Globalisation has been the great economic and political theme of the past three decades. It has brought the labour supplies of Asia into the world economy. It has transformed the operations of companies and financial markets. But will it survive the financial crisis? One precedent - that of the 1930s - is disturbing enough to give even the optimistic pause.

The first world war damaged, but did not destroy, the globalisation of late 19th and early 20th century. The world economy recovered its vitality in the 1920s. Then came the US stock market crash of 1929 and the financial melt-down of the 1930s. During the great depression, the world chose autarky. By the late 1930s, the integrated global economy of half a century before was little more than a memory. Will today's prove more robust? The good news is that it has already survived terrorism, war and a series of devastating financial crises. As Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard have shown in a seminal paper, the epoch of globalisation has been an epoch of banking crises (see chart).* While most of these crises occurred in emerging economies, they also brought Japan and the Scandinavian economies low in the early 1990s. In the case of Japan, the financial crisis afflicted the economy for more than a decade.