Okay so let's dig deeper into trade as a domain, trade as a network that is part of globalization. And we have to think about two very different images— I mean there's lots of them but—summary, two very different perspectives on trade in globalization. One exemplified by, again, Thomas Friedman in his book The World is Flat, globalization is driven by comparative advantage and seeking efficiencies. So it's very straightforward, and this creates a "flat" world, remaking historical patterns. That no matter what the history this pursuit of efficiency, this following the rules of comparative advantage is going to shift the world and everyone is going to be shifted more or less in the same direction or enjoy the same benefits. A very different perspective, we might say, comes from Immanuel Wallerstein and the whole dependency theory and global system, and world system theorists argue that inequality is a fundamental characteristic of the structure of world trade. That it's not everyone playing the same game. That everyone—maybe they're playing the same game but with very, very different assets and very different characteristics. That you might have a game, let's say, that you call the globalization trade game, basketball. Well if you happen to be 6 foot 5, as opposed to my height, then basketball becomes a much better game to play. And Wallerstein reminds us that history— history does not begin in 1989. History goes way back, by definition, in that the world that is being globalized is also a world that's been produced by a whole bunch of other processes. And we shouldn't think of trade or globalization as something that simply begins in 1989 but something that continues from that process. And that this results in different versions of risk or opportunity depending on your historical legacy. Let's just take a look at the world in 1914. This is the global empires map. So, you obviously have the pink zones, those belong to Britain. You have the blue zones, they belong to France. You have this purple zone which is the Russian Empire. You have this dark gray zone which is the Ottoman Empire. You've got, in a sense, this strange 100-year-old independence in this part of this world but one where certainly it's—the legacies of colonialism and the legacies of 19th century domination by British capital and the U.S. are going to make a difference. Now, tell me that—let's say, it's a hundred years, a hundred years later, the world looks very different. But that doesn't mean that we can ignore this map, that we can ignore the legacies that come from this, because the world globalization is going to affect you in a different way and you're going to bear a different kind of risk, as we will see even in something like trade. So, what about contemporary globalization? Again, I just love this image created by an ex-student of mine. We can think of contemporary globalization perhaps as somewhat dated, as exemplified by Starbucks and "the fries that bind" of McDonald's. Perhaps today the best way of thinking about this would be an Amazonian world. A world that is defined in a sense by the flow of Amazon, or by the flows of Google or during COVID, by the flows of Netflix. What about contemporary globalization? How do we begin to understand these trade patterns inside globalization? Well first of all, the general line is that trade is good. This is the average annual change in GDP per capita. This is in constant dollars, 2011 dollars, and up here is the average annual change in merchandise export. So, the relationship that we're looking at is to what extent there is a relationship between economic growth and trade growth. And what we see is that it's a very— pretty clear linear relationship. The countries that have been increasing their exports from 1945 to 2014, they're the ones who also happen to be the wealthiest. And look at China over here, South Korea, Thailand, you've got parts of the EU here because they're much more trade dependent. Remember, a lot of this trade is inside the EU. You've got new powers like India or Vietnam. You've got countries down here, and this trade, yes, one of the problems is they don't engage in merchandise exports. What many of these countries export are the commodities that we talked about. And the results—the economic results of that are nowhere near as positive as with merchandise exports. But again, in general, a positive relationship. Not always. Not for everyone. Certainly not—again, think about the inequality between countries and the inequality within countries. But overall a positive relationship. And we know that trade— again we go back to this graph. This is not as a percentage of GDP. This is inflation-adjusted, inflation-controlled dollars from let's say 1961 through 2016. And you see in absolute term, the world trade has gone from maybe two and a half trillion, okay, in constant dollars, to around 25 trillion, 60 years later. All right? It has increased tenfold. And again, we see that in Europe, in Central Asia, this has taken place. This is not including North America and that East Asia has seen its growth, but notice that for a large part of the rest of the world, it has not experienced this massive growth of exports. But in general, yes, trade is good. Again, with all the various provisos that I talked about before in terms of inequality, environmental damage, et cetera. But trade is at the very heart of this. Moreover, we even are governing our trade a little bit better. This graph distributes the world, in a sense, into pairs. Country pairs with unilateral trade. That is, these are countries that have always traded with each other. Country pairs with bilateral trade. That is, it's not just one country sending something to the other but actually, they've made deals between them. And non-trading country pairs, a relatively small number of countries do not have this trading relationship. So, this is trade. This is—it's increasing. It's dramatic and it increasingly involves just about everyone in some dyad or another with other countries. Now let's take a look at what those trade linkages are. So, we know that everybody— each node in a sense is in the game. It tends to be better for the node if you have this trade. Now let's take a look at what those links might be.
