World Trade Through History
World trade grew from roughly 1% of global GDP in 1820 to 14% in 1913 — the 'first wave of globalization'. It collapsed in the inter-war period, falling back to 5% by 1945. The second wave, accelerated by GATT and container shipping, drove trade past 30% of GDP in 2008. It has since plateaued, with the world entering a 'slowbalization' phase.
Key insights
First wave: steam, telegraph, gold standard
Between 1870 and 1913, trade as % of GDP roughly tripled. Steamships cut Atlantic crossing times from 40 days to 7. The transatlantic telegraph enabled price arbitrage. The gold standard reduced exchange-rate risk. Migration, capital flows and trade all peaked together — and all collapsed together in 1914.
Second wave: GATT, containers, China's entry
Post-1945, the GATT/WTO trading rounds cut average industrial tariffs from 22% to under 5%. The shipping container (1956) cut handling costs ~95%. China's accession to the WTO in 2001 added 1.3 billion people to the world labour-supply at a stroke. By 2008 trade was over 30% of GDP — twice the 1913 peak in proportional terms.
Are we in a third wave or a retrenchment?
Trade-to-GDP has been roughly flat since 2008. The 2018+ US-China tariff escalation, supply-chain reshoring, and conflict-driven disruptions have all pressed in the same direction. Services trade, digital trade and intra-firm transfers continue to grow faster than goods trade — so the headline ratio understates the deeper integration that has continued.
World trade as % of global GDP 1820–2024
Sum of world exports and imports / global GDP, current prices
Key Finding: Two clear waves separated by the inter-war collapse; the current plateau is the third inflection.
Average tariffs — major economies (1850–2024)
Average tariff on imports of manufactures, %
Key Finding: Tariffs were extremely high in the inter-war period; the post-WW2 fall is the underlying enabler of the second globalization wave.
Methodology & caveats
Trade-to-GDP as a globalization metric
Trade-to-GDP is the most common headline measure but has known biases — it rises mechanically as supply chains lengthen (each component crossing borders is counted) and overstates 'real' integration. Value-added trade statistics (TiVA, WIOD) strip out double-counting and show globalization continuing past 2008.
First-globalization sources
Federico and Tena (2019) reconstructed world merchandise trade from 1800 onwards using national archives, port records and customs receipts. Pre-1870 figures are estimates; the picture from 1870 onwards is reasonably firm. Services trade is excluded from the historical series — modern figures include services.
What 'globalization' means here
Trade-to-GDP captures merchandise integration. Capital flows, migration and information flows are separate dimensions that broadly co-move but not perfectly. Each was strong in 1913, collapsed in 1914–45, and recovered to varying degrees post-1945. Current migration share of world population is below the 1913 peak.