Globalization has been catching eyes of everyone for much of the last 20 years or so though it has a considerable amount of history behind. The export and investment booms of the 1860s and in the early twentieth century in Europe are just two of many examples. At the beginning of the nineteenth century, there were only a few multinationals; nowadays, there are close to 70,000 of these companies worldwide, and they oversee more than 1,000,000 branches. This clearly means that businesses overcame the disadvantages of distance and the difficulties posed by political, geographic, economic, and cultural differences.
In the past, relations between nations were limited to diplomacy, wars or their rulers’ conquests – this however does not focus on globalization. It is the extensive exports and imports in history, which began the stream of globalization. Individuals moving to different cultures, identities, languages and countries for trading purpose started the first steps to be precise. Immigrant workers and merchants are the classic examples of this movement. European era of discovery which can be described as starting in the last years of the fifteenth century and advanced maritime navigation at that very time boosted the process. Both were a result of the outward looking tendencies of Europe as the rulers of the more powerful nations; Spain and Portugal especially competed with each other for power and territory; British joined in later. Christopher Columbus and other explorers wanted to reach the East for spices, trade and power, and for Christendom to become more dominant than Islam.
By the seventeenth century, the Dutch were the key European nation in promoting trade and beginning the proto-globalization of Europe. And the idea of industrialization that may be of particular relevance for today’s scenario began around 1770 that was truly a period of economic expansions. Trading companies, joint-stock companies, public banks, were taking places all around. Private corporations like the French, Dutch, English, and Swedish East India Company played a decisive role in globalization as well. They extended their markets to different lands and to deferent cultures. Adam Smith wrote in the Wealth of Nations about the difficulties faced by nations “who have attempted to tax the revenue arising from stock may wander about from place to place, according as it can either buy cheap or sell dear.” The challenge of constructing political relationships with strangers and new nations is of continuing importance to modern democracies till now. Without political ties, it is difficult if not impossible for business firms to grow in other territories.
The process of globalization is now more associated with new and unprecedented technologies such as international capital markets, supersonic travel, cable news, and the internet and just in time deliveries across a very large distance. On the eve of World War I, a remarkably integrated global economy had materialized, driven by entrepreneurs and firms of that time. But in the subsequent thirty years, political and economic shocks progressively dismantled this first global economy. Multinationals started to focus more on national markets and they formed cartels as a way of controlling fluctuations. Reconstruction of the global economy began between the 1950s and the 1970s, but this development was slowed by the huge presence of the Communist bloc. By the 1980s, multinationals had become the driving force behind the global integration of capital and commodity markets. And now, two-fifths of world trade is intrafirm.
Over the course of the long history, multinationals have played a critical role in almost every economic endeavor, that is in the global search for raw materials and foodstuffs; in the international diffusion of manufacturing know-how, processes, and products; in the services (trading and shipping companies, banks, and utilities), where they facilitated the expansion of world trade and constructed the infrastructure of the global economy. The process will remain as long as market incentives will be there. It is now not much to dream that in near future, multinationals will dominate over people who try to lead the world by sitting in the parliaments, senates and in the Security Councils.
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