Globalization: The Story Behind the Numbers

International Monetary Fund
Published Date:
April 2007
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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 same call in 2000




Price of equivalent computer in 2000

What is globalization?


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?


• 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.


Has globalization reduced inequality?

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




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?
ProblemPolicy response
Countries that are not involved in globalization may become increasingly marginalized and mired in poverty.This calls for poverty reduction strategies and policies to promote the integration of low-income countries into world markets. Rich countries need to open their markets to exports from developing countries.
Globalization, like technological change, can cause short-run disruptions, such as job losses and income declines, which disproportionately hit the poor.Governments need to provide adequate social safety nets to mitigate the effects on the vulnerable and the poor. Governments can also reduce inequalities and help all citizens to achieve their potential through policies that provide equal opportunities, including greater access to public education and health care.
Openness to global capital markets can bring greater volatility in financial markets.Countries that open their financial markets need to develop strong financial systems and sound economic policies.

Globalization time line

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

Late nineteenth–early twentieth centuries1914–50Post-1950 period
Rapid growth in world trade was triggered by sharply falling transportation costs, reduced tariffs, and major inventions, such as the internal combustion engine, the steamship, the telephone, and the telegraph. This expansion in exports resulted in a massive flow of capital from Western Europe to the rapidly developing countries of the Americas, Australia, and elsewhere. Migration was also very large during this period.The outbreak of the two world wars, the unsuccessful attempt to revive the gold standard, and the Great Depression gave rise to protectionist sentiment and halted global integration.Globalization resumed as the barriers to trade and capital flows erected in the 1930s were rolled back. Technology continued to advance, especially in the area of communications and computers. This period of globalization saw a remarkable rise in living standards and dramatic improvements in health and education.
Based on Paul Masson, 2001, “Globalization: Facts and Figures,” IMF Policy Discussion Paper 01/4 (Washington: International Monetary Fund).

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