![Earle, Liberty to Trade as Buttressed by National Law, 1909 Title](https://upload.wikimedia.org/wikipedia/commons/4/46/Earle%2C_Liberty_to_Trade_as_Buttressed_by_National_Law%2C_1909_Title.jpg)
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a
system or network that allows trade as a
market
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, an ...
.
An early form of trade,
barter
In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists disti ...
, saw the direct exchange of goods and services for other goods and services,
i.e. trading things without the use of money.
[ Modern traders generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and letter of ]credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
, paper money
A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand.
Banknotes were originally issued ...
, and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade
Bilateral trade or clearing trade is trade exclusively between two states, particularly, barter trade based on bilateral deals between governments, and without using hard currency for payment. Bilateral trade agreements often aim to keep trade def ...
, while trade involving more than two traders is called multilateral trade.
In one modern view, trade exists due to specialization and the division of labour, a predominant form of economic activity
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes w ...
in which individuals and groups concentrate on a small aspect of production, but use their output in trades for other products and needs. Trade exists between regions because different regions may have a comparative advantage
In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comp ...
(perceived or real) in the production of some trade-able commodity—including production of natural resources scarce or limited elsewhere. For example: different regions' sizes may encourage mass production. In such circumstances, trade at market price
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...
s between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the spice trade and grain trade have both historically been important in the development of a global, international economy.
Retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and ...
trade consists of the sale of goods or merchandise from a very fixed location (such as a department store
A department store is a retail establishment offering a wide range of consumer goods in different areas of the store, each area ("department") specializing in a product category. In modern major cities, the department store made a dramatic app ...
, boutique or kiosk), online
In computer technology and telecommunications, online indicates a state of connectivity and offline indicates a disconnected state. In modern terminology, this usually refers to an Internet connection, but (especially when expressed "on line" o ...
or by mail
The mail or post is a system for physically transporting postcards, letters, and parcels. A postal service can be private or public, though many governments place restrictions on private systems. Since the mid-19th century, national postal sys ...
, in small or individual lots for direct consumption
Consumption may refer to:
*Resource consumption
*Tuberculosis, an infectious disease, historically
* Consumption (ecology), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of newly produced goods for curren ...
or use by the purchaser. Wholesale
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
trade is traffic in goods that are sold as merchandise to retailer
Retail is the sale of goods and Service (economics), services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturing, manufacturers, dire ...
s, or to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.
Historically, openness to free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
substantially increased in some areas from 1815 to the outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the Great Depression of the 1930s. Trade openness increased substantially again from the 1950s onwards (albeit with a slowdown during the oil crisis of the 1970s). Economists and economic historians
Economic history is the academic learning of economies or economic events of the past. Research is conducted using a combination of historical methods, statistical methods and the application of economic theory to historical situations and in ...
contend that current levels of trade openness are the highest they have ever been.
Etymology
''Trade'' is from Middle English
Middle English (abbreviated to ME) is a form of the English language that was spoken after the Norman conquest of 1066, until the late 15th century. The English language underwent distinct variations and developments following the Old English ...
''trade'' ("path, course of conduct"), introduced into English by Hanseatic merchants, from Middle Low German
Middle Low German or Middle Saxon (autonym: ''Sassisch'', i.e. " Saxon", Standard High German: ', Modern Dutch: ') is a developmental stage of Low German. It developed from the Old Saxon language in the Middle Ages and has been documented i ...
''trade'' ("track, course"), from Old Saxon
Old Saxon, also known as Old Low German, was a Germanic language and the earliest recorded form of Low German (spoken nowadays in Northern Germany, the northeastern Netherlands, southern Denmark, the Americas and parts of Eastern Europe). It ...
''trada'' ("spoor, track"), from Proto-Germanic
Proto-Germanic (abbreviated PGmc; also called Common Germanic) is the reconstructed proto-language of the Germanic branch of the Indo-European languages.
Proto-Germanic eventually developed from pre-Proto-Germanic into three Germanic bran ...
''*tradō'' ("track, way"), and cognate with Old English
Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language, spoken in England and southern and eastern Scotland in the early Middle Ages. It was brought to Great Britain by Anglo-Saxon settlers in the mid-5th c ...
''tredan'' ("to tread").
''Commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
'' is derived from the Latin
Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) around present-day Rome, but through the power of the ...
''commercium'', from ''cum'' "together" and ''merx'', "merchandise."
History
Prehistory
Trade originated from human communication
Human communication, or anthroposemiotics, is a field of study dedicated to understanding how humans communicate. Humans ability to communicate with one another would not be possible without an understanding of what we are referencing or think ...
in prehistoric times. Trading was the main facility of prehistoric people, who exchanged goods and services from each other in a gift economy before the innovation of modern-day currency. Peter Watson dates the history of long-distance commerce from years ago.[ Watson (2005), Introduction.]
In the Mediterranean region, the earliest contact between cultures involved members of the species ''Homo sapiens'', principally using the Danube river, at a time beginning 35,000–30,000 BP.
Some trace the origins of commerce to the very start of transactions in prehistoric times. Apart from traditional self-sufficiency, trading became a principal facility of prehistoric people, who barter
In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists disti ...
ed what they had for goods and services from each other.
Ancient history
Trade is believed to have taken place throughout much of recorded human history. There is evidence of the exchange of obsidian and flint
Flint, occasionally flintstone, is a sedimentary cryptocrystalline form of the mineral quartz, categorized as the variety of chert that occurs in chalk or marly limestone. Flint was widely used historically to make stone tools and sta ...
during the Stone Age. Trade in obsidian is believed to have taken place in New Guinea
New Guinea (; Hiri Motu: ''Niu Gini''; id, Papua, or , historically ) is the world's second-largest island with an area of . Located in Oceania in the southwestern Pacific Ocean, the island is separated from Australia by the wide Torr ...
from 17,000 BCE.
Robert Carr Bosanquet
Robert Carr Bosanquet (1871–1935) was a British archaeologist, operating in the Aegean and Britain and teaching at the University of Liverpool from 1906 to 1920 as the first holder of the Chair of Classical Archaeology there.
Life and work
Bo ...
investigated trade in the Stone Age by excavations in 1901. Trade is believed to have first begun in south west Asia.
Archaeological evidence of obsidian use provides data on how this material was increasingly the preferred choice rather than chert
Chert () is a hard, fine-grained sedimentary rock composed of microcrystalline or cryptocrystalline quartz, the mineral form of silicon dioxide (SiO2). Chert is characteristically of biological origin, but may also occur inorganically as a ...
from the late Mesolithic to Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean region.
Obsidian is thought to have provided the material to make cutting utensils or tools, although since other more easily obtainable materials were available, use was found exclusive to the higher status of the tribe using "the rich man's flint". Interestingly, Obsidian has held its value relative to flint.
Early traders traded Obsidian at distances of 900 kilometres within the Mediterranean region.
Trade in the Mediterranean during the Neolithic of Europe was greatest in this material. Networks were in existence at around 12,000 BCE Anatolia was the source primarily for trade with the Levant, Iran and Egypt according to Zarins study of 1990. Melos and Lipari
Lipari (; scn, Lìpari) is the largest of the Aeolian Islands in the Tyrrhenian Sea off the northern coast of Sicily, southern Italy; it is also the name of the island's main town and ''comune'', which is administratively part of the Metropo ...
sources produced among the most widespread trading in the Mediterranean region as known to archaeology.
The Sari-i-Sang mine in the mountains of Afghanistan was the largest source for trade of lapis lazuli. The material was most largely traded during the Kassite period
The Kassites () were people of the ancient Near East, who controlled Babylonia after the fall of the Old Babylonian Empire c. 1531 BC and until c. 1155 BC (short chronology).
They gained control of Babylonia after the Hittite sack of Babylon ...
of Babylonia beginning 1595 BCE.
Later trade
Mediterranean and Near East
Ebla
Ebla ( Sumerian: ''eb₂-la'', ar, إبلا, modern: , Tell Mardikh) was one of the earliest kingdoms in Syria. Its remains constitute a tell located about southwest of Aleppo near the village of Mardikh. Ebla was an important center t ...
was a prominent trading center during the third millennia BCE, with a network reaching into Anatolia and north Mesopotamia.
Materials used for creating jewelry
Jewellery ( UK) or jewelry ( U.S.) consists of decorative items worn for personal adornment, such as brooches, rings, necklaces, earrings, pendants, bracelets, and cufflinks. Jewellery may be attached to the body or the clothes. From a w ...
were traded with Egypt since 3000 BCE. Long-range trade routes first appeared in the 3rd millennium BCE, when Sumerians in Mesopotamia
Mesopotamia ''Mesopotamíā''; ar, بِلَاد ٱلرَّافِدَيْن or ; syc, ܐܪܡ ܢܗܪ̈ܝܢ, or , ) is a historical region of Western Asia situated within the Tigris–Euphrates river system, in the northern part of the ...
traded with the Harappan civilization
Harappa (; Urdu/ pnb, ) is an archaeological site in Punjab, Pakistan, about west of Sahiwal. The Bronze Age Harappan civilisation, now more often called the Indus Valley Civilisation, is named after the site, which takes its name from a mod ...
of the Indus Valley. The Phoenicians
Phoenicia () was an ancient thalassocratic civilization originating in the Levant region of the eastern Mediterranean, primarily located in modern Lebanon. The territory of the Phoenician city-states extended and shrank throughout their histor ...
were noted sea traders, traveling across the Mediterranean Sea
The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western and Southern Europe and Anatolia, on the south by North Africa, and on the ...
, and as far north as Britain
Britain most often refers to:
* The United Kingdom, a sovereign state in Europe comprising the island of Great Britain, the north-eastern part of the island of Ireland and many smaller islands
* Great Britain, the largest island in the United King ...
for sources of tin
Tin is a chemical element with the symbol Sn (from la, stannum) and atomic number 50. Tin is a silvery-coloured metal.
Tin is soft enough to be cut with little force and a bar of tin can be bent by hand with little effort. When bent, t ...
to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia. Along the coast of the Mediterranean, researchers have found a positive relationship between how well-connected a coastal location was and the local prevalence of archaeological sites from the Iron Age. This suggests that a location's trade potential was an important determinant of human settlements.
From the beginning of Greek civilization
A civilization (or civilisation) is any complex society characterized by the development of a state, social stratification, urbanization, and symbolic systems of communication beyond natural spoken language (namely, a writing system).
...
until the fall of the Roman Empire
The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post- Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediter ...
in the 5th century, a financially lucrative trade brought valuable spice
A spice is a seed, fruit, root, bark, or other plant substance primarily used for flavoring or coloring food. Spices are distinguished from herbs, which are the leaves, flowers, or stems of plants used for flavoring or as a garnish. Spice ...
to Europe from the far east, including India and China. Roman commerce
Roman commerce was a major sector of the Roman economy during the later generations of the Republic and throughout most of the imperial period. Fashions and trends in historiography and in popular culture have tended to neglect the economic basis ...
allowed its empire to flourish and endure. The latter Roman Republic and the Pax Romana
The Pax Romana (Latin for 'Roman peace') is a roughly 200-year-long timespan of Roman history which is identified as a period and as a golden age of increased as well as sustained Roman imperialism, relative peace and order, prosperous stabilit ...
of the Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy
Piracy is an act of robbery or criminal violence by ship or boat-borne attackers upon another ship or a coastal area, typically with the goal of stealing cargo and other valuable goods. Those who conduct acts of piracy are called pirates, v ...
, as Rome had become the sole effective sea power in the Mediterranean
The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western Europe, Western and Southern Europe and Anatolia, on the south by North Africa ...
with the conquest of Egypt and the near east.
In ancient Greece Hermes
Hermes (; grc-gre, wikt:Ἑρμῆς, Ἑρμῆς) is an Olympian deity in ancient Greek religion and Greek mythology, mythology. Hermes is considered the herald of the gods. He is also considered the protector of human heralds, travelle ...
was the god of trade (commerce) and weights and measures. In ancient Rome, ''Mercurius
Mercury (; la, Mercurius ) is a major god in Roman religion and mythology, being one of the 12 Dii Consentes within the ancient Roman pantheon. He is the god of financial gain, commerce, eloquence, messages, communication (including divinati ...
'' was the god of merchants, whose festival was celebrated by traders on the 25th day of the fifth month. The concept of free trade was an antithesis to the will and economic direction of the sovereigns of the ancient Greek states. Free trade between states was stifled by the need for strict internal controls (via taxation) to maintain security within the treasury of the sovereign, which nevertheless enabled the maintenance of a '' modicum'' of civility within the structures of functional community life.
The fall of the Roman empire and the succeeding Dark Ages brought instability to Western Europe
Western Europe is the western region of Europe. The region's countries and territories vary depending on context.
The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the ancient Mediterranean ...
and a near-collapse of the trade network in the western world. Trade, however, continued to flourish among the kingdoms of Africa, the Middle East, India, China, and Southeast Asia. Some trade did occur in the west. For instance, Radhanite
The Radhanites or Radanites (; ar, الرذنية, ''ar-Raðaniyya'') were early medieval Jewish merchants, active in the trade between Christendom and the Muslim world during roughly the 8th to 10th centuries.
Many trade routes previously esta ...
s were a medieval guild or group (the precise meaning of the word is lost to history) of Jew
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""T ...
ish merchants who traded between the Christians
Christians () are people who follow or adhere to Christianity, a monotheistic Abrahamic religion based on the life and teachings of Jesus Christ. The words '' Christ'' and ''Christian'' derive from the Koine Greek title ''Christós'' (Χρ ...
in Europe and the Muslims of the Near East.
Indo-Pacific
The first true maritime trade network in the Indian Ocean was by the Austronesian peoples
The Austronesian peoples, sometimes referred to as Austronesian-speaking peoples, are a large group of peoples in Taiwan, Maritime Southeast Asia, Micronesia, coastal New Guinea, Island Melanesia, Polynesia, and Madagascar that speak Austro ...
of Island Southeast Asia. Initiated by the animist indigenous peoples of Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
and the Philippines
The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no),
* bik, Republika kan Filipinas
* ceb, Republika sa Pilipinas
* cbk, República de Filipinas
* hil, Republ ...
, the Maritime Jade Road
Philippine jade Culture or Jade Artifacts, made from white and green nephrite and dating as far back as 2000–1500 BC, have been discovered at a number of archeological excavations in the Philippines since the 1930s. The artifacts have been b ...
was an extensive trading network connecting multiple areas in Southeast and East Asia. Its primary products were made of jade mined from Taiwan by animist Taiwanese indigenous peoples
Taiwanese indigenous peoples (formerly Taiwanese aborigines), also known as Formosan people, Austronesian Taiwanese, Yuanzhumin or Gaoshan people, are the indigenous peoples of Taiwan, with the nationally recognized subgroups numbering about 5 ...
and processed mostly in the Philippines by animist indigenous Filipinos, especially in Batanes, Luzon
Luzon (; ) is the largest and most populous island in the Philippines. Located in the northern portion of the Philippines archipelago, it is the economic and political center of the nation, being home to the country's capital city, Manila, as ...
, and Palawan
Palawan (), officially the Province of Palawan ( cyo, Probinsya i'ang Palawan; tl, Lalawigan ng Palawan), is an archipelagic province of the Philippines that is located in the region of Mimaropa. It is the largest province in the country in t ...
. Some were also processed in Vietnam
Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making i ...
, while the peoples of Malaysia
Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...
, Brunei
Brunei ( , ), formally Brunei Darussalam ( ms, Negara Brunei Darussalam, Jawi: , ), is a country located on the north coast of the island of Borneo in Southeast Asia. Apart from its South China Sea coast, it is completely surrounded by t ...
, Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...
, Thailand
Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is b ...
, Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania between the Indian and Pacific oceans. It consists of over 17,000 islands, including Sumatra, Java, Sulawesi, and parts of Borneo and New Guine ...
, and Cambodia
Cambodia (; also Kampuchea ; km, កម្ពុជា, UNGEGN: ), officially the Kingdom of Cambodia, is a country located in the southern portion of the Indochinese Peninsula in Southeast Asia, spanning an area of , bordered by Thailan ...
also participated in the massive animist-led trading network. Participants in the network at the time had a majority animist population. The maritime road is one of the most extensive sea-based trade networks of a single geological material in the prehistoric world. It was in existence for at least 3,000 years, where its peak production was from 2000 BCE to 500 CE, older than the Silk Road in mainland Eurasia and the later Maritime Silk Road
The Maritime Silk Road or Maritime Silk Route is the Maritime history, maritime section of the historic Silk Road that connected Southeast Asia, China, the Indian subcontinent, the Arabian peninsula, Somalia, Egypt and Europe. It began by the 2n ...
. The Maritime Jade Road began to wane during its final centuries from 500 CE until 1000 CE. The entire period of the network was a golden age for the diverse animist societies of the region.
Sea-faring Southeast Asians also established trade routes with Southern India
South India, also known as Dakshina Bharata or Peninsular India, consists of the peninsular southern part of India. It encompasses the Indian states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana, as well as the union territ ...
and Sri Lanka as early as 1500 BC, ushering an exchange of material culture (like catamarans, outrigger boat
Outrigger boats are various watercraft featuring one or more lateral support floats known as outriggers, which are fastened to one or both sides of the main hull. They can range from small dugout canoes to large plank-built vessels. Outrigger ...
s, sewn-plank boats, and paan
Betel nut chewing, also called betel quid chewing or areca nut chewing, is a practice in which areca nuts (also called "betel nuts") are chewed together with slaked lime and betel leaves for their stimulant and narcotic effects. The practice ...
) and cultigen
A cultigen () or cultivated plant is a plant that has been deliberately altered or selected by humans; it is the result of artificial selection. These plants, for the most part, have commercial value in horticulture, agriculture or forestry. Beca ...
s (like coconuts, sandalwood
Sandalwood is a class of woods from trees in the genus ''Santalum''. The woods are heavy, yellow, and fine-grained, and, unlike many other aromatic woods, they retain their fragrance for decades. Sandalwood oil is extracted from the woods for us ...
, bananas, and sugarcane); as well as connecting the material cultures of India and China. Indonesians, in particular were trading in spices (mainly cinnamon and cassia) with East Africa using catamaran and outrigger boats and sailing with the help of the Westerlies
The westerlies, anti-trades, or prevailing westerlies, are prevailing winds from the west toward the east in the middle latitudes between 30 and 60 degrees latitude. They originate from the high-pressure areas in the horse latitudes and trend t ...
in the Indian Ocean. This trade network expanded to reach as far as Africa and the Arabian Peninsula, resulting in the Austronesian colonization of Madagascar
Madagascar (; mg, Madagasikara, ), officially the Republic of Madagascar ( mg, Repoblikan'i Madagasikara, links=no, ; french: République de Madagascar), is an island country in the Indian Ocean, approximately off the coast of East Africa ...
by the first half of the first millennium AD. It continued up to historic times, later becoming the Maritime Silk Road.
Mesoamerica
The emergence of exchange networks in the Pre-Columbian societies of and near to Mexico are known to have occurred within recent years before and after 1500 BCE.
Trade networks reached north to Oasisamerica
Oasisamerica is a term that was coined by Paul Kirchhoff (who also coined "Mesoamerica") and published in a 1954 article, and is used by some scholars, primarily Mexican anthropologists, for the broad cultural area defining pre-Columbian sout ...
. There is evidence of established maritime trade with the cultures of northwestern South America and the Caribbean.
Middle Ages
During the Middle Ages
In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire ...
, commerce developed in Europe by trading luxury goods at trade fairs. Wealth became converted into movable wealth or capital. Banking systems developed where money on account was transferred across national boundaries. Hand to hand markets became a feature of town life and were regulated by town authorities.
Western Europe established a complex and expansive trade network with cargo ships being the main carrier of goods; Cogs and Hulks are two examples of such cargo ships. Many ports would develop their own extensive trade networks. The English port city of Bristol
Bristol () is a city, ceremonial county and unitary authority in England. Situated on the River Avon, it is bordered by the ceremonial counties of Gloucestershire to the north and Somerset to the south. Bristol is the most populous city in ...
traded with peoples from what is modern day Iceland, all along the western coast of France, and down to what is now Spain.
During the Middle Ages, Central Asia was the economic center of the world.[ Beckwith (2011), p. xxiv.] The Sogdians :''This category lists articles related to historical Iranian peoples''
Historical
Peoples
Iranian
Iranian
Iranian
Iranian may refer to:
* Iran, a sovereign state
* Iranian peoples, the speakers of the Iranian languages. The term Iranic peoples ...
dominated the east–west trade route known as the Silk Road after the 4th century CE up to the 8th century CE, with Suyab and Talas ranking among their main centers in the north. They were the main caravan merchants of Central Asia.
From the Middle Ages, the maritime republics
The maritime republics ( it, repubbliche marinare), also called merchant republics ( it, repubbliche mercantili), were Thalassocracy, thalassocratic city-states of the Mediterranean Basin during the Middle Ages. Being a significant presence in I ...
, in particular Venice
Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy and the capital of the Veneto region. It is built on a group of 118 small islands that are separated by canals and linked by over 400 bridges. The isla ...
, Pisa and Genoa
Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian census, the Province of ...
, played a key role in trade along the Mediterranean. From the 11th to the late 15th centuries, the Venetian Republic
The Republic of Venice ( vec, Repùblega de Venèsia) or Venetian Republic ( vec, Repùblega Vèneta, links=no), traditionally known as La Serenissima ( en, Most Serene Republic of Venice, italics=yes; vec, Serenìsima Repùblega de Venèsia ...
and the Republic of Genoa
The Republic of Genoa ( lij, Repúbrica de Zêna ; it, Repubblica di Genova; la, Res Publica Ianuensis) was a medieval and early modern maritime republic from the 11th century to 1797 in Liguria on the northwestern Italian coast. During the La ...
were major trade centers. They dominated trade in the Mediterranean and the Black Sea, having the monopoly between Europe and the Near East for centuries.
From the 8th to the 11th century, the Viking
Vikings ; non, víkingr is the modern name given to seafaring people originally from Scandinavia (present-day Denmark, Norway and Sweden),
who from the late 8th to the late 11th centuries raided, pirated, traded and se ...
s and Varangians
The Varangians (; non, Væringjar; gkm, Βάραγγοι, ''Várangoi'';[Varangian]
" Online Etymo ...
traded as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Russia. The Hanseatic League was an alliance of trading cities that maintained a trade monopoly
A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a speci ...
over most of Northern Europe and the Baltic, between the 13th and 17th centuries.
The Age of Sail and the Industrial Revolution
Portuguese explorer Vasco da Gama pioneered the European spice trade in 1498 when he reached Calicut
Kozhikode (), also known in English as Calicut, is a city along the Malabar Coast in the state of Kerala in India. It has a corporation limit population of 609,224 and a metropolitan population of more than 2 million, making it the second l ...
after sailing around the Cape of Good Hope at the southern tip of the African continent. Prior to this, the flow of spice into Europe from India was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped spur the Age of Discovery
The Age of Discovery (or the Age of Exploration), also known as the early modern period, was a period largely overlapping with the Age of Sail, approximately from the 15th century to the 17th century in European history, during which seafarin ...
in Europe. Spices brought to Europe from the Eastern world were some of the most valuable commodities for their weight, sometimes rivaling gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile me ...
.
From 1070 onward, kingdoms in West Africa
Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
became significant members of global trade. This came initially through the movement of gold and other resources sent out by Muslim traders on the Trans-Saharan trading network. Beginning in the 16th century, European merchants would purchase gold, spices, cloth, timber and slaves from West African states as part of the triangular trade
Triangular trade or triangle trade is trade between three ports or regions. Triangular trade usually evolves when a region has export commodities that are not required in the region from which its major imports come. It has been used to offset ...
. This was often in exchange for cloth
Textile is an umbrella term that includes various fiber-based materials, including fibers, yarns, filaments, threads, different fabric types, etc. At first, the word "textiles" only referred to woven fabrics. However, weaving is not the ...
, iron, or cowrie shells which were used locally as currency.
Founded in 1352, the Bengal Sultanate was a major trading nation in the world and often referred to by Europeans as the wealthiest country with which to trade.
In the 16th and 17th centuries, the Portuguese gained an economic advantage in the Kingdom of Kongo due to different philosophies of trade. Whereas Portuguese traders concentrated on the accumulation of capital, in Kongo spiritual meaning was attached to many objects of trade. According to economic historian Toby Green, in Kongo "giving more than receiving was a symbol of spiritual and political power and privilege."
In the 16th century, the Seventeen Provinces were the center of free trade, imposing no exchange controls, and advocating the free movement of goods. Trade in the East Indies was dominated by Portugal in the 16th century, the Dutch Republic in the 17th century, and the United Kingdom, British in the 18th century. The Spanish Empire developed regular trade links across both the Atlantic and the Pacific Oceans.
In 1776, Adam Smith published the paper ''An Inquiry into the Nature and Causes of the Wealth of Nations''. It criticized Mercantilism, and argued that economic specialization could benefit nations just as much as firms. Since the division of labour was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labour more efficiently and thereby become more productive. Smith said that he considered all rationalizations of International trade, import and export controls "dupery", which hurt the trading nation as a whole for the benefit of specific industries.
In 1799, the Dutch East India Company, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.
19th century
In 1817, David Ricardo, James Mill and Robert Torrens (economist), Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of comparative advantage
In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comp ...
. In Principles of Political Economy and Taxation Ricardo advanced the doctrine still considered the most counterintuitive in economics:
: ''When an inefficient producer sends the merchandise it produces best to a country able to produce it more efficiently, both countries benefit.''
The ascendancy of free trade was primarily based on national advantage in the mid 19th century. That is, the calculation made was whether it was in any particular country's self-interest to open its borders to imports.
John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate the terms of trade through maintaining tariffs, and that the response to this might be Reciprocity (international relations), reciprocity in trade policy. Ricardo and others had suggested this earlier. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would accrue to a country following ''reciprocal'', rather than completely free, trade policies. This was followed within a few years by the infant industry scenario developed by Mill promoting the theory that the government had the duty to protectionism, protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialize and out-compete English exporters. Milton Friedman later continued this vein of thought, showing that in a few circumstances tariffs might be beneficial to the host country; but never for the world at large.
20th century
The Great Depression was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators.
The lack of free trade was considered by many as a principal cause of the depression causing stagnation and inflation. Only during World War II did the recession end in the United States. Also during the war, in 1944, 44 countries signed the Bretton Woods Agreement, intended to prevent national trade barriers, to avoid depressions. It set up rules and institutions to regulate the international political economy: the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank $ Bank for International Settlements). These organizations became operational in 1946 after enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.
The European Union became the world's largest exporter of manufactured goods and services, the biggest export market for around 80 countries.
21st century
Today, trade is merely a subset within a complex system of Corporation, companies which try to maximize their profits by offering Product (business), products and Service (economics), services to the Market (economics), market (which consists both of individuals and other companies) at the lowest production cost. A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
, has sometimes harmed Third World, third-world markets for local products.
Free trade
Free trade is a policy by which a government does not discriminate against imports or exports by applying tariffs or subsidies. This policy is also known as laissez-faire policy. This kind of policy does not necessarily imply because a country will then abandon all control and taxation of imports and exports.
Free trade advanced further in the late 20th century and early 2000s:
* 1992 European Union lifted barriers to internal trade in good (economics), goods and labour (economics), labour.
* January 1, 1994 the North American Free Trade Agreement (NAFTA) took effect.
* 1994 The GATT Marrakech Agreement specified formation of the WTO.
* January 1, 1995 World Trade Organization was created to facilitate free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
, by mandating mutual most favored nation trading status between all signatories.
* EC was transformed into the European Union, which accomplished the Economic and Monetary Union (EMU) in 2002, through introducing the Euro, and creating this way a real single market between 13 member states as of January 1, 2007.
* 2005, the Central American Free Trade Agreement was signed; It includes the United States and the Dominican Republic.
Perspectives
Protectionism
Protectionism is the policy of restraining and discouraging trade between states and contrasts with the policy of free trade. This policy often takes the form of tariffs and restrictive Import quota, quotas. Protectionist policies were particularly prevalent in the 1930s, between the Great Depression and the onset of World War II.
Religion
Islamic teachings encourage trading (and condemn usury or interest).
Judeao-Christian teachings do not prohibit trade. They do prohibit fraud and dishonest measures. Historically they forbade charging interest on loans.
Development of money
The first instances of money were objects with intrinsic value. This is called commodity money and includes any commonly available commodity that has intrinsic value; historical examples include pigs, rare seashells, whale's teeth, and (often) cattle. In medieval Iraq, bread was used as an early form of money. In the Aztec Empire, under the rule of Moctezuma II, Montezuma cocoa beans became legitimate currency.
Currency was introduced as standardised money to facilitate a wider exchange of goods and services. This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years.
Numismatists have examples of coins from the earliest large-scale societies, although these were initially unmarked lumps of precious metal.[Gold was an especially common form of early money, as described in #Davies2002, Davies (2002).]
Trends
Doha rounds
The Doha round of World Trade Organization negotiations aimed to lower trade barrier, barriers to trade around the world, with a focus on making fair trade, trade fairer for developing countries. Talks have been hung over a divide between the rich developed countries, represented by the G20, and the major developing countries. Agricultural subsidies are the most significant issue upon which agreement has been the hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building. The Doha round began in Doha, Qatar, and negotiations were continued in: Cancún, Mexico; Geneva, Switzerland; and Paris, France, and Hong Kong.
China
Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reforms in China, economic reform. In contrast to the previous USSR, Soviet-style centrally planned economy, the new measures progressively relaxed restrictions on farming, agricultural distribution and, several years later, urban enterprises and labor. The more market-oriented approach reduced inefficiencies and stimulated private investment, particularly by farmers, which led to increased productivity and output. One feature was the establishment of four (later five) Special Economic Zones located along the South-east coast.
The reforms proved spectacularly successful in terms of increased output, variety, quality, price and demand. In real terms, the economy doubled in size between 1978 and 1986, doubled again by 1994, and again by 2003. On a real per capita basis, doubling from the 1978 base took place in 1987, 1996 and 2006. By 2008, the economy was 16.7 times the size it was in 1978, and 12.1 times its previous per capita levels. International trade progressed even more rapidly, doubling on average every 4.5 years. Total two-way trade in January 1998 exceeded that for all of 1978; in the first quarter of 2009, trade exceeded the full-year 1998 level. In 2008, China's two-way trade totaled US$2.56 trillion.
In 1991 China joined the Asia-Pacific Economic Cooperation group, a trade-promotion forum. In 2001, it also joined the World Trade Organization.
International trade
International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of Gross Domestic Product, GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing.
Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialization, and India, which historically had a more closed policy. South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.
Trade sanctions
Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an United States embargo against Cuba, embargo against Cuba for over 40 years. Embargoes are usually on a temporary basis. For example, Armenia put a temporary embargo on Turkish products and bans any imports from Turkey on December 31, 2020. The situation is prompted by food security concerns given Turkey's hostile attitude towards Armenia.
Fair trade
The "fair trade" movement, also known as the "trade justice" movement, promotes the use of Manual labour, labour, environmental movement, environmental and Social issues, social standards for the production of Commodity, commodities, particularly those exported from the Third World, Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.
Importing firms voluntarily adhere to fair trade standards or governments may enforce them through a combination of employment law, employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the common prohibition of good (economics), goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with labeling requirements. As such, it is a form of Protectionism.
Notes
Bibliography
*
*
*
*
* (Covers sea-trading over the whole world from ancient times.)
* Rössner, Philipp
''Economy / Trade''
EGO - European History Online
Mainz
Institute of European History
2017, retrieved: March 8, 2021
pdf
.
*
External links
*
Agritrade
Resource material on trade by ACP countries
World Bank's
World Integrated Trade Solution provides summary trade statistics and custom query features
World Bank's
Preferential Trade Agreement Database
{{Authority control
Trade,
Society
az:Kommersiya