GLOBALISATION

Globalisation

Globalisation

Before 1870, the important innovating industries were textiles (especially cotton) and iron, with steam the new source of power. After 1870 the focus of technical change began to shift, as increasing emphasis came to be placed on the production of steel, machine tools, electrical engineering products, and chemicals. Electricity emerged as a new form of energy and the internal combustion engine as the basis of a new means of transport. The outcome of all these developments was a flood of new goods (Hannah 2008, 46-79), including railway equipment, steamships, steel and electrical products, plant and machinery of all kinds, and a growing variety of other manufactured products. In addition, many of the items already traded internationally became cheaper, especially cotton cloth. The result was a rapid expansion in foreign trade in manufactures (Green, Urquhart 1976, 217-252). The industrial revolution, which began in Britain in the late eighteenth century and which spread first to Europe and then to the United States during the nineteenth century, enormously increased the opportunities for trade between countries, for the new technology presupposed a wide variety of resources and an expanding market. But except for a few favoured countries, such as the United States, most industrializing nations during the nineteenth century had to look outside their own borders for markets in which to sell the surplus output yielded by modern industry, and for the additional supplies of raw materials that were needed when domestic production of these inputs failed to keep pace with rising industrial demand (Hannah 2008, 46-79). A similar situation arose in the new centres of primary production overseas, where the use of modern farming techniques produced agricultural surpluses for which markets had to be found abroad. At the same time, the apparatus of improved farming often had to be imported, along with the transport equipment necessary to the opening up of new areas of primary production.

As industrial growth accelerated in the last quarter of the nineteenth century, the consumption of raw materials increased phenomenally (Green, Urquhart 1976, 217-252). Between 1880 and 1913, petroleum production doubled every ten years. Success in the search for foreign markets for manufactured goods depended very much on whether the new techniques resulted in a new product or in the cheapening of an existing one. Obviously trade in a new product will grow fastest when many countries are unable to produce it for themselves but want to consume it. For this reason, the rather limited spread of industrialization before 1913 must have given a powerful impetus to the growth of trade in industrial goods during the nineteenth century (Bordo, Eichengreen, Irwin 1999, 31). On the other hand, where innovation involves the cheapening of old goods the effects on trade are often less clear. Thus, foreign trade in cheap machine-made articles often increased at the expense of trade in hand-made substitutes. This happened with British cotton textiles and Indian calicoes during the late eighteenth and early nineteenth century, though on balance the revolution in textile manufacturing that occurred in Britain ...