Suppose globalization breaks into three phases: one that began with the discovery and colonization of the New World (the 16th and 17th centuries), the second that went with technological development and the overseas expansion (the 18th, 19th and early 20th centuries), and the third that is in progress now. Then it can safely be said that the Industrial Revolution that began in Britain in the mid-18th century helped bring forth the second phase, which gradually turned from mercantilistic colonialism into imperialistic conflicts.　The process is obvious. The key mechanical devices invented by Richard Arkwright, James Watt et al., together with ample material (wool) and factory workers—both products of the enclosure movement—enhanced Britain’s manufacturing capability so abruptly that its production grew by more than 280% between 1700 to 1800. The volume of export, consequently, increased by more than 700% during the same period, which in turn prompted British foreign investment, turning Britain into a creditor nation in a short period of time. (While Britain’s outward investment in 1750 [£1.1–1.5 million] had been some 2 million pounds less than the investment from abroad [£3.0–3.5 million], it grew to £3.5–4.0 million around 1800, slightly exceeding the inward investment which had shrinked to £2.5–3.0 million).　Similar trends continued through the 19th century. Between 1801 and 1900Britain’s GNP grew by 500% (from £232 million to £1,389 million); its trade by more than 1,000% (from £75 million to £877 million), and its net foreign investment by more than 2,000% (from £1 million to £2,396 million). The accumulated wealth and military power enabled Britain to get hold of foreign territories, which ultimately comprised almost one quarter of the world’s land territory at the end of the 19th century: Canada, the West Indies, Honduras and Guyana, South Africa, Australia and New Zealand, India and Southeast Asia.　Although Britain’s trade balance had been mostly in the red since the early 19th century (people seem to have consumed much more than they produced), the deficit was more than compensated by invisible balance (shipping, in particular) and the earnings from foreign investment (interests and dividends). While its share of export of manufactures reached 44–46% of the world total between 1865 and 1874, and its share of accumulated foreign investment 45.5% in 1914, they stood at 12.6% and 10.8% respectively in 1960, when Britain had lost most of its former territories. Excepting the debt charges (redemption, pension, etc.), military expenses accounted for more than 50% of the government expenditures during the late 19th and early 20th centuries.　American economy, on the other hand, was rather small in scale at the initial stage of development in the early 19th century. The GNP in 1820 ($656 million) was probably much less than a half of Britain’s (£291 million) in the same year. It grew rapidly, however, and caught up with Britain’s (£728 million [$3,866 million]) around 1860; it had, as a matter of fact, more than quintupled to $3,839 million between 1820 and 1860, while Britain’s had increased by merely 150%. In another 40 years—between 1860 and 1920—American GNP again quintupled (to $18,700 million), while Britain’s hardly doubled (to £1,389 million [$6,767 million]).　Nevertheless American trade volume ($2,336 million) in 1900 was exactly one half of Britain’s (£879 [$4,667 million]), and American international investmentposition (in 1897) stood at － $2,700 million while Britain’s accumulated credit abroad at £2,293 million, or $11,096 million (at £1=$4.839). This means that Britain heavily depended on trade (25.5% [export] and 37.7% [import] of GNP in 1900), while America did not (7.8% [export] and 4.7% [import] of GNP in 1900), and that America still borrowed a lot (roughly 20% of GNP) at the end of the 19th century while Britain was a big creditor (148% of GNP); Britain, in fact, largely financed American industrialization in the latter half of the 19th century.　 In the 20th century America finally came out ahead in almost all the economic activities: production (agriculture, manufacturing, transportation and communication, commerce and finance, etc.), foreign trade, and foreign investment. Although Japan, as a new Asian power, challenged America in a bid to secure international standing or even take over world leadership, it was beaten hard (in an all-out war), losing everything, including sovereignty, integrity and, among other things, heavy investment in East Asia. With its GNP one-tenth of America’s, it had no chance of even disturbing American hegemony.