 and 1945, transport costs continued to fall, but trade barriers rose. Then it went back to the 1870 level, but by 1945 trade barriers again came down as transport costs became cheaper.

Since 1980, many developing countries continued to participate in the world economy by patronizing world goods and services. Now low income countries are competing with high-income countries. With this integration of markets, world trade has grown so massively. In the United States, the term “consumerism” became popular. Other developing countries followed suit, buying everything what might be called “stateside”, referring to the colonial mentality where products from other countries seemed always superior from local brands.

Telegraph and Railroads

Telegraph cables and railroads were built to bring the world closer and to accelerate the transfer of goods. In Cuba, the main producer of sugar, railroads were built before any existed in Italy or Holland (Bairoch, 1997, vol. 2, p. 574, cited in Milanovic, 2003, p 57).

Foreign capital flowed from the capital-rich England and France to the lands capital-poor, yet rich in opportunities, such as Argentina and Russia. (Milanovic, 2003, p. 57)

Cheaper transport and lifting of man-made barriers

During the period from 1870 to 1914, a new wave of global integration began with falling transport costs. Innovations introduced were the switch from sail to steamships, and reductions in tariff barriers.

Cheaper transport and the lifting of man-made barriers opened up the possibility of using abundant land. New technologies such as railways created huge opportunities for land-intensive commodity exports. The resulting pattern of trade was that land-intensive primary commodities were exchanged for manufactures. Exports as a share of world income nearly doubled to about 8 percent (Maddison 2001, cited in Collier and Dollar, 2002, p. 25).

Production of Prime Commodities

Production of prime commodities was labour intensive, which now necessitated millions of immigrant workers. There was abundance of land in the newly settled areas, incomes were high and fairly equal, with labour migration going so fast, which also tightened markets and raised wages. Labour supply also came from the countries of China and India to smaller but sparsely populated countries like Sri Lanka, Burma, Thailand, Philippines and Vietnam.

Growth accelerated globally, with per capita incomes rising by an average of 1.3 percent, where previously in about 50 years, it was only 0.5 percent per year. Globally therefore, the countries involved in the global economy – meaning those exporters of manufactures, people and capital, and the importers, took off economically. Argentina, Australia, New Zealand, and the United States benefitted largely when they exported primary commodities, at the same time importing people, institutions, and capital. (Collier and Dollar, 2002, p. 25)

The rest of the world lagged behind.

The impact of globalisation on countries was the growing inequality which depended in part on the ownership of land. Those who were landed reaped the fruits of others’ labour, or the sweat of migrant workers who came from poor countries.

Exports from developing countries were land-intensive primary commodities. Within developing countries this benefited predominantly the people who owned the land. Since most were colonies, land ownership itself was subject to the power imbalance inherent in the colonial relationship. Where land ownership was concentrated, as in Latin America, increased trade was associated with increased inequality (Collier and Dollar, 2001, p. 26).

Innovations in the Twentieth Century

Containerization

The introduction of containerization in shipping products from one port to another is one of the greatest innovations in the twentieth century that have benefitted a number of industries and have advanced the economies of nations through globalisation. It made transfer of products faster, easier and safer.

The technological revolution was started with the era of containerization when Malcom McLean experimented in 1956 truck-trailer vans loaded by cranes on the deck of the ship named Ideal X. McLean had premised that total distribution costs could be reduced only by a streamlining of the entire distribution process. Thus detachable container vans were lifted from their chassis and stowed on board ship.

Products are well secured inside the container which, upon arrival, would be moved onto a truck for delivery to the consignee. The process reduced costs, theft, and damage, and also provided savings in packaging, and resulted in more reliable service.

McLean’s original concept incorporated both containerization and intermodalism, and the experiment was so successful that it is usually taken to mark the real beginning of the container revolution. After that first voyage, another tanker was outfitted to carry containers, and plans were finalized to convert six regular dry-cargo ships to full containerships with on-board cranes for self-loading and unloading.

By mid-1958, Pan Atlantic was offering scheduled containership service between Newark and Puerto Rico, and then between Newark and Houston with intermediate port calls at Jacksonville and Miami. In 1960, Pan Atlantic changed to Sea-Land Service, which then began operating containerships between Newark and Long Beach-Oakland by way of the Panama Canal, using converted tankers that could carry 476 containers. Other navigational companies followed suit by experimenting on containerization after much research on ways to reduce cargo-handling costs. (Transportation Research Board Special Report 236, 1992, pp. 17-18)

The Internet or the World Wide Web

The internet plays a major role in economic globalization. This is one of marvels of invention that has revolutionized communication. Most businesses and organisations employ the internet or the World Wide Web as a tool for conducting business or communicating with their branches wherever these maybe. With just a computer connected to the internet, anybody can connect to anyone any part of the globe. Any organisation can construct its own website where customers can browse or communicate, ask questions, or interact with the organisation. Customers can purchase products and services through the firm’s website. The website acts as the organisation’s window to the world.

There is the question of national border which is not so clear when it comes to laws or codes of countries around the world.

Goodwin (1974: 100, cited in Halavais, 2000, p. 8) defines national border as “an imaginary boundary tied strictly to geographical territory in which a state’s sovereignty may be exercised.”

Global firms handle a large organization but geographic consideration is different now. “It is the characteristics of globalization rather than the territorial dimension that makes a difference” (Sussland, 2000, p. 2).

Theodore Levitt says that “technological, social, and economic developments over the last two decades have combined to create a unified world marketplace in which companies must capture global-scale economies to remain competitive” (Bartlett and Ghoshal, 2002, p. 6).

Through the internet, the company can employ other means and innovations to remain competitive. One of the innovations is outsourcing.

The Information Revolution

The Information revolution has spawned numerous technologies geared towards automating the office. Information Systems has created new paradigm shifts in organizational processes. The trend in organizations is implementing Office Information Systems solutions such as groupware and enterprise applications, for example databases or shared repositories, intranets, workflow, imaging systems, and other customized applications.

Technological advancement and continuous innovations have motivated organizations and businesses to react to changes in the global competition. Organizations have to reorganize, re-evaluate and reprogram outdated functional programs and activities, and realign them to the present trends for improvement and competition. Personnel and field people, ordinary employees, including middle-level and top management have to refocus along the line of technological innovations.

External and internal environments in organizations are becoming complex; thus they are handled with a globally-oriented brand of management, with the aid of Information Technology. Corporate management is now handling a global-scale brand of management, requiring a different kind of strategy, much distinct from traditional management.

Advancement in technology is fast; innovations are applied every minute. There is what we call Web 2.0, or web-enabled infrastructure allowing business-customer and business-to-business interaction. This spawns databasing or shared repositories.

Outsourcing

Outsourcing of products and services allow firms to use the services of other firms, even if the outsourcing company is from other countries. For example, automakers Toyota or GM outsource their products from China and India. This innovation can save time and cost.

Outsourcing is another trend amongst industries of the latter part of the 20^th century, and up to the present time. It has revolutionized processes in the workplace, provided tools and valuable data and information to managers and employees, shortened workloads, and has done many things of great importance to businesses and organizations. In the 19^th century, this was impossible to conduct because there was no internet, or communication was not yet fully developed. The telegraph was still in its infancy.

Eltschinger (2007, p. 2) says, “The progress made in the past 100 years is staggering: modern air connections ferry passengers from Beijing to New York in just over 13 hours; documents zip back and forth across the world in seconds; whole libraries of information can be searched in moments.”

Additionally, the advancement made in communication and the internet makes it very easy to connect with people in the other side of the globe. The global age is here and will continue to dominate man’s activities – businesses for that matter – for many years ahead, centuries perhaps, with more and more industries emerging everyday as a result of new tools, innovations, and inventions made by man. Because of these advances, changes, innovations, or development, new industries are formed.

Outsourcing is defined as “the transfer of a commercial function to an outside service provider, subject to the customer’s retained authority and responsibility to third parties and shareholders for continued success of the customer organization” (Springsteel et al., 2004, p. 58).

Almost every major player of any industry today uses outsourcing. Since the 1960s, the United States has been using outsourcing. American car makers such as Ford and GM used this to be more competitive with Japanese car manufacturers. They would source car parts, for example carburetors, from specialty sub-contractors.

Japanese counterparts also use the same method. Toyota and other car manufacturers outsourced their car parts from outside sources as an operational strategy to lower the cost of manufacturing. These companies have been successful in outsourcing that their finished products are mostly composed of outsourced products or components from their own valued suppliers. (Lynch, 2008, p. 765-767)

Global companies use outsourcing to minimize costs and time in production. Outsourcing is not limited to one or a few countries. Many countries, especially the developing ones, are “implementing proactive strategies to attract jobs and industries. U.S. companies are encouraged to move work offshore because of the direct incentives these governments offer as part of their national industry strategy.” (Hira et al., 2008, p. 167)

Outsourcing involves servicing clients or companies whose customers ask information about products and product warranties. These companies use call centers stationed in Asia, and operators reply to clients’ call. Companies in the United States and other European countries also outsource supplies from China and other developing countries.

One disadvantage is with the present economic downturn in the United States and all throughout the world, unemployment is aggravated by this process of outsourcing, although this refers only to buyer countries. This is no answer to mass layoff of employees of many businesses.

Regional Integration

Integration is a territorially restricted form of globalisation, while globalisation is a spontaneous process that has not been programmed institutionally by countries subject to mechanisms regulating the functioning of the world economy. (Bożyk, 2006, p. 2)

Over the past half-century, transnational organizations have been founded to oversee global business activity and promote growth and stability in the global economy. These institutions have generally encouraged freer trade, FDI cross-border financial flows and other programs and policies to encourage participation in the global economy.

In the 19^th century globalisation, there were no such groupings, but in the twentieth century up to the present, remarkable innovations come in the form of multilateral organizations: the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank Group. These institutional groupings were introduced after World War II to help economies of nations, or the world economy in general.

The International Monetary Fund was founded in Bretton Woods to stabilize the international monetary system. It functioned as a specialized agency within the United Nations system. By 2003, membership grew to 182 countries, each of which was obliged to contribute to the IMF quota. By 2003, the IMF’s total quotas topped $290 billion” (O’Connor, 2004, p. 281).

The World Bank Group is a multinational development organization, also founded at the Bretton Woods Conference in 1944. The International Bank for Reconstruction and Development (IBRD) is an organization under the World Bank Group whose initial goal was to help rebuild war-torn Europe which was ravaged by World War II. Today, the World Bank Group consists of five mutually supporting development institutions, and its financial resources come from the sale of securities in global financial markets, interest payments on past loans, and contributions from donor countries.

Comparison of the 19^th Century and 20^th-21^st Century Innovations

International trade has always been a source of political tension, although the nature of those tensions has changed over time. For many centuries, intercontinental trade was so expensive that only very valuable commodities were profitably traded.

In the early years of globalisation, only a few products could be brought from continent to another because of the high cost of transport. Spices were very expensive for the reason that they were not readily grown in the European countries. When transportation improved, such as the steamship, importation of products became available almost everywhere.

Of course, it is obvious to state that transportation has also been revolutionized with the emergence of jets or air transportation that can travel faster than the speed of sound.

Communications and the internet have also revolutionized commerce and trade, and have brought globalisation even to the farthest corner of the globe.

In the 19^th century, labour-abudant Europe with left wing parties favoured free trade more because they thought it would bring cheap food, than because they believed it would expand labour-intensive activities and promote employment. In the rich, labour-scarce New World, where globalisation might have been expected to lower real wages rather than raise them, there were far more echoes of today’s concerns about trade, inequality and unemployment in OECD economies. (Schettkat and Verhagen, 2000, p. 50)

Around 1840, American protectionists began to argue that “high duties were necessary to shut out the competition of the ill-paid labourers of Europe, and to maintain the high wages of the labourers of the Unites States” (Taussig, 1888, p. 66, cited in Schettkat and Verhagen, 2000, p. 50) – an argument that holds true up to this day among labourers of the United States and Asian immigrant workers.

But it was migration that had the greatest impact on workers’ living standards, and when immigration led to unskilled wages lagging excessively behind average incomes, governments intervened to stem the migration flows.

There are various parallels here with today’s concerns that rising inequality will undermine the political support for globalisation. The mass intercontinental migration which lowered New World living standards is absent today; while international institutions such as the WTO would make it much more difficult for politicians to dismantle today’s international economy, should their constituents demand that they do so.

The late 19^th century experience does serve as a useful reminder that the political support for globalisation cannot be taken for granted, and that the distributional consequences of a more tightly integrated international economy matter not just in their own right, but because of the policy responses which they can provoke. (Schettkat and Verhagen, 2000, p. 50)

There has been a process of downgrading the social with the ascendancy of neoliberalism at the nation-state level in the late 1970s. Through globalisation, there is an empowering and privileging neoliberal economics as a transnational force beyond the control of nation states and governments.

Mishra (1999, p. 115) states that ‘what economic globalisers fail to acknowledge, is that whereas economies can go global, people cannot, [and that] while money and capital have been set free to move across the globe, labour remains locked into the nation state, for example by strict control on immigration.’

This means human communities can be confined in a geographical location while economies cannot. Nation-states and governments have to institute measures to confine their nationals. Mishra (1999, p 116) says the problem of controlling the economic order to save the social is back on the agenda. It is necessary to affirm once again the importance of the social and to make it an integral component – alongside the economic – of development and progress.

In the 20^th and 21^st centuries, companies involved in importation of cheap labour from Asian countries to the Middle East, introduced contractualization, where labourers serve for a number of years, and are sent back to the country of origin after the lapse of the contract. This was introduced by greedy companies to minimize benefits for the labourers.

There was then an increase of demand for cheap labour from countries of the Persian Gulf and other countries in the Middle East. The demand was for workers in construction, low-skilled service, but also for professionals like teachers, engineers, and doctors. (Chiswick & Hatton, 2003, p. 77)

McKern (2003) stated that during the early years of the post-war development of the modern international corporation, organizational structures evolved slowly in response to geographical and market diversity. It was easy for management to change structures incrementally. But later changes in the organization were based on complex environmental factors.

Similar innovations include the rise of the retail transnational corporations (TNCs) (Wrigley et al, 2005, p. 437). Globalisation is dominated by uncontrollable global forces in which the principal actors are transnational corporations (Yeates, 2002, p. 70).

These are a select group of food and general merchandise retailers with considerable, and rapidly growing, international sales. As Dicken (2003, cited in Wrigley et al, p. 438) says, one clear indication of the rapid growth of these retail TNCs is that, while in 1993 there were no retailers in the top 100 TNCs, by 2003, there were no less than 14 retailers (all but two were food and general merchandise retailers) each deriving over US$10bn of annual sales from international markets. (Wrigley et al, 2005, p. 438)

Figure above shows a comparison of the different innovations from the 19^th century to the 20^th-21^st Century economic globalisations.

Discussion/Analysis

Since the 1980s, economists have observed a trend of growing income inequality around the world, the impact of trade liberalization on prices and income. This trend is contemporaneous with increasing openness to trade and investment; the question has naturally been posed about whether a causal relationship exists. Further effects of trade opening on income inequality are also associated with the transfer of skill-enhancing technology (SET), and indeed SET models have become predominant in the debate over openness and its distributive consequences (Robbins, 1996, cited in Kapstein and Milanovic, 2009, p. 192).

An impact of innovation is much emphasized with the invention of containers or containerization: it was cost effective and safe for the products shipped to long distances. Transports are secured because these big boxes are fastened on the vehicles and the contents of the containers are kept secret. Due to the many advantages of containerization, expansion has been rapid.

Containerization has been motivated by globalisation of international commerce, and by the growth in Chinese exports. The costs are minimized by the transport of goods in gigantic quantities. It is said that the transport costs for wine and other products have been reduced tremendously with containerization.

Before, loads were transported as bulk cargo which was not safe for the products, but with containers the transport of goods has become safer, easy and cost effective. Majority of cargo freight is today transported in containers. The container market grew on average three times faster than the global economy in past years.

Conclusion

Economically, proponents of globalisation expect it to increase growth, decrease inequality and poverty across people and countries. Politically, socially and culturally, they hope that it will decrease differences, reduce xenophobia and lead to a global consciousness where the nation state is no longer the main unit of identity for individuals. Opponents of globalization or those who oppose it for ideological reasons, argue that the socioeconomic costs of globalization are too high and the benefits are inequitably distributed. Politically, they claim that globalization has simply acted as a vehicle for American hegemony, and to a handful of powerful transnational corporations.

We still have to see whether the innovations brought about by globalization have benefitted man, or that all these changes can bring him prosperity and glory. Many have noted that in this era of globalization, of fast-paced communication, computers and the internet, the poor have become poorer and the rich richer.

We have to be aware of the various challenges to globalization, such as the exploitation of human and natural resources by transnational corporations. Environmental degradation is one of the abuses that can result to a more severe climate change and global warming as a result of globalization.

One of the ill effects of globalisation is convergence of wages of wealth from one area of the globe to a single or concentrated area. In the early years of economic globalisation, international wages converged. Furthermore, there was increasing inequality as regards skilled labour.

What have led to a globalized world economy?

There are the innovations in information technology, a global shift towards market economies within nation states and regional multilateral free trade arrangements which have all led to an increasingly globalized world economy.

With continuous technological innovations, globalisation will be improved or modified any moment or any time. Every second or every minute of our existence, we witness technological breakthroughs, and these breakthroughs seem to become ordinary course of events.

Recently, we witness the recent Apple announcement of Mr. Steve Jobs on the introduction of the ipad in their new line of electronic products. Probably, Microsoft will introduce another state-of-the art mobile communication equipment. Mobile commerce has been introduced to us years ago, but now this could be further enhanced.

The question now is: Will tomorrow bring us more surprises of exciting new inventions? Or will this turn the global world to its near end?

Some authors and church scholars have commented that in this era of globalisation, of fast-paced communication, computers, the internet and the information revolution, the poor have tremendously lagged behind where before their usual preoccupation was to look for something to eat, now they are more left because of the digital divide that has been created out of these new revolutions.

References

Bairoch, P., 2000. The constituent economic principles of globalization in historical perspective: myths and realities (trans. by M. Kendall and S. Kendall). International Sociology June 2000, Vol 15(2): 197-214. DOI: 10.1177/0268580900015002004.

Bartelson, J., 2000. Three concepts of globalization. International Sociology 2000; 15; 180-193. DOI: 10.1177/0268580900015002003.

Bartlett, C. A. and Ghoshal, S., 2002. Managing across borders: the transnational solution. United States of America: Harvard Business School Press.

Bożyk, P., 2006. Globalization and the transformation of foreign economic policy. England: Ashgate Publising Limited. pp. 1-3.

Chiswick, B. R. & Hatton, T. J., 2003. International migration and the integration of labor markets. In: M. D. Bordo, A. M. Taylor, and J. G. Williamson, eds. 2003. Globalization in historical perspective. London: University of Chicago Press, Ltd. pp. 65-120.

Citrin, D. And Fischer, S., 2000. Meeting the challenges of globalization in the advanced economies. In: H. Wagner, ed. Globalization and Unemployment. New York: Springer. p. 19.

Collier, P. and Dollar, D., 2002. Globalization, growth, and poverty: building an inclusive world economy. Washington DC: The International Bank for Reconstruction and Development / The World Bank. pp. 23-51.

Connell, R., 2007. The heart of the problem: South African intellectual workers, globalization and social change. Sociology 2007; 41, 11. DOI: 10.1177/0038038507072281.

Cray, D. and Mallory, G., 1998. Making sense of managing culture. London: International London Business Press Inc.

Findlay, R. and O’Rourke, K. H., 2003. Commodity market integration, 1500-2000. In: M. D. Bordo, A. M. Taylor, and J. G. Williamson, eds. 2003. Globalization in historical perspective. London: University of Chicago Press, Ltd. pp. 13-60.

Giusta, M. D., Kambhampati, U., and Wade, R., (Eds.) 2006. Critical Perspectives on Globalization: The Globalization of the World Economy. UK: Edward Elgar Publishing Limited. pp. xii-xiii.

Halavais, A., 2000. National borders on the world wide web. New Media Society 2000, 2; 7-8. Sage Publications. DOI: 10.1177/14614440022225689.

Kapstein, E. B. & Milanovic, B., 2001. Responding to globalization: social policy in emerging market economies. Global Social Policy 2001, vol. 1 (2): 191-212. Sage Publications. DOI: 10.1177/146801810100100203.

Levitt, T., 1983. The marketing imagination. New York: The Free Press.

Lynch, K., 2003. The forces of economic globalization: challenges to the regime of international commercial arbitration. United Kingdom: Kluwer Law International. pp. 1-3.

Lynch, R., 2008. Global Automotive Vehicle – Strategy in a Mature Market and Toyota: What is its Strategy for World Leadership. In Strategic Management, 5th edition, Financial Times, Prentice Hall, pp. 767-775.

McKern, B. (Ed.), 2003. Managing the Global Network Corporation. New York: Routledge.

Milanovic, B., 2003. The two faces of globalization: Against globalization as we know it, World Development, 31 (4), 667-83. In M. Della Giusta, et al. Eds. Critical Perspectives on Globalization. UK: Edward Elgar Publishing Limited. pp. 55-71.

Mishra, R., 1999. Globalization and the welfare state. UK: Edward Elgar Publishing Limited.

Ogan, C., Bashir, M., Camaj, L., Luo, Y., Gaddie, B., Pennington, R., Rana, S. & Salih, M., 2009. Development communication: The state of research in an era of ICTs and globalization. International Communication Gazette 2009, 71(8): 655-670. DOI: 10.1177/1748048509345060.

O’Rourke, K. H., 2000. Globalization in historical perspective. In: H. Wagner, ed. Globalization and unemployment. New York: Springer. pp. 39-45.

Raab, M., Ruland, M., Schönberger, B., Blossfeld, H., Hofäcker, D., Buchholz, B., & Schmelzer, P., 2008. Global Index: a sociological approach to globalization measurement. International Sociology 2008; 23(4); 596-631. DOI: 10.1177/0268580908090729.

Rozanova, J., 2003. Russia in the context of globalization. Current Sociology, November 2003, Vol. 51(6): 649-669 SAGE Publications. DOI: [0011–3921(200311)51:6;649–669;036276.

Strier, R., Surkis, T., & Biran, D., 2008. Neo-Liberalism: Bottom-up counter-narratives. International Social Work 2008, 51 (4): 493-508. Sage Publications: Los Angeles, London, New Delhi and Singapore. DOI: 10.1177/0020872808090242.

Schettkat, R. and Verhagen, M., 2000. International Unemployment Trends: Measurement and stylized facts. In H. Wagner, H., ed. Globalization and Unemployment. New York: Springer. pp. 59-83.

Springsteel, I., Kuan, J. S., and World Trade Executive, Inc., 2004. Offshore Business Sourcing Special Report on Law & Strategy. USA: WorldTrade Executive, Inc.

Sussland, W. A. 2000. Connected: A Global Approach to Managing Complexity. London: Business Press.

Transportation Research Board Special Report 236, 1992. Intermodal marine container transportation: impediments and opportunities. United States of America: National Research Council. pp. 17-35.

Van Der Bly, M., 2005. Globalization: a triumph of ambiguity. Current Sociology 2005, 53 (875), DOI: 10.1177/0011392105057153.

Wells, G. J., 2001. The issue of globalization – an overview. In. G. J. Wells, R. Shuey, & R. Keily, eds. Globalization. New York: Nova Science Publishers, Inc. pp. 1-30.

Wrigley, N., Coe, N., & Currah, A., 2005. Globalizing retail: conceptualizing the distribution-based transnational corporation (TNC). Progress in Human Geography 2005, 29, 437-457. Sage Publications. DOI: 10.1191/0309132505ph559oa.

Yeates, N., 2002. Globalization and social policy: from global neoliberal hegemony to global political pluralism. Global Social Policy 2002, 2(1): 69-91. DOI: 10.1177/1468018102002001095.