Intercontinental Trade and the Development of the Third World since the Industrial Revolution

Abstract

This paper inserts two centuries of historical perspective into the ongoing debate on the nature and significance of participation in the global economy for the long-term material progress of the Third World. The global economy impinged upon the relative rates of growth achieved by national, regional, and local economies basically through commodity trade, the migration of labor, flows of capital, and transfers of technology between the developed continents of Europe, North America, and Australasia, on the one hand, and the less developed continents of Asia, Africa, and South America (the Third World) on the other. Despite the marked inequality in the distribution of income across continents, Third World economies and populations derived significant benefits from participation in the global economy until 1914, and the breakdown of the liberal order imposed serious impediments to trade during the era of neo-mercantilism between 1914 and 1950, which severely constrained Third World opportunities for growth through trade. When a new international economic order emerged with decolonization and the rise of American hegemony, the Third World again found it entirely beneficial to participate in global commerce.