II. The waves of globalization

A. 2 periods of globalization

  • 1st period: from the industrial revolutions to World War I
  • 2nd period: from the beginning of the 1950s. It is divided into two phases:
    —pre-oil shock phase: internationalization
    —post-oil shock phase: globalization

B. 2 main causes of globalization

  1. Technical progress allowing a decrease in transport costs
  2. The success of free-trade ideas, since the 1840s with the abolition of taxes on wheat, with GATT and WTO

C. The elements of globalization

  • Intermediation: the bank is the intermediary between the individual and his activities;
  • Internationalization of finance: investments in banks or insurance companies;
  • Risk management;
  • Foreign direct investment (FDI): capital flows for international firms in the form of FDI

Rodrick’s trilemma:

Trilemme de Rodrick

According to Rodrick, it is difficult to have hyper-globalization, the nation-state, and democracy at the same time. Depending on the period, one chooses two of the three elements. Today, we find tensions that come from the fact that individuals reject hyper-globalization; in order to combine the nation-state and democracy, we need a withdrawal from globalization.

Summary of the Economics Course on Globalization:

  • I. Globalization: presentation and phases
  • II. Waves of globalization
  • III. The geography of globalization exchanges
  • IV. Multinational firms
  • V. Protectionism

General Knowledge: globalization