chapter  5
44 Pages

The Political Economy of Global Production and Exchange

Over the past two centuries, the geography of global production and exchange has experienced two large swings, resulting in radical changes in the relative prosperity of nations and regions. In 1820, the dominant economic power in the world – measured by the size of economies – was China. What followed was an industrial revolution concentrated in the West and largely missing from most of the rest of the world, especially China. For nearly a century after 1820, the rapid globalization of trade and financial flows accompanied industrialization. Changes in the technology of production interacted with changes in the technology of communication and transportation to give those nations developing and adopting new capabilities enormous economic and even military advantages over those that did not. In 1820, China’s gross domestic product (GDP) was about one-third of global GDP and that of the British and United States combined was about 7 percent; by 1950, this same figure for China was near 4 percent and for the United Kingdom plus United States was about 34 percent.1