w. In its first phase, from roughly 1880 to 1914, it took the form of a massive outflow of private capital and exodus of peoples from Europe (the core) to other parts of the world (the periphery). Primary products were exported from the periphery to the core and manufactured goods were imported by the periphery from the core. It produced rising living standards in the core and the newly industrializing areas of North America and Australasia but had only mixed benefits for European colonies. This globalization failed to survive the dislocations of the First World War, the boom and bust business cycles which culminated in the Great Depression and autarchic trade policies.
The current wave of globalization has been accompanied by the movement toward free trade, the elimination of tariff and other barriers to the free flow of goods and services, and the removal of national impediments to transnational movements of public and private capital. Over the past 50 years the total gross national product (GDP) of the world economy and the volume of international trade expanded six and sixteen times, respectively (Micklethwaite & Wooldridge, 2001, September 16, p. 18). Most capital flows have been among developed nations; however, private flows of foreign direct investment (FDI) from the developed to the less developed or Third World also rose --from $1.9 billion in 1980 to $120.3 billion in 1997 (Wella & Hersh, 2002, January 1, p. A 13). One result has been a much more tightly (albeit imperfectly) integrated and interdependent world economy.
The major developed nations led by the United States have promoted the spread of free market policies since the end of World War II. Interestingly, many less developed countries (LDCs) initially pursued protectionist external trade policies and domestic import substitution/subsidized centrally planned economic development strategies. By and large, such policies failed and were replaced in the 1980s and ...