1 A brief history of
globalization
Learning outcomes
By the end of this chapter you should understand:
● The way in which global trade has developed
● The means by which history has shaped organizations and trade
● The importance of government support to trading organizations
Definitions
Globalization, as the term is used in this book, is the process whereby organizations
offer their products and services on a global rather than a local basis. As part of this
process trade barriers are dismantled giving globalization a political as well as an
economic impact. As stated in the Introduction Ellwood (2001) believes that glob-
alization began with the launch of the European colonial era five centuries ago.
The view of Alan Rugman (2000) that what is described as globalization is actually
either regionalization or trading between the three great trading blocs of the world –
North America, Europe and the Far East – is also worthy of careful consideration. If
what Rugman says is true then many of the perceived problems associated with
globalization and put forward with considerable passion by, among others, Giddens
(1999), Herz (2001), Klein (2000) and Korten (1996) may be illusionary. These
perceived problems are discussed in chapter 4.
Think/Discussion point: Consider the everyday items that you use – foodstuffs,
electrical equipment, motor vehicle etc. Examine them to see how many differ-
ent countries they come from – does the answer surprise you?
The development of globalization
‘Those who cannot remember the past are condemned to repeat it.’
George Santayana, 1905
In order to predict the future with any degree of accuracy it is necessary to under-
stand the present. In order to understand the present requires knowledge of how the
Chapter 1 A brief history of globalization 7
R. Cartwright, Mastering the Globalization of Business
© Roger Cartwright 2004
current situation came about, i.e. it is necessary to know about the past. There are
those who believe that the history of a subject is unimportant and that texts on that
subject need not devote any part to its history. The author is not of this view. To
understand globalization and the opportunities and threats that it presents it is nec-
essary to review its development. George Santayana’s words as quoted above have a
universal truth, as without a knowledge of history mistakes are likely to be repeated.
Think/Discussion point: Consider a recent economic or political event such as
the 2003 conflict in Iraq. How easy would it be to understand the event fully
without a knowledge of the circumstances and actions leading up to it?
This chapter considers the development of firstly internationalization of trade
and latterly globalization, i.e. the trend towards a single global market up to 1945.
Post 1945 the institutions that govern world trade and relations – the United
Nations, the International Monetary Fund, the World Bank and the World Trade
Organization – were set up. Countries also began to come together as discrete trad-
ing blocs linked by treaty, the European Union being the prime example. Post-1945
developments form the substance of this book.
Globalization as described in this material began not as many believe towards the
end of the twentieth century but with the voyages of discovery emanating in Europe
from the fifteenth century onwards. Magellan, Drake, de Gama etc. are familiar figures
in the pages of history books but they have also made a contribution to the commer-
cial world as we see it today. While some of the explorers may have been concerned
purely with extending knowledge about the world (a world many believed was both
flat and at the centre of the universe as taught by the Church – heliocentricity, the idea
that the earth revolved around the sun was a heresy for which death by burning could
be ordered), most were concerned with commerce. They were seeking new markets for
the products of their sponsors and new products to sell on their home market. The
major developments in this process are considered in some detail below. It is not nec-
essary to learn the names of people and dates but it is important that you understand
the hazards that faced these explorers and the commercial and political imperatives
that drove them. The ships of these explorers left with trading goods and the intention
was that they would return with goods for the European markets.
It is worth noting at this point that much of the literature about globalization is
‘Eurocentric’, since the development of globalization is perceived to have begun
with European exploration. There has been recent speculation that the Chinese
were undertaking voyages of discovery across the globe to Africa, Australia, Europe
and the Americas as early as 1421 (Menzies, 2002) and that they may have been the
originators of globalization – a point discussed later in this chapter.
Think/Discussion point: How easy is it to think outside one’s culture? History is
often supposed to be about dates and facts. As they are in the past, surely they
can be verified? Try to find a history book from another culture that describes an
event that is also covered in a history book from your culture – are the narrative
8 Mastering the Globalization of Business
