non-Western countries had, until quite recently, highly unreliable legal systems and differing accounting rules. If a foreign trading partner decided to default on its debts, there was little that an investor situated on the other side of the world could do. In the first era of globalization, the solution to this problem was brutally simple but effective: to impose European rule.
In the past, many non-Western countries struggled with legal systems that lacked reliability, and their accounting standards varied significantly from one another. This created challenges for investors, particularly when foreign trading partners chose to default on their financial obligations. Investors often found themselves powerless to address these defaults due to the geographical distance and legal complications involved.
During the initial phase of globalization, the prevalent solution for dealing with these issues was the imposition of European governance. This approach, though harsh, was seen as a practical method to ensure stability and enforce contracts in regions with weak legal frameworks. Niall Ferguson discusses these themes in "The Ascent of Money," illustrating how such measures were considered essential for promoting economic order in the globalized world of that era.
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