How did globalization develop?
Modern globalization developed through post-WWII institutions (Bretton Woods, GATT/WTO, IMF, World Bank), the container shipping revolution, deregulation of financial markets in the 1980s, the end of the Cold War opening new markets, the internet enabling instant global communication, and China's integration into the world economy. Each wave of technological and political change deepened the interconnection of economies, cultures, and societies.
Globalization in its current form is the product of deliberate political choices, technological revolutions, and historical contingencies that have accelerated the integration of human societies over roughly seventy years — though its roots extend much deeper into history.
The post-World War II institutional framework was foundational. The Bretton Woods conference (1944) created the International Monetary Fund and the World Bank to stabilize the global financial system. The General Agreement on Tariffs and Trade (GATT, 1947) — later replaced by the World Trade Organization (1995) — provided the framework for reducing trade barriers. The Marshall Plan rebuilt European economies and created markets for American exports. These institutions reflected a conviction, born from the catastrophe of the 1930s, that economic nationalism and protectionism led to depression and war.
Technological revolutions in transportation and communication made globalization physically possible. Container shipping, standardized by Malcolm McLean in the 1950s, dramatically reduced the cost of moving goods across oceans. Jet aircraft shrank travel times from days to hours. Fiber optic cables and communications satellites enabled real-time global communication. Each innovation reduced the friction of distance, making it easier and cheaper to trade, invest, and communicate across borders.
The 1980s brought financial deregulation and ideological transformation. The Reagan-Thatcher revolution promoted free markets, privatization, and the removal of barriers to international capital flows. The 'Washington Consensus' — a set of economic policy prescriptions emphasizing liberalization, deregulation, and fiscal discipline — became the template imposed on developing countries by international financial institutions.
The Cold War's end opened vast new territories to global capitalism. The former Soviet bloc, China (already reforming since 1978), and India (which liberalized in 1991) brought billions of people into the global market economy. The 1990s were globalization's triumphant decade — NAFTA, the EU's single market, China's WTO accession (2001), and the internet's commercialization all deepened integration.
The internet and digital technology represented globalization's latest and most transformative wave. Services could be delivered across borders — call centers in India serving American customers, software developers in Eastern Europe working for Silicon Valley companies. Financial markets became truly global, operating 24 hours a day. Social media connected billions of people regardless of geography. The result is a world more interconnected than at any point in human history — and more vulnerable to disruptions, as the COVID-19 pandemic demonstrated when global supply chains seized up and the interconnection that had delivered prosperity also delivered a virus worldwide in weeks.