Though large business interests had long profited from systems of international trade and investment, multinational corporations grew and flourished in a world economy increasingly organized around policies of free-market neoliberalism, which relaxed barriers to international trade. Multinational corporations built global systems of production and distribution that generated unprecedented wealth and generally escaped the control of national regulators and politicians. Conglomerates such as Siemens and Vivendi exemplified this business model. Siemens, with international headquarters in Berlin and Munich and offices around the globe, is one of the world’s largest engineering companies, with vast holdings in energy, construction, health care, financial services, and industrial production. Vivendi, an extensive media and telecommunications company headquartered in Paris, controls a vast international network of producers and products, including music and film, publishing, television broadcasting, pay-TV, Internet services, and video games.

The development of sophisticated personal computer technologies and the Internet at the end of the twentieth century, coupled with the deregulation of national and international financial systems, further encouraged the growth of international trade. The ability to rapidly exchange information and capital meant that economic activity was no longer centered on national banks or stock exchanges, but rather flowed quickly across international borders. Large cities like London, Moscow, New York, and Hong Kong became global centers of banking, trade, and financial services. The influence of financial and insurance companies, communications conglomerates, and energy and legal firms headquartered in these global cities extended far beyond the borders of the traditional nation-state.

At the same time, the close connections between national economies also made the entire world vulnerable to economic panics and downturns. In 1997 a banking crisis in Thailand spread to Indonesia, South Korea, and Japan and then echoed around the world. The resulting slump in oil and gas prices hit Russia especially hard, leading to high inflation, bank failures, and the collapse of the Russian stock market. The crisis then spread to Latin America, plunging most countries there into a severe economic downturn. A decade later, a global recession triggered by a crisis in the U.S. housing market and financial system created the worst worldwide economic crisis since the Great Depression of the 1930s (see “The Global Recession and the Viability of the Eurozone”).