Technology and globalisation

Abstract

Ever since Neolithic times, the geography and range of commodities covered by long- distance trade have been strongly influenced by technology. From 1100 to 1400, Mediterranean trade grew, aided by technological improvements in ship design and navigational aids. During the fi fteenth century, the Portuguese developed the threemasted sailing ship that allowed Europeans to travel the world with a reasonable chance of returning with valuable cargo. Europeans then traded globally with most of the world and conquered much of it, neither of which could have happened with European ships vintage 1400. In the nineteenth century, railroads created a vast single market in the US and along with iron steamships enabled a worldwide specialisation: raw materials and foodstuffs entering Europe and manufactured goods leaving. After 1945, innovations in transport and communications (ICTs) initiated a new type of globalisation. Manufacturing was disintegrated into global value chains spreading over developing and developed countries. Driven by new ICTs, services and fi nance were globalised. The high oil prices of 2007-08 caused some localisation of manufacturing. Should the price return to these or higher levels, there will be strong pressures to de- globalise manufacturing, but not services and fi nance, which should continue globalising.