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When did globalization begin?

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Some world historians attach globalization “big bang” significance to 1492 (ChristopherColombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an endrun around Africa and snatches monopoly rents away from the Arab and Venetian spice traders).Such scholars are on the side of Adam Smith who believed that these were the two most importantevents in recorded history. Other world historians insist that globalization stretches back even earlier.There is a third view which argues that the world economy was fragmented and completely deglobalizedbefore the 19th century. None of these three competing views has explicitly shown thedifference between trade expansion driven by booming demand and supply within the tradingeconomies (e.g., the underlying fundamental, population growth), and trade expansion driven by theintegration of markets between trading economies (e.g., the central manifestation of globalization,commodity price convergence). This paper makes that distinction, and then offers two novelempirical tests which allow us to discriminate between these three competing views. Both testsshow: there is no evidence supporting the view that the world economy was globally integrated priorto 1492 and/or 1498; there is also no evidence supporting the view that these two dates had theeconomic impact on the global economy that world historians assign to them; but there is abundantevidence supporting the view that the 19th century contained a very big globalization bang. Thesetests involve a close look at the connections between factor prices, commodity prices andendowments world wide.

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Kevin H. O’Rourke

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