When Chinese e-commerce giant Alibaba in 2018 announced it had chosen the ancient city of

Xi’an as the site for its new regional headquarters, the symbolic value wasn’t lost on the
company: it had brought globalization to its ancient birthplace, the start of the old Silk Road. It
named its new offices aptly: “Silk Road Headquarters”. The city where globalization had started
more than 2,000 years ago would also have a stake in globalization’s future.
Alibaba shouldn’t be alone in looking back. As we are entering a new, digital-driven era of
globalization – we call it “Globalization 4.0” – it is worthwhile that we do the same. When did
globalization start? What were its major phases? And where is it headed tomorrow?

This piece also caps our series on globalization. The series was written ahead of the 2019 Annual
Meeting of the World Economic Forum in Davos, which focuses on “Globalization 4.0”. In
previous pieces, we looked at some winners and losers of economic globalization,
the environmental aspect of globalization, cultural globalization and digital globalization. Now we
look back at its history. So, when did international trade start and how did it lead to
globalization?
Silk roads (1st century BC-5th century AD, and 13th-14th centuries AD)
People have been trading goods for almost as long as they’ve been around. But as of the 1st
century BC, a remarkable phenomenon occurred. For the first time in history, luxury products
from China started to appear on the other edge of the Eurasian continent – in Rome. They got
there after being hauled for thousands of miles along the Silk Road. Trade had stopped being a
local or regional affair and started to become global.
That is not to say globalization had started in earnest. Silk was mostly a luxury good, and so
were the spices that were added to the intercontinental trade between Asia and Europe. As a
percentage of the total economy, the value of these exports was tiny, and many middlemen
were involved to get the goods to their destination. But global trade links were established, and
for those involved, it was a goldmine. From purchase price to final sales price, the multiple went
in the dozens.The Silk Road could prosper in part because two great empires dominated much of
the route. If trade was interrupted, it was most often because of blockades by local enemies of
Rome or China. If the Silk Road eventually closed, as it did after several centuries, the fall of the
empires had everything to do with it. And when it reopened in Marco Polo’s late medieval time, it
was because the rise of a new hegemonic empire: the Mongols. It is a pattern we’ll see
throughout the history of trade: it thrives when nations protect it, it falls when they don’t.
Spice routes (7th-15th centuries)
The next chapter in trade happened thanks to Islamic merchants. As the new religion spread in
all directions from its Arabian heartland in the 7th century, so did trade. The founder of Islam,
the prophet Mohammed, was famously a merchant, as was his wife Khadija. Trade was thus in
the DNA of the new religion and its followers, and that showed. By the early 9th century, Muslim
traders already dominated Mediterranean and Indian Ocean trade; afterwards, they could be
found as far east as Indonesia, which over time became a Muslim-majority country, and as far
west as Moorish Spain.
The main focus of Islamic trade in those Middle Ages were spices. Unlike silk, spices were traded
mainly by sea since ancient times. But by the medieval era they had become the true focus of
international trade. Chief among them were the cloves, nutmeg and mace from the fabled Spice
islands – the Maluku islands in Indonesia. They were extremely expensive and in high demand,
also in Europe. But as with silk, they remained a luxury product, and trade remained relatively
low volume. Globalization still didn’t take off, but the original Belt (sea route) and Road (Silk
Road) of trade between East and West did now exist.
Age of Discovery (15th-18th centuries)
Truly global trade kicked off in the Age of Discovery. It was in this era, from the end of the 15th
century onwards, that European explorers connected East and West – and accidentally
discovered the Americas. Aided by the discoveries of the so-called “Scientific Revolution” in the
fields of astronomy, mechanics, physics and shipping, the Portuguese, Spanish and later the
Dutch and the English first “discovered”, then subjugated, and finally integrated new lands in
their economies.
The Age of Discovery rocked the world. The most (in)famous “discovery” is that of America by
Columbus, which all but ended pre-Colombian civilizations. But the most consequential
exploration was the circumnavigation by Magellan: it opened the door to the Spice islands,
cutting out Arab and Italian middlemen. While trade once again remained small compared to
total GDP, it certainly altered people’s lives. Potatoes, tomatoes, coffee and chocolate were
introduced in Europe, and the price of spices fell steeply.
Yet economists today still don’t truly regard this era as one of true globalization. Trade certainly
started to become global, and it had even been the main reason for starting the Age of
Discovery. But the resulting global economy was still very much siloed and lopsided. The
European empires set up global supply chains, but mostly with those colonies they owned.
Moreover, their colonial model was chiefly one of exploitation, including the shameful legacy of
the slave trade. The empires thus created both a mercantilist and a colonial economy, but not a
truly globalized one.
First wave of globalization (19th century-1914)
This started to change with the first wave of globalization, which roughly occurred over the
century ending in 1914. By the end of the 18th century, Great Britain had started to dominate
the world both geographically, through the establishment of the British Empire, and
technologically, with innovations like the steam engine, the industrial weaving machine and
more. It was the era of the First Industrial Revolution.
The “British” Industrial Revolution made for a fantastic twin engine of global trade. On the one
hand, steamships and trains could transport goods over thousands of miles, both within
countries and across countries. On the other hand, its industrialization allowed Britain to make
products that were in demand all over the world, like iron, textiles and manufactured goods.
“With its advanced industrial technologies,” the BBC recently wrote, looking back to the era,
“Britain was able to attack a huge and rapidly expanding international market.”
The resulting globalization was obvious in the numbers. For about a century, trade grew on
average 3% per year. That growth rate propelled exports from a share of 6% of global GDP in
the early 19th century, to 14% on the eve of World War I. As John Maynard Keynes, the
economist, observed: “The inhabitant of London could order by telephone, sipping his morning
tea in bed, the various products of the whole Earth, in such quantity as he might see fit, and
reasonably expect their early delivery upon his doorstep.”
And, Keynes also noted, a similar situation was also true in the world of investing. Those with
the means in New York, Paris, London or Berlin could also invest in internationally active joint
stock companies. One of those, the French Compagnie de Suez, constructed the Suez Canal,
connecting the Mediterranean with the Indian Ocean and opened yet another artery of world
trade. Others built railways in India, or managed mines in African colonies. Foreign direct
investment, too, was globalizing.
While Britain was the country that benefited most from this globalization, as it had the most
capital and technology, others did too, by exporting other goods. The invention of the
refrigerated cargo ship or “reefer ship” in the 1870s, for example, allowed for countries like
Argentina and Uruguay, to enter their golden age. They started to mass export meat, from cattle
grown on their vast lands. Other countries, too, started to specialize their production in those
fields in which they were most competitive.
But the first wave of globalization and industrialization also coincided with darker events, too. By
the end of the 19th century, the Khan Academy notes, “most [globalizing and industrialized]
European nations grabbed for a piece of Africa, and by 1900 the only independent country left
on the continent was Ethiopia”. In a similarly negative vein, large countries like India, China,
Mexico or Japan, which were previously powers to reckon with, were not either not able or not
allowed to adapt to the industrial and global trends. Either the Western powers put restraints on
their independent development, or they were otherwise outcompeted because of their lack of
access to capital or technology. Finally, many workers in the industrialized nations also did not
benefit from globalization, their work commoditized by industrial machinery, or their output
undercut by foreign imports.
The world wars
It was a situation that was bound to end in a major crisis, and it did. In 1914, the outbreak of
World War I brought an end to just about everything the burgeoning high society of the West
had gotten so used to, including globalization. The ravage was complete. Millions of soldiers died
in battle, millions of civilians died as collateral damage, war replaced trade, destruction replaced
construction, and countries closed their borders yet again.
In the years between the world wars, the financial markets, which were still connected in a
global web, caused a further breakdown of the global economy and its links. The Great
Depression in the US led to the end of the boom in South America, and a run on the banks in
many other parts of the world. Another world war followed in 1939-1945. By the end of World
War II, trade as a percentage of world GDP had fallen to 5% – a level not seen in more than a
hundred years.
Second and third wave of globalization
The story of globalization, however, was not over. The end of the World War II marked a new
beginning for the global economy. Under the leadership of a new hegemon, the United States of
America, and aided by the technologies of the Second Industrial Revolution, like the car and the
plane, global trade started to rise once again. At first, this happened in two separate tracks, as
the Iron Curtain divided the world into two spheres of influence. But as of 1989, when the Iron
Curtain fell, globalization became a truly global phenomenon.
In the early decades after World War II, institutions like the European Union, and other free
trade vehicles championed by the US were responsible for much of the increase in international
trade. In the Soviet Union, there was a similar increase in trade, albeit through centralized
planning rather than the free market. The effect was profound. Worldwide, trade once again rose
to 1914 levels: in 1989, export once again counted for 14% of global GDP. It was paired with a
steep rise in middle-class incomes in the West.

Then, when the wall dividing East and West fell in Germany, and the Soviet Union collapsed,
globalization became an all-conquering force. The newly created World Trade Organization
(WTO) encouraged nations all over the world to enter into free-trade agreements, and most of
them did, including many newly independent ones. In 2001, even China, which for the better
part of the 20th century had been a secluded, agrarian economy, became a member of the
WTO, and started to manufacture for the world. In this “new” world, the US set the tone and led
the way, but many others benefited in their slipstream.
At the same time, a new technology from the Third Industrial Revolution, the internet,
connected people all over the world in an even more direct way. The orders Keynes could place
by phone in 1914 could now be placed over the internet. Instead of having them delivered in a
few weeks, they would arrive at one’s doorstep in a few days. What was more, the internet also
allowed for a further global integration of value chains. You could do R&D in one country,
sourcing in others, production in yet another, and distribution all over the world.
The result has been a globalization on steroids. In the 2000s, global exports reached a
milestone, as they rose to about a quarter of global GDP. Trade, the sum of imports and exports,
consequentially grew to about half of world GDP. In some countries, like Singapore, Belgium, or
others, trade is worth much more than 100% of GDP. A majority of global population has
benefited from this: more people than ever before belong to the global middle class, and
hundred of millions achieved that status by participating in the global economy.

Globalization 4.0
That brings us to today, when a new wave of globalization is once again upon us. In a world
increasingly dominated by two global powers, the US and China, the new frontier of globalization
is the cyber world. The digital economy, in its infancy during the third wave of globalization, is
now becoming a force to reckon with through e-commerce, digital services, 3D printing. It is
further enabled by artificial intelligence, but threatened by cross-border hacking and
cyberattacks.
At the same time, a negative globalization is expanding too, through the global effect of climate
change. Pollution in one part of the world leads to extreme weather events in another. And the
cutting of forests in the few “green lungs” the world has left, like the Amazon rainforest, has a
further devastating effect on not just the world’s biodiversity, but its capacity to cope with
hazardous greenhouse gas emissions.
But as this new wave of globalization is reaching our shores, many of the world’s people are
turning their backs on it. In the West particularly, many middle-class workers are fed up with a
political and economic system that resulted in economic inequality, social instability, and – in
some countries – mass immigration, even if it also led to economic growth and cheaper
products. Protectionism, trade wars and immigration stops are once again the order of the day in
many countries.
As a percentage of GDP, global exports have stalled and even started to go in reverse slightly.
As a political ideology, “globalism”, or the idea that one should take a global perspective, is on
the wane. And internationally, the power that propelled the world to its highest level of
globalization ever, the United States, is backing away from its role as policeman and trade
champion of the world.
It was in this world that Chinese president Xi Jinping addressed the topic globalization in a
speech in Davos in January 2017. “Some blame economic globalization for the chaos in the
world,” he said. “It has now become the Pandora’s box in the eyes of many.” But, he continued,
“we came to the conclusion that integration into the global economy is a historical trend. [It] is
the big ocean that you cannot escape from.” He went on the propose a more inclusive
globalization, and to rally nations to join in China’s new project for international trade, “Belt and
Road”.
It was in this world, too, that Alibaba a few months later opened its Silk Road headquarters in
Xi’an. It was meant as the logistical backbone for the e-commerce giant along the new “Belt and
Road”, the Paper reported. But if the old Silk Road thrived on the exports of luxurious silk by
camel and donkey, the new Alibaba Xi’an facility would be enabling a globalization of an entirely
different kind. It would double up as a big data college for its Alibaba Cloud services.
Technological progress, like globalization, is something you can’t run away from, it seems. But it
is ever changing. So how will Globalization 4.0 evolve? We will have to answer that question in
the coming years.
1. Leonid Grinin and Andrey Korotayev contribute to the history of globalization an analysis of
the nature of global processes and causes of increasing integration. They propose a history of
globalization that draws on a special methodology and a world-system approach based on the
development of spatial links over seven periods of time starting with the Agrarian Revolution
(four before and three after the great geographic discoveries). The time periods range from
Introduction: Globalization As A Link Between The Past And The Future | xxi before the 4th
millennium BCE to the 21st century. The types of spatial links described range from local and
regional links to global and planetary links through continental and intercontinental ones.
Evidence is presented for each period. This includes for instance the existence of large-scale
trade in metals as early as 4th millennium BCE, and the social impact of intercontinental trade in
the late 1st millennium BCE. The evidence also includes a density and diversity of
transcontinental links suffi cient to transmit disease (bubonic plague) from the Far East to the
Atlantic in two decades (1330s-1340s), and the comparability of some aspects of global
integration prior to the great geographic discoveries with more recent periods. The authors note
that globalization began at least as early as 4th thousand BCE. The proposed system of spatial
links addresses shortcomings in previous systems that tended to underestimate the scale of
spatial links in the pre-industrial era.

2. William Thompson contributes to the history of political and economic globalization an

analysis of the signifi cance of global events. He argues that the way we make sense of world
politics and episodes of accelerated globalization depends on our historical scripts, and that
these vary considerably. It is not so much a matter of disagreeing about what happened in the
past as it is the one of disagreeing about which past events were most signifi cant to an
understanding of international relations processes. Validating one person’s historical script
versus someone else’s is a highly problematic exercise. Counterfactuals, however, can be utilized
to at least suggest or reinforce the asserted signifi cance of diff erent versions of political-
economic history. A series of eight counterfactuals encompassing the past 1000 years are
harnessed to buttress the utility of framing the development of the modern world economy
around a chain of lead economies and system leaders extending back to Sung China and forward
to the United States. These potential turning points matter in part because they did not go down
the counterfactual path but might have. They matter even more because of the path that was
pursued at each point. They matter because they created a political-economic structure for world
politics that has fi rst emerged, then evolved and, so far, endured. The implications of what did
happen (not what did not happen) are still with us today.

3. Christopher Chase-Dunn contributes to the globalization in history section a discussion on the

continuities and transformations of systemic logic. Modes of accumulation in the world historical
evolutionary perspective are described and the prospects for systemic transformation in the next
several decades evaluated. The article also considers the meaning of the recent global fi nancial
meltdown by comparing it with earlier debt crises and periods of collapse. Has this been xxii |
Sheffi eld, Korotayev, & Grinin just another debt crisis like the ones that have periodically
occurred over the past 200 years, or is it part of the end of capitalism and the transformation to
a new and diff erent logic of social reproduction? The author considers how the contemporary
network of global counter-movements and progressive national regimes are seeking to
transform the capitalist world-system into a more humane, sustainable and egalitarian
civilization and how the current crisis is aff ecting the network of counter-movements and
regimes, including the Pink Tide populist regimes in Latin America, and the anti-austerity
movements. The ways in which the New Global Left is similar to, and diff erent from, earlier
global counter-movements are also described. The discussion contributes to the development of
a comparative and evolutionary framework that examines what is really new about the current
global situation and what constitutes therefore collectively rational responses.

4. Randall Collins completes Part I with a geopolitical analysis of key globalization events in the
past, present, and future. As historical sociologists in the tradition of Weber have documented,
the state’s existence has depended on its military power, which varies in degree of
monopolization, of legitimacy, and of extent of territory controlled. Geopolitical principles
(comparative resource advantage, positional or marchland advantage, logistical overextension)
have determined both the Chinese dynastic cycles, and the balance of power in European
history. In 1980 the author was successful in using these geopolitical principles to predict the
strains which brought about the collapse of the Soviet empire, which was itself a continuation of
the older Russian empire. The same geopolitical principles continue to apply to recent wars in
Afghanistan, Iraq, and Pakistan. Guerrilla wars diff er from conventional wars by relying
especially on geopolitical principles of promoting enemy overextension. Geopolitics encompasses
both war and diplomacy, the means by which coalitions among states are organized. The rule of
international law depends on a dominant coalition upheld by favorable geopolitical conditions;
and on the extension of bureaucracy via state penetration, but now on a world-wide scale.
Randall Collins answers two key questions regarding historical globalization processes: “Is the
world of the early 21st century moving towards a new era of international rule of law to support
universal human rights?” and “Where does the opposition to universal human rights come
from?” His answers to both of these questions demonstrate that international rule of law is not
an alternative to geopolitics, but is successful only under specifi c geopolitical conditions.