It explains what is happening to the world economy. In a splendid discussion in its latest World Economic outlook, the IMF describes it as the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology . Improved communications have led to an organisational innovation - the multinational company, a superb mechanism for transferring technology across frontiers. Technology makes globalisation feasible.
Liberalisation makes it happen.
True, in certain respects, the world economy is less integrated than before the first world war. The UK's capital outflow, for example, was 9 per cent of gross domestic product at its pre-1914 peak, twice as big a share of GDP as outflows from Germany and Japan in the 1980s. The world then effectively operated with a single currency - gold. Likewise, in the early part of the century, the number of workers moving across frontiers was greater than now. Yet, on balance, globalisation has gone further than ever before.