Quick facts


Reduction in cost of ocean freight transport between 1920 and 1990


Reduction in cost of air transport between 1930 and 1990


Cost of a 3-minute telephone call from New York to London in 1960 (in 2000 U.S. dollars)


Cost of same call in 2000


Price of computer and peripheral equipment in 1960 (relative to GDP deflator; 2000=1000)


Price of equivalent computer in 2000

What is globalization?

Globalization is characterized by increases in flows of trade, capital, and information, as well as mobility of individuals, across borders. It is not a new phenomenon—globalization has progressed throughout the course of recorded history, although not in a steady or linear fashion.

Has globalization raised living standards?

Increased international trade and capital flows have been a major source of the unprecedented economic growth and rise in living standards globally in the postwar period. Evidence shows that countries that have opened up to the rest of the world have done better than those that have not (see chart). In fact, there are no successful cases of fast-growing countries that followed inward-looking policies. Even so, not all open economies have prospered, nor have all citizens of countries that have globalized. Of course, other factors—including the full range of domestic economic and social policies—also shape countries’ economic growth and how the benefits of that growth are shared.

Has globalization helped the poor?

Not only does international economic integration promote economic growth, but also, on average, economic growth tends to increase incomes of the poor. In fact, without economic growth, there can be no sustained poverty reduction. Globalization has also facilitated the spread of technologies that have contributed to dramatic improvements in health, life expectancy, and literacy in poorer countries and communities.

• Infant mortality rates declined, on average, by 50 per thousand (to 59 per thousand) from 1970 to 1999 in developing countries, versus 10 per thousand (to 6 per thousand) in developed countries.

• Life expectancy in China doubled (to 70 years) over 1960–99; in India it rose by 20 years (to 64 years); and in the United States it rose from 70 to 77 years.

• Over the past three to four decades, adult illiteracy rates have declined by 30 percentage points in China, Ghana, India, Korea, and Mexico.

Has globalization reduced inequality?

Global inequality has two dimensions: inequality among and within countries.

• Globalization has helped promote convergence of per capita incomes among countries. Per capita incomes have grown faster in globalizing developing countries (those lowering their barriers to trade) than in rich countries—5 percent versus 2.2 percent in the 1990s—and there has also been convergence of per capita incomes among the advanced economies. Nonglobalizing developing countries have lagged behind.

Within industrial countries, increased openness does not appear to be a significant cause of widening inequality. While it is true that inequality has increased within some industrial countries, this increase is linked to a widening gap between wages of skilled and unskilled labor. Evidence suggests that it is technological change, not trade with lower-wage countries, that has driven the widening gap.

Within developing countries, inequality has increased even as income has grown for both rich and poor. However, it is wrong to link this increase in inequality solely to globalization, as many factors can affect inequality. Some of them are specific to the countries concerned (such as wars and natural disasters), while others are more general (such as technological change).


Dramatic increases in per capita income have accompanied the expansion of trade

Source: IMF, World Economic Outlook database.Notes: Trade openness is defined as the sum of exports and imports divided by GDP. Data for Korea, China, and Ghana are for 1960–99 and for Mexico for 1970–2000.

How should governments respond to problems caused by globalization?

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Globalization time line

The post-1950 period and late nineteenth–early twentieth centuries witnessed the strongest sustained growth of output in recorded world history.

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Based on Paul Masson, 2001, “Globalization: Facts and Figures,” IMF Policy Discussion Paper 01/4 (Washington: International Monetary Fund).
The Impact on Trade, Policy, Labor, and Capital Flows