Globalization History: Silk Road

• In 2018, Alibaba announced that the ancient city of Xi'an was chosen as its new regional headquarters, symbolizing the return of globalization to its ancient birthplace, which started on the old Silk Road and is now named "Silk Road Headquarters."
• Xi'an, where globalization started more than 2000 years ago, would have a stake in globalization's future.

Major aspects of globalization history

• The Silk Road
• The spice routes
• The Age of Discovery
• The first wave of globalization
• The world wars
• The second and third waves of globalization
• Globalization 4.0

The Silk Road

• Globalization began in the Silk Roads, in which China and Rome partnered through trade and it became a period of global trade.
• The Silk Road trade route continued, but it was closed for centuries due to the fall of the Han Dynasty and Roman Empire.
• It was reopened during Marco Polo's late medieval time due to the rise of the Mongol Empire.

Spice Routes

• The spice route started during the 7th century and ended during the 15th century, mainly by Islamic merchants.
• Islamic merchants became a part of the religion's DNA because their founder, Muhammad, was a known merchant.
• Muslim traders became prominent in Mediterranean and Indian Ocean trade by the early 9th century.
• They became a focus of international trade during the medieval period, and they were found as far as East Indonesia, which later became a Muslim-majority country.
• Islamic trade focused on spices, like cloves, nutmeg, and mace from the Spice Islands that were expensive and in high demand, which were traded by sea since ancient times.

Age of Discovery/Exploration

• The Age of Discovery/Exploration started in the 15th century and ended in the early 17th century, recognized as one of the most important events in Western history and involving European exploration.
• European countries used their navigational skills to find new routes to distant trading partners in the Far East, including China, Japan, and India.
• Absolute monarchies rose in Europe
• Europeans were interested in foreign countries.

First Wave of Globalization

• The first wave of globalization ended in 1914, led by Britain's dominance in global trade and technology during the First Industrial Revolution.
• British innovations like the steam engine and industrial weaving machine, along with the expansion of the British Empire, stimulated global trade.
• Steamships and trains helped transport goods worldwide, while industrialization allowed Britain to produce goods like textiles and iron that were in high demand.
• Global trade grew significantly between the 19th century and World War I, averaging 3% per year.
• By the eve of World War I, exports made up 14% of global GDP (Gross Domestic Product).
• People in cities like London could easily access products from different parts of the world, while people in cities like New York, Paris, and Berlin could invest in international projects, like the Suez Canal.
• Countries like Argentina and Uruguay benefited from this period of globalization and prospered through exporting meats.
• The outbreak of World War I in 1914 ended what the high society of the West had gotten so used to, including globalization, and it caused a major crisis.
• Millions of soldiers and civilians died, trade was replaced by war, and countries closed their borders.
• The financial market, which was connected to a global web, caused further damage to the global economy and its connections between the world wars.
• 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.
• By the end of World War II (1939-1945), trade as a percentage of world GDP had fallen to 5%.

Second and Third Wave of Globalization

• The second and third waves of globalization began after World War II, driven by the United States' leadership and technological advances like cars and airplanes.
• Initially, globalization occurred along separate tracks due to the Iron Curtain.
• After 1989, it became a global phenomenon.
• Institutions like the European Union and the WTO (World Trade Organization) promoted free trade, and by 1989, global trade reached the same level as in 1914 (14%).
• After the fall of the Iron Curtain and the Soviet Union, globalization accelerated, China joined the WTO in 2001.
• The rise of the internet during the Third Industrial Revolution further facilitated globalization by enabling global communication and integrated value chains across different countries.
• By the 2000s, global exports had reached a quarter of global GDP, with trade accounting for about half of the world's GDP.
• In countries like Singapore and Belgium, trade exceeded 100% of their GDP, and this wave of globalization lifted millions into the middle class.

Globalization 4.0

• Globalization 4.0 represents a new phase in the global economy, driven by digital technologies like e-commerce, AI, and 3D printing, with the US (Iphone) and China dominating this era.
• It offers opportunities, but it also faces challenges such as cyberattacks, economic inequality, and rising protectionism, especially in the West.
• Global exports are stagnating, and political support for "globalism" is waning, countries promote an inclusive global economy through initiatives like the Belt and Road.
• Despite technological advancements, negative effects of globalization, such as climate change and environmental degradation, are also growing, creating further global challenges.
• The future impact of Globalization 4.0 remains uncertain.