International Trade: A Brief Historical Tale

Trade is believed to have taken place throughout much of recorded human history. Trade formed between regions because different regions have a comparative advantage in the production of some commodities, or because the size of some regions allows for mass production. As such, trade between different locations benefits both locations. Before the formation of "Nation states", International Trade would have better described just trade over long distances; the sort of movement in goods which would represent international trade in today's modern world. Trade (also called commerce) is voluntary exchange of goods, services, or both. A market is a mechanism that allows trade. The original trade form was bartering, the direct exchange of goods and services. Modern -Day traders now generally negotiate through exchange, such as money. The invention of money greatly simplified and promoted trade. Trade between two trading partners is called bilateral trade, while trade between more than two trading partners is called multilateral trade.

Once International Trade began to become popular, however, it would be regulated by treaties drawn up between two nations spelling out rules and expectations. Mercantilism was the popular approach used by nations when it came to International Trade. Mercantilism is an economic theory that proposes that the the wealth of a nation depends on it's supply of capital or durable produced goods (often measured in gold bullion - see picture to the left), so the more capital available the richer the nation, and that the global volume of trade never changes. Mercantilism speculates that the government can increase capital with a positive balance of trade (exports minus imports) and increase the positive balance of trade with other nations by encouraging exports and discouraging imports, especially through use of tariffs. The economic policy based on these ideas is sometimes referred to as the "Mercantile System"(France was one of the nations that wholly embraced Mercantilism - see the picture of 1638 France at the height of Mercantilism).

For centuries, most nations had high tariffs and lots of restrictions based on the Mercantile System. In the 19th Century, the idea of Free Trade began to become popular, especially in Britain. Free Trade is an idealized economic theory in which trade of goods and services flows between nations unrestricted by governments. Since that time, the idea of Free Trade has remained considerably popular even up until the Present Day and several treaties have been drawn up in an attempt to create a globally regulated trade structure.

* www.Wikipedia.org

Background

Today trade is essential to Americas economic growth. For example, 700,00 people are supplied with jobs in just California alone. International trade is more than a way to supply jobs however. International trade is essential because no country can stand on its own without recources from others. The USA needs foriegn oil, Russia needs grain, and China needs foreign markets. Multinational corperations have emerged since the early 1950's, but similar links can be traced to much earlier times. The importance of trade can be traced back to the 1400s with Sub-Saharan trade; it proved to be resourceful and necessary to stimulate economy. The trans- Atlantic slave route and the British East India Trading Company contributed major trade routes and opened up doorways to sucess. However, more currently, multinational corporations in 1971 made up "one fifth of the noncommunist worlds annual income" and they kept on growing from there (p. 1084). The upsurge of multinational corporations is related to the revival of capitalism after World War Two and the industrialization drive. There are three factors that contribute to their sucess- free access to information, marketing skills, no relation to politics. The impact of multinational corporations on third world countries is for the better and the worst. International trade brings in more technology, but the money that is needed to supply that technology is not there.

Overview

-Different nations have and lack different resources, thus needing trade to export surplus to gain resources and money that they need.
-Poorer countries are often left out of global trade because they have less to offer, because of this causes many problems for the world to think about.
In the early 1900's transportation was improving so world trade was easier and faster.
Now World Trade is used in many different ways, for money, to import resources and to isolate other nations for example North Korea and Cuba.
A couple of areas for further research- How World Trade developed over the years (for example what innovations improved global trade) and what are some problems that come from Global trade
I am most interested in what nations need and what they have, also how much money can come from some resources

Introduction-Edit Later

"The first era, from the late 1800's to World War I, was driven by falling transportation costs, thanks to the steamship and the railroad. That was Globalization 1.0, and it shrank the world from a size large to a size medium. The second big era, Globalization 2.0, lasted from the 1980's to 2000, was based on falling telecom costs and the PC, and shrank the world from a size medium to a size small. Now we've entered Globalization 3.0, and it is shrinking the world from size small to a size tiny. That's what this outsourcing of white-collar jobs is telling us — and it is going to require some wrenching adjustments for workers and political systems."

--Thomas Friedman, NYT 3/4/04

Just Checkin' Out the Blog...

Um...this is just for a little practice(sort of).

Three Quick Facts about International Trade:*

1) International Trade is the exchange of goods and services across international boundaries or territories.

2) Increasing international trade is the primary meaning of "Globalizaton"

3) International Trade is also a branch of economics.

Hope you found them interesting! And I hope this post comes out alright...

* Source: http://en.wikipedia.org/wiki/International_trade

World History International Trade

This is a first post for the World History International Trade Blog.