He has analysed Globalization over the course of history and identified three distinct phases. In the article, Tosh argues that “globalization is not a new thing. It has been with us since the dawn of history”.
“…Well before trade in goods and services, globalization consisted of the exchange of ideas across distinct civilizations — as opposed to loosely structured nations and/or tribes. Such ideas helped form worldviews and shape the world materially….
Quite a few of these ideas originated in India, China, Greece and Rome. And undoubtedly there was significant cross-fertilization between these ancient civilizations, alongside the vanished memories of Babylon and Egypt….
…Evidence of such enriching exchanges are demonstrated in the writings of Megasthenes, the 4th century B.C. Greek Ambassador to India, or Chinese scholar Hieun Tsang, who visited India’s 2,000 tutor-staffed Nalanda University a millennium later…At the time, Europe, as we should recall, was only beginning to settle down after the trans-territorial forays of the Burgundians, the Ostrogoths and their energetic cousins.
…The Arabs were among the first ambassadors of the realm of ideas. Readers of the Islamic scholar Alberuni know that it was Arabs who transferred Indian science, medicine, literature and, above all, mathematics to western Europe….As Alberuni said, these are subjects which either are noteworthy for their strangeness, or which are unknown among our own people. This was the First Round of Globalization.. ”
The second phase of globalization was driven by comparative advantage and shaped by trade.
“…The systemic acceleration of trade in goods was the invention and genius of Europe. It was fueled by cross-border finance, including sophisticated custody and settlement processes inspired by the likes of the Medicis — and backed by their powerful patrons in the continent’s monarchies and of course, Rome.
For a variety of reasons, such financial flows went on to fuel the Second Round of Globalization — the age of colonies, Empire and the Industrial Revolution…
…The Second Round also turbocharged standards of living in Europe and America — its principal movers and shapers.
One consequence of the Second Round was the rapid decline of India and China, even then the world’s two largest nations.
…The whys for this have been extensively debated, but one could argue that China opted out of the Industrial Revolution, while India was left out.
What is important is one widely accepted fact. In the early 19th century, India and China’s share of the global economy corresponded roughly to their share of the world’s population…And in terms of the know-how required for the Industrial Revolution, both were on par with Europe. In other words, this was a time of global equity. There may have been significant poverty inside nations, but there was much less between them. “
“…By the time the Second Round came to an end after World War II, India and China were at the bottom of the world income league.
But there also was a flip side to this displacement. In a reversal of the First Round, Europe’s ideas had flowed into what had become an ideologically stagnant India and China. Some of these ideas were truly revolutionary — about equality, liberty, earthly justice and the promise of boundless material benefits.
And yet, it is useful to always recall that ideas had flowed before in the opposite direction. To be sure, spices — high value, low volume and easily transportable — could not have been the only reason so many Western adventurers went seeking Mother India. Nor were they wrongly naming entire lands and peoples from southeast Asia to the United States and Caribbean after India…
…The rise of China and India today is, above all, a return towards global equity. It is a moral imperative that about 40% of the world’s people have somewhere close to a similar share of its income.
…Well before trade in goods and services, globalization consisted of the exchange of ideas across distinct civilizations.”
Tosh then talks about the third phase of globalization which has some unique features.
“…unlike past rounds, the Third Round of Globalization has some wholly-new facets. One of these is the rapid (and thanks to the Internet, the near-instantaneous) movement of know-how — a new factor of production alongside land, labor and capital. More than pure ideas, the diffusion of know-how powerfully unsettles the dynamics of trade in goods and, more crucially, services.
…The disruption in the origin of high-value services is a unique challenge of this round.
Its symbol is the information technology-powered Indian economy, which is achieving near-Chinese double digit rates of growth — without the gift (or to some, Trojan Horse) of Western foreign direct investment.
Instead, Indians have begun to massively draw in or buy out some of the Western world’s highest-value symbols — from IT, telecoms and pharmaceuticals to Arcelor and Trevira. Accompanied by China’s manufacturing juggernaut, this is dramatically shaking up the entire supply chain and value-creation geoscape.”
Even as I was summarising this article, the TATA-Corus deal was announced and two days later, I stumbled on this piece of information (Hindustan Times, 23rd Oct ’06): Café Coffee Day starts Vienna Ops. A spokesperson for its parent company (Amalgamated Bean Coffee Trading Company) said that “Coffee Day had decided to pit itself against European cafes instead of choosing a “safe” market, as this challenge was the only way to do business.” Impressive.
…and to connect the final dot, about 4 months ago, Sequoia’s India team invested $20m in Cafe Coffee Day.
* These are different from Thomas Friedman’s three phases (which he mentions in “The World is Flat“). His first phase (1492 ~ 1800) was primarily driven by countries and governments opening up trade & commerce with the New World. The second (which lasted two centuries) was marked by multinational companies while the third (now) would be defined by technologies and individuals.