The history of globalisation.wmv

The interview with Martin Wolf, Associate editor and chief economics commentator at the Financial Times Thranscript: I am Martin Wolf and I am chief economics commentator for the Financial Times in London. The globalization process at the moment is often described as the second one. It is important to place it in a historical context. There was a previous period, between 1870 and 1914, when the world economy also integrated. That went into reverse between the two wars with a series of disasters. There has been a slow recovery of integration, which started with the developed countries in the fifties, sixties and seventies and then spread quite quickly in the rest of the world with a series of big policy changes in China, after 1978, when Deng Xiaoping started the reforms; the collapse of the Soviet Union, which was immensely important; the reforms in India, particularly in 1991; and a series of similar market-oriented opening reforms throughout most of the world, including the developed countries. In their different ways. Ronald Reagan and Margaret Thatcher were also part of this process. That was really because it came to be realized by the late seventies that the central planning system, the inward-looking sort of development process that had been seen as being the most advanced in the world-Stalin's model in large measure  didn't work very well. That was the intellectual part. Beyond that, there have also been some quite important technological changes. Over this period, the most important have been in communications technologies. There has been a massive decline in the cost of collecting and distributing information across the world. That has allowed integration of companies across the world. Production is really integrated to an extraordinary degree. Retailers can manage their production and supply lines across oceans. Previously they could hardly do so even across state borders. For example, Wal-Mart buys enormous quantities from China and can manage that process extremely precisely because of modern technology and the know-how and organization that goes with that. Modern technology has created modern global financial markets, 24-hour financial markets. That is a new phenomenon in the world. That is sort of the second element. As a result of these things coming together, billions of people have been integrated into the world economy. There's a huge increase in the labour supply in the world-predominantly unskilled and mostly from Asia  that has sort of turbocharged the whole process. So those are the three major things going on: technology, policy change and, as a result of these two things, the entry of billions of people into the world economy. And that is contemporary globalization.