CHAPTER 5FOUNDATIONS OF

GLOBALIZATION

Why and How did Globalization Begin?

• Differing opinions:– As old as trade among

people– 325 BCE when the

Buddhist leader Maurya combined religion, trade, and military to create a protected trading area

– 1100’s when Genghis Khan introduced fighting from horseback

– 1492 when Columbus made his first trip to the Americas

EARLY TRADE ROUTESTHE SILK ROAD

Linked Asia and EuropeNot only goods, but ideas travelled this route. Ex:

Indo-Arabic number system (1,2,3….)

ONE THEORY3 DISTINCT PHASES

First Round Goods and ideas were exchanged along ancient trade routes.

Second Round Grew out of the first round and began in the late 1400’s. Building on new ideas..new technologies…IMPERIALISM.

Third Round The world is now in this phase. Began after WWII. Rapid growth, instant communication..marked by the rise of China and India as economic powers.

The Concept of Historical Globalization

• Some economists refer to the second round as HISTORICAL GLOBALIZATION. The beginning of this is usually marked as 1492, the year Columbus made his first trip to the Caribbean. Some say it ended when the US and Soviet Union emerged as superpowers after WWII.

• The second theory on HISTORICAL GLOBALIZATION says it started in the 1800’s when low cost goods from factories poured into markets around the world …changed the way people lived.

HOW DID THE FOUNDATIONS OF HISTORICAL GLOBALIZATION AFFECT

PEOPLE?The Printing Press: Encouraged people to read because it

was now cheaper to buy books. This played an important role in the spreading of new ideas about science, religion, politics etc. across Europe.

The world changed from place being decided by birth, to towns and cities growing with independent city dwellers who practiced their trades and crafts for money…the earliest middle class. This also fostered in them ideas of individualism..valued education, welcomed innovations. As the middle class grew larger, trade became more important.

IMPERIALISM AND MERCANTILISM

IMPERIALISM refers to extending a countries power by acquiring new territories and establishing control over their country and people’s.

MERCANTILISM strictly controlling trade. For example: colonies had to ship their goods to the mother country=no money for the colonies.

• After the fall of Rome (476 CE) towns and cities began to grow.

• Many historians believe that those townspeople and city dwellers were the earliest middle class – people who earned money by practicing a trade or craft.

• As the middle class grew, trade became more important.

The Rise of a European Middle Class

• European imperialism, the policy of extending a country’s power by acquiring new territories and establishing control over other countries and peoples, was motivated by trade.

• From the 16th-18th centuries European governments practiced an economic system called mercantilism where trade was strictly controlled trade to favor the home country.

• Practices of mercantilism include: closing ports to foreign trade, exporting more than importing, exploiting the colonies for raw materials, forcing colonies to purchase goods manufactured in the mother country.

Global Competition for Trade

Decline of Mercantilism• As the 18th century unfolded, many

people began to resist mercantilism? Why?

• 1776…American colonies rebelled..American Revolution. This resulted in the creation of the United States as an independent country.

• In the same year, Adam Smith published “The Wealth of Nations” This book challenged government economic control, and advocated for free trade….set the ground work for CAPITALISM.

• After the 18th Century mercantilism declined as colonies such as the United States fought for their independence (1776), and books such as Adam Smith’s The Wealth of Nations challenged government economic control and argued for free trade.

• Adam Smith laid the foundation for the economic system called capitalism.

• Britain, France, the Dutch, Spanish and Portuguese established large colonial empires because of their strong central governments and superior naval, gun and cannon power.

Global Competition for Trade cont

Dividing Up the World British, French, Dutch, Spanish and Portuguese had

established large colonial empires by 1770.