History of global trade

The global economy has provided opportunities for trade, and increases in wealth, for centuries.

The Silk Road

Extensive trading networks began in the fertile crescent, in the present Middle East, with the onset of human civilization. From 250bc to 250ad the Red Sea become the predominant shipping route that connected Europe with the Indian continent. The Silk Road – across land and sea – was an ancient trading network that linked the East with West. Goods such a porcelain and spices were a key part of the development of this route.

By the time that Western European countries searched for a sea route to the East Asia, the global economy was already blossoming. All supply chains have been global for centuries. Spain tried to circumnavigate the globe and bumped into America. Portugal missed the Cape of Good Hope and “discovered” Brazil. The age of discovery led to the integration, and colonialization, of the global economy.

Global trade in the 1700s was characterized by an assigned monopoly, competing against other national monopolies, and supported by military protection. By the nineteenth century we had entered into an era of peaceful free trade.

This video shows the history of globalisation through some important maps:

This image shows how the word used for “tea” depends on the original trade routes:

Trade between countries or trade within countries?

There’s a fairly strong empirical link between more free trade and economic growth since the 1970s. It’s true that this relationship was less strong in the nineteenth century, but this is probably because trade within countries was more important than trade between countries.

From the perspective of Virginia it doesn’t matter so much what the tariffs with France are like relative to the tariffs with Pennsylvania. Once it became common for goods to move freely within countries, reducing international barriers had more impact.

Interestingly many who remain hostile to free trade between nations tend to favour free trade within nations.