chapter  27
12 Pages

Globalization and Inequality, Past and Present

ByJEFFREY A. WILLIAMSON

Economic growth after 1850 in the countries that now belong to the Organization for Economic Cooperation and Development (OECD) can be divided into three periods: the late nineteenth century belle epoque, the dark middle years between 1914 and 1950, and the late twentieth century renaissance. The first and last epochs were characterized by rapid growth; economic convergence as poor countries caught up with rich ones; and globalization, marked by trade booms, mass migrations, and huge capital flows. The years from 1914 to 1950 are associated with slow growth, a retreat from globalization, and economic divergence. Thus history offers an unambiguous positive correlation between globalization and convergence. When the pre-World War I years are examined in detail, the correlation turns out to be causal: globalization was the critical factor promoting economic convergence.