0.3 Globalization

Introduction

The prime focus of this chapter is upon the process of globalization that has, among other things, materially increased connection between world markets and economies since about 1980. As we shall see, globalization has had many important dimensions. One of the most significant of these has to do with certain aspects of income distribution. The following chapter is concerned exclusively with income distribution generally. The difference between the two chapters is as follows: discussion of income distribution in this chapter centers upon “ between country inequality, the gap between rich and poor nations”. Chapter 4 deals primarily with income distribution issues within nations: the share of national income received by individuals in the top, middle and bottom income ranges. There is necessarily some overlap between the two chapters, but this is not only unavoidable, but desirable. We will see that the most recent wave of globalization, contributed to a decline in income inequality between rich and poor nations, but higher income inequality within countries. Source: OECD 2014.

Globalization

Since 1995 the international press and many learned journals have been filled with articles on globalization, often with exaggerated estimates of the degree and effects of globalization. In recent years, globalization has become something of a cliché . It has sometimes been depicted as a magic potion or a poison, depending on one’s political views. It is neither.

Globalization strictly speaking began 60,000 years ago when the first humans walked out of Africa. It has waxed and waned ever since. The Phoenicians began international trade with tin brought from Wales in Bronze Age (3,000 B.C.E). Marco Polo, who fashioned trade deals in India and China, was a forerunner of globalization and he was there just before the Ming Dynasty Empress started burning ships in 13th century China.

Globalization continued in the 14th and 15th centuries. Then, Imperial China became highly dependent on New World plants and Peruvian silver. The latter ultimately weakened the Ming Dynasty. Jared Farmer (2011, November 4), “Pangaea Penultima”, Science, 334(6056): 600-601. Ibid, p.602; see also Dennis Flynn and Arturo Giraldez, “Born With a Silver Spoon: The Origin of World Tade in 1571,” Journal of World History 6:2 (1995). Not only that, but after 1492 human-powered exchanges of populations, species and genomes from the New World to the Old had far-reaching consequences for ecology as well as markets. To illustrate only 30 years after Pizarro overthrew the Inca Empire in the 16th century, Spanish farmers were exporting potatoes to France. But the potato was indigenous to the Andes. In turn, it has been estimated that 20% to 30% of world population increase from 1700-1900 was due to better nutrition from the spread of the potato. Nathan Nunn and Nancy Qian (2011), “The Potato's Contribution to Population and Urbanization: Evidence from a Historical Experiment,” Quarterly Journal of Economics, 126(2): 593-650.