The Long Arc of Globalisation: Trade’s Evolution, Architecture, and Enduring Echoes
Imagine a world where the total value of international trade could once have fitted onto a handful of sailing ships. In 1800 that was reality. Today the figure stands at roughly $28 trillion a year, more than two thousand times larger in real terms. Global exports now represent about 25% of world GDP, up from less than 10% before the first great wave of globalisation began in the 1830s.
These numbers come from Our World in Data’s remarkable long-run dataset, which lets us see the entire arc of trade across two centuries with unusual clarity. The picture that emerges is not a straight line of progress but two distinct waves of openness, a deep interwar valley, and a present moment that feels both familiar and fragile.
The Two Waves and the Great Reversal
The first wave ran from roughly 1830 to 1914. Steamships, railways, and the telegraph slashed transport and communication costs. Europe’s share of world trade soared. Exports as a percentage of GDP rose from around 1% in the early nineteenth century to roughly 10% on the eve of the First World War. Colonies supplied raw materials; industrial cores shipped finished goods. Then came 1914. Nationalism, protectionism, and two world wars caused trade openness to collapse by more than half in the space of three decades.
The second wave began after 1945 and continues today. Containerisation, jet aircraft, and falling tariffs drove an explosion in both volume and complexity. Real exports have grown eightyfold since 1900, far outpacing global GDP. Trade in intermediate goods (the parts and components that cross borders multiple times before becoming a finished product) now dominates the system. A modern car might contain steel from Korea, electronics from Taiwan, and design from Germany long before it reaches a showroom.
The Structure of Trade in 2025
The geography of trade has changed dramatically. China sits at the centre of the network. South-South trade (between developing economies) now accounts for half of global merchandise flows, roughly equal to North-North trade. Bilateral relationships dominate: most country pairs trade in both directions, a stark contrast to the one-way colonial patterns of the nineteenth century.
Services are the quiet riser. In the United Kingdom they already make up half of all exports. In many African economies the figure remains near zero. Food’s share of trade has fallen sharply in middle-income regions since the 1960s as countries achieve self-sufficiency or shift to higher-value goods. Intermediate inputs, however, keep rising. The iPhone assembled in Shenzhen contains components that have crossed borders a dozen times before the final sale.
The Impacts: Clear Gains, Unequal Pains
Economists have studied the effects for decades and the broad conclusion is consistent: more trade raises productivity and living standards. A rule of thumb from Frankel and Romer suggests that a one-percentage-point increase in the trade to GDP ratio lifts income per person by between 0.5% and 2%. Specific examples abound. Chilean firms became 10% more productive after tariff cuts in the 1980s. European consumers save an estimated €24 billion a year thanks to intra-EU trade.
Yet the gains are rarely evenly spread. The “China shock” in the United States between 1999 and 2007 displaced roughly two million manufacturing jobs. Mexico gained overall from NAFTA, but the welfare improvement was regressive: the poorest households benefited least. Rural districts in India exposed to greater import competition after 1991 saw slower poverty reduction than sheltered urban areas.
Trade has lifted hundreds of millions out of poverty since 1980, yet it has also widened inequality within many countries when adjustment assistance is weak or absent.
Looking Ahead
History shows that globalisation is not irreversible. The interwar collapse reminds us how quickly openness can contract when political forces turn inward. Today we face echoes of that era: rising protectionist rhetoric, friend-shoring, and geopolitical fracture lines from the South China Sea to the Red Sea.
At the same time, new technologies (digital services, automated ports, blockchain-tracked supply chains) could launch a third wave as transformative as steam or containers once were. Whether that wave crests or crashes will depend less on technology itself and more on the political choices made in the next few years.
The long arc of trade has bent toward greater connection for most of the past two centuries. The question for the 2020s is whether the bend will continue, or whether we are at the start of another great reversal.
The views expressed in this article are those of the author and do not constitute investment advice, a recommendation, or an offer to buy or sell any security or financial instrument. Readers should seek independent professional advice tailored to their own circumstances before making any investment decisions. Market conditions can change rapidly, and past performance is not indicative of future results.
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