Despite views that globalization has reached its peak, a period beginning in the nineteenth century and extending into the early-twentieth century, in fact, is the interval during which international barriers to trade fell most steeply, as can be seen in the case of price convergence in commodities. The prices of cloves, pepper, and coffee failed to converge between Amsterdam and East Asia or between England and India from as far back as 1580 but began in 1820 to draw closer. Similarly, the difference in wheat prices in the United States and England fell from one hundred percent in the early-nineteenth century to negligible levels late in the century and to no difference at all in the early-twentieth century. A similar story unfolded during this period for bacon, cotton, and rice.
Peter Lindert and Jeffrey Williamson have summarized the price gaps in commodity markets between continents as evolving in three phases. From 1820 to 1914, these gaps fell by 81 percent; they attribute 72 percent of this decline to cheaper transport and 28 percent to trade policies. Second, during the wartime period of 1914 to 1950, the gaps doubled, due to a reversal in trade policies. Finally, from 1950 to 2000, they fell again by 76 percent, ending up 92 percent lower than in 1820, with about four-fifths of the total change attributable to cheaper transport and one-fifth to more favorable trade policies.
Trade data for this period are typically articulated in terms of ratio of total trade volume to gross domestic product, since commodity price information is not universally available. These ratios in many advanced economies were higher in the mid-1990s than in the early 1900s, but not by much. In Japan, notably, the percentage of GDP for which trade accounted in 1995 was 17 percent, far under its 1910 level of 30 percent, as measured in current prices. Sure enough, the ratios have risen somewhat in other economies over that same time period—by 13 percentage points in the United Kingdom, 8 points in France, and from 11 percent to 24 percent in the United States; this latter spike may explain why the attention to globalization has been especially acute in America. These increases, nevertheless, are modest given the fact that the world economy grew roughly twice as quickly in the twentieth century as in the nineteenth.
The ratios above, and hence the substantiation for the argument that globalization peaked a century ago, grow much more dramatically if they are computed in constant prices rather than in current prices, because the prices of goods relative to services fell due to sustained increases in productivity in the sectors producing these goods. Trade has grown most in those sectors in which prices have most strikingly fallen, so the proportions of GDP in constant prices have risen more than those in current prices.