When did globalisation truly begin?

  • Business
  • Saturday, 25 Jun 2016

1492 is associated with the discovery of America by Christopher Columbus. By 1498, when Vasco da Gama opened up the sea route via the Cape of Good Hope to Asia via Africa, trade became truly globalised. Prior to 1492, trade between Europe and Asia was dominated by Islamic traders from Spain to Malacca, via the sea route and also overland via Bagdad to China through the Silk Road.

1492 was an important watershed for globalisation because it also marked the re-conquest of Spain by the Catholic King Ferdinand of Aragon and Queen Isabel of Castile when the last Islamic fortress of Alhambra in Granada surrendered. That year began the expulsion of Jews and Moors from Spain, drawing a line on the Golden Age of Islam (8th to 15th century) when Muslims, Jews and Christians lived for 700 years in Spain, changing the intellectual landscape of Europe.

The rise of the West is commonly associated with the Renaissance (14th to 17th century), sparked by the migration of Greek scholars to Italy after the fall of Constantinople (Istanbul) to the Ottoman Empire in 1453. But the revival of Greek philosophy and science in Europe owed no small measure to Islamic philosophers like Ibn Rusd (Averroes, 1126-1198 AD), scientist Ibn Sina (Avicenna 980-1037 AD) and travellers like Ibn Battuta (1304-1369) who also travelled to Asia and Africa after the journey of Marco Polo (1254-1324 AD) to China.

There is increasing awareness that even though there was considerable trade between Rome and the Indian and China market during the time of Christ, it was essentially Euro-Asian trade.

What was remarkable was that within 100 years of discovery of America, Spain and Portugal had opened up the American and Asian markets, followed quickly by the Dutch and English. Between 1530 to 1670, Europe imported over 255 tonnes of gold and 150,000 tonnes of silver from South America, which enabled Europe to finance its Industrial Revolution.

After 1574, when Manila was founded, silver was shipped in Spanish galleons across the Pacific for transshipment to China in exchange for porcelain, tea and silk. At the same time, the potato and chillies which originated from South America began to change the Asian diet and palate.

The five centuries of globalised trade after 1492 may be divided into roughly two halves. Up to roughly 1750, the Europeans were attracted to the wealth of Asia, particularly India and China. Economic historian Angus Maddison estimated that in 1700, the GDP of Asia (in purchasing power parity basis) was US$214bil (1990 dollars) or nearly 58% of world GDP. China alone accounted for 22% of world GDP. By comparison, Western Europe at that time had an estimated GDP of US$81bil. But once the Europeans had started competitively to carve up colonies in Asia, Africa and Americas, the proceeds of colonisation brought new wealth and new markets. The US farmlands that produced cotton and tobacco could not have taken off without the slave labour imported from Africa.

After two centuries of land grab, the global game changed with the independence of the American colonies in 1776, which caused the English to turn further eastwards to consolidate their empire in India and further along the maritime route to China via the Straits of Malacca.

By 1870, Europe plus America accounted for nearly 54% of world GDP, whereas China’s share had dropped in both absolute and relative terms to US$190bil or 17% of world GDP.

But what was remarkable was the growth of the United States of America.

By 1870, only five years after the end of her costly Civil War, the US had already matched Great Britain in terms of GDP, but it took another 70 years before the US dollar replaced sterling as the dominant global reserve currency. Globalisation was driven by Western science and technology, armaments and modern finance, but also dramatic improvements in sea, air and finally telecommunications.

Having had a chance to visit Córdoba and Granada and seeing for myself the glory of Islamic rule in Spain before 1492, one begins to appreciate that one must assess history in longer time-frames. The Moors ruled Spain for 700 years, two hundred more than the current age of globalisation.

Today, globalisation is driven not only by trade, finance and people, but also by digital information.

The interconnection of people digitally and physically is increasing by the day. According to McKinsey Global Institute, there are 429 million international travellers and 244 million people living outside their home country.

But it is the rising level of international migration that has sparked controversy and fear in Europe, as the number of migrants last year rose to over 1 million. World financial markets quiver in fear of Brexit. As someone wise told me recently, we are shifting from an age of risk (which is measurable) to an age of radical uncertainty (which we can neither predict nor measure).

There are so many unknown unknowns that even the generally internationalist Brits are having second thoughts about being European.

The average person is so bombarded with new uncertainties, from terrorism to fear of job loss from robotisation, that it is too easy to blame the foreigners and new migrants.

The rise of Trump and other outspoken politicians that preach isolationism and fundamentalism is a reflection of the unease of many people about the uncertainties brought about by globalisation.

But as technology networks everyone through the mobile phone, globalisation cannot be stopped.

Nevertheless, governments are clamping down on the Internet, due to cybersecurity and fear of the spread of extremism and anti-social hate.

Because of such insecurity, we see a world moving into gated communities trying to shield themselves from unknown unknowns. We may not yet have reached the stage of a Clash of Civilisations, but as the drums of war are being beaten, a clash or crash of Globalisation is no longer so far off.

Tan Sri Andrew Sheng writes on global affairs from an Asian perspective.

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