A series on Trade
World trade
Policy Import Export Balance of trade Comparative advantage Trade law Trade pact Trade bloc Trade creation Trade diversion Export orientation Import substitution Trade finance Trade facilitation Trade route Domestic trade Tax, tariff and trade
Restriction Trade barriers Tariffs Non-tariff barriers Import quotas Tariff-rate quotas Quota share Import licenses Customs duties Export subsidies Technical barriers Bribery Exchange rate controls Embargo Safeguards Countervailing duties Anti-dumping duties Voluntary export restraints
History Mercantilism Protectionism Laissez-faire Free trade Economic nationalism Economic integration
Organizations World Trade Organization World Customs Organization International Monetary Fund Preferential trading area Free trade area Customs union Single market Economic union Monetary union Fiscal union Customs and monetary union Economic and monetary union
Issues Intellectual property rights Smuggling Competition policy Government procurement Outsourcing Globalization Fair trade Trade justice Emissions trading Trade sanctions War Currency Customs Trade Trade and development
Lists Imports Exports Tariffs Largest consumer markets Leading trade partners
By Country Trade mission Trading nation United States Argentina Pakistan Romania Vietnam India
v t e

This is a list of international trade topics.

• Absolute advantage
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
• Asia-Pacific Economic Cooperation (APEC)
• Autarky
• Balance of trade
• Barter
• Bilateral Investment Treaty (BIT)
• Bimetallism
• Branch plant economy
• Bretton Woods conference
• Bretton Woods system
• British timber trade
• Cash crop
• Central European Free Trade Agreement (CEFTA)
• Comparative advantage
• Cost, Insurance and Freight (CIF)
• Council of Arab Economic Unity
• Currency
• Customs broking
• Customs union
• David Ricardo
• Doha Development Round (Of World Trade Organization)
• Dominican Republic – Central America Free Trade Agreement (DR-CAFTA)
• Enabling clause
• European Union (EU)
• Export documents

• ATA Carnet
• ATR.1 certificate
• Certificate of origin
• EUR.1 movement certificate
• Form A
• Form B
• TIR Carnet

• European Free Trade Association (EFTA)
• Exchange rate
• Factor price equalization
• Fair trade
• Foreign direct investment (FDI)
• Foreign exchange option
• Foreign Sales Corporations (FSCs)
• Forfaiting
• Free Trade Area of the Americas (FTAA)
• Free On Board (FOB)
• Free trade
• Free trade area
• Free trade zone (FTZ)
• General Agreement on Tariffs and Trade (GATT)
• Generalized System of Preferences (GSP)
• Geographical pricing
• Giant sucking sound (a colorful phrase by Ross Perot)
• Global financial system (GFS)
• Globalization
• Gold standard
• Gravity model of trade
• Gresham's law
• Heckscher-Ohlin model (H-O model)
• Horizontal integration
• Import
• Import substitution industrialization (ISI)
• International factor movements
• International law
• International Monetary Market (IMM)
• International Monetary Fund (IMF)
• International trade of genetically modified foods
• International Trade Organization (ITO)
• Internationalization
• Internationalization and localization (G11n)
• ISO 4217 (international standard for currency codes)
• Leontief paradox
• Linder hypothesis
• List of tariffs and trade legislation
• Maquiladora
• Mercantilism
• Merchant bank
• Money market
• Most favoured nation (MFN)
• Nearshoring
• New Trade Theory (NTT)
• North American Free Trade Agreement (NAFTA)
• Offshore outsourcing
• Offshoring
• Organisation for Economic Co-operation and Development (OECD)
• Organization of the Petroleum Exporting Countries (OPEC)
• Outsourcing
• Purchasing power parity (PPP)
• Rules of origin
• Safeguard
• South Asia Free Trade Agreement (SAFTA)
• Special drawing rights (SDRs)
• Special Economic Zone (SEZ)
• Tariff
• Tax, tariff and trade
• Terms of trade (TOT)
• Tobin tax
• Trade
• Trade barrier
• Trade bloc
• Trade facilitation
• Trade Facilitation and Development
• Trade finance
• Trade pact
• Trade sanctions
• Trade war
• Transfer pricing
• Transfer problem
• United Nations Monetary and Financial Conference
• Uruguay Round (Of General Agreement on Tariffs and Trade)
• Wage insurance
• World Intellectual Property Organization (WIPO)
• World Intellectual Property Organization Copyright Treaty (WIPO Copyright Treaty)
• World Trade Organization (WTO)

See also[link]

• Outline of business management
• Outline of economics
• Outline of finance
• Outline of marketing
• Outline of production
• Index of accounting articles
• List of business law topics
• List of business theorists
• List of economists

Look up list in Wiktionary, the free dictionary.

List or lists may refer to:

Enumerations[link]

• Any enumeration of a set of items
• A list of comma separated values, a common way of listing in everyday life and computing. (British usage: Comma-separated values)
• A mailing list
• An electronic mailing list
• An electoral list
• List (computing)
• Task lists, a list of tasks to be completed
• Listicle, an article in list format
• Watchlist
• Ranker

Other meanings[link]

• List (watercraft), the leaning to either port or starboard of a ship
• List, an alternative term for roll in flight dynamics
• Lists (jousting), a roped-off enclosure where medieval knights jousted
• SC Germania List, German rugby union club
• List College, an undergraduate division of the Jewish Theological Seminary of America

People[link]

• Friedrich List, German economist
• Guido von List, Austrian Armanist
• John List, murderer
• Liesbeth List, Dutch singer
• Maximilian List, SS officer and Commandant of Lager Sylt, a labour camp on Alderney
• Paul List, chess player
• Peyton List, the name of two American actresses:
  • Peyton List (actress born 1986), American actress in the TV series Mad Men
  • Peyton List (actress born 1998), American actress in the Disney Channel TV series Jessie
• Siegmund Wilhelm List, WWII German field marshal

Places[link]

• List, Schleswig-Holstein, the northernmost village in Germany, on the island Sylt

Work titles[link]

The List may refer to:

• The List (magazine), a Scottish magazine
• The List (South Park), an episode of the television show South Park
• The List (The X-Files), an episode of the television show The X-Files
• The List (2007 film), a film based on the novel by Robert Whitlow
• The List (album), an album by Rosanne Cash

See also[link]

• Liszt (surname)
• Listing (disambiguation)

This disambiguation page lists articles associated with the same title. If an internal link led you here, you may wish to change the link to point directly to the intended article.

Ancient silk road trade routes across Eurasia.

International trade is the exchange of capital, goods, and services across international borders or territories.^[1] In most countries, such trade represents a significant share 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 has been on the rise in recent centuries.

Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.

Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production.

Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.^[2]

International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

History[link]

Roman trade with India according to the Periplus Maris Erythraei, 1st century CE.

The history of international trade chronicles notable events that have affected the trade between various countries.

In the era before the rise of the nation state, the term 'international' trade cannot be literally applied, but simply means trade over long distances; the sort of movement in goods which would represent international trade in the modern world.

Models[link]

Several models have been proposed to predict patterns of trade and to analyze the effects of trade policies such as tariffs, quotas and subsidies.

Adam Smith's model[link]

Adam Smith displays trade taking place on the basis of countries exercising absolute cost advantage over one another.^{[citation needed]}

Ricardian model[link]

The law of comparative advantage was first proposed by David Ricardo.

The Ricardian model focuses on comparative advantage, which arises due to differences in technology or natural resources. The Ricardian model does not directly consider factor endowments, such as the relative amounts of labor and capital within a country.

The Ricardian model makes the following assumptions:

1. Labor is the only primary input to production
2. The relative ratios of labor at which the production of one good can be traded off for another differ between countries

Heckscher-Ohlin model[link]

In the early 1900s a theory of international trade was developed by two Swedish economists, Eli Heckscher and Bertil Ohlin. This theory has subsequently been known as the Heckscher-Ohlin model (H-O model). The results of the H-O model are that countries will produce and export goods that require resources (factors) which are relatively abundant and import goods that require resources which are in relative short supply.

In the Heckscher-Ohlin model the pattern of international trade is determined by differences in factor endowments. It predicts that countries will export those goods that make intensive use of locally abundant factors and will import goods that make intensive use of factors that are locally scarce. Empirical problems with the H-O model, such as the Leontief paradox, were noted in empirical tests by Wassily Leontief who found that the United States tended to export labor-intensive goods despite having an abundance of capital.

The H-O model makes the following core assumptions:

1. Labor and capital flow freely between sectors
2. The amount of labor and capital in two countries differ (difference in endowments)
3. Technology is the same among countries (a long-term assumption)
4. Tastes are the same.

Reality and Applicability of the Heckscher-Ohlin Model[link]

In 1953, Wassily Leontief published a study in which he tested the validity of the Heckscher-Ohlin theory.^[3] The study showed that the U.S was more abundant in capital compared to other countries, therefore the U.S would export capital-intensive goods and import labor-intensive goods. Leontief found out that the U.S's exports were less capital intensive than its imports.

After the appearance of Leontief's paradox, many researchers tried to save the Heckscher-Ohlin theory, either by new methods of measurement, or either by new interpretations. Leamer^[4] emphasized that Leontief did not interpret H-O theory properly and claimed that with a right interpretation, the paradox did not occur. Brecher and Choudri^[5] found that, if Leamer was right, the American workers' consumption per head should be lower than the workers' world average consumption.^[6][7] Many textbook writers, including Krugman and Obstfeld and Bowen, Hollander and Viane, are negative about the validity of H-O model.^[8][9] After examining the long history of empirical research, Bowen, Hollander and Viane concluded: "Recent tests of the factor abundance theory [H-O theory and its developed form into many-commodity and many-factor case] that directly examine the H-O-V equations also indicate the rejection of the theory."^[9]:321

Specific factors model[link]

This unreferenced section requires citations to ensure verifiability.

In the specific factors model, labor mobility among industries is possible while capital is assumed to be immobile in the short run. Thus, this model can be interpreted as a short-run version of the Heckscher-Ohlin model. The "specific factors" name refers to the assumption that in the short run, specific factors of production such as physical capital are not easily transferable between industries. The theory suggests that if there is an increase in the price of a good, the owners of the factor of production specific to that good will profit in real terms.

Additionally, owners of opposing specific factors of production (i.e., labor and capital) are likely to have opposing agendas when lobbying for controls over immigration of labor. Conversely, both owners of capital and labor profit in real terms from an increase in the capital endowment. This model is ideal for understanding income distribution but awkward for discussing the pattern of trade.

New Trade Theory[link]

New Trade Theory tries to explain empirical elements of trade that comparative advantage-based models above have difficulty with. These include the fact that most trade is between countries with similar factor endowment and productivity levels, and the large amount of multinational production (i.e. foreign direct investment) that exists. New Trade theories are often based on assumptions such as monopolistic competition and increasing returns to scale. One result of these theories is the home-market effect, which asserts that, if an industry tends to cluster in one location because of returns to scale and if that industry faces high transportation costs, the industry will be located in the country with most of its demand, in order to minimize cost.

Although new trade theory can explain the growing trend of trade volumes of intermediate goods, Krugman's explanation depends too much on the strict assumption that all firms are symmetrical, meaning that they all have the same production coefficients. Shiozawa, based on much more general model, succeeded in giving a new explanation on why the traded volume increases for intermediates goods when the transport cost decreases ^[10].

Gravity model[link]

The Gravity model of trade presents a more empirical analysis of trading patterns. The gravity model, in its basic form, predicts trade based on the distance between countries and the interaction of the countries' economic sizes. The model mimics the Newtonian law of gravity which also considers distance and physical size between two objects. The model has been proven to be empirically strong through econometric analysis.

Ricardian theory of international trade (modern development)[link]

The Ricardian theory of comparative advantage became a basic constituent of neoclassical trade theory. Any undergraduate course in trade theory includes a presentation of Ricardo's example of a two-commodity, two-country model. A common representation of this model is made using an Edgeworth Box.

This model has been expanded to many-country and many-commodity cases. Major general results were obtained by McKenzie^[11] and Jones,^[12] including his famous formula. It is a theorem about the possible trade pattern for N-country N-commodity cases.

Contemporary theories[link]

Ricardo's idea was even expanded to the case of continuum of goods by Dornbusch, Fischer, and Samuelson^[13] This formulation is employed for example by Matsuyama^[14] and others. These theories use a special property that is applicable only for the two-country case.

Neo-Ricardian trade theory[link]

Inspired by Piero Sraffa, a new strand of trade theory emerged and was named neo-Ricardian trade theory. The main contributors include Ian Steedman (1941-) and Stanley Metcalfe (1946-). They have criticized neoclassical international trade theory, namely the Heckscher-Ohlin model on the basis that the notion of capital as primary factor has no method of measuring it before the determination of profit rate (thus trapped in a logical vicious circle).^[15] This was a second round of the Cambridge capital controversy, this time in the field of international trade.^[16]

The merit of neo-Ricardian trade theory is that input goods are explicitly included. This is in accordance with Sraffa's idea that any commodity is a product made by means of commodities. The limitation of their theory is that the analysis is restricted to small-country cases.

Traded intermediate goods[link]

Ricardian trade theory ordinarily assumes that the labor is the unique input. This is a great deficiency as trade theory, for intermediate goods occupy the major part of the world international trade. Yeats^[17] found that 30% of world trade in manufacturing involves intermediate inputs. Bardhan and Jafee^[18] found that intermediate inputs occupy 37 to 38% of U.S. imports for the years 1992 and 1997, whereas the percentage of intrafirm trade grew from 43% in 1992 to 52% in 1997.

McKenzie^[19] and Jones^[20] emphasized the necessity to expand the Ricardian theory to the cases of traded inputs. In a famous comment McKenzie (1954, p. 179) pointed that "A moment's consideration will convince one that Lancashire would be unlikely to produce cotton cloth if the cotton had to be grown in England."^[21] Paul Samuelson^[22] coined a term Sraffa bonus to name the gains from trade of inputs.

Ricardo-Sraffa trade theory[link]

John Chipman observed in his survey that McKenzie stumbled upon the questions of intermediate products and discovered that "introduction of trade in intermediate product necessitates a fundamental alteration in classical analysis."^[23] It took many years until Y. Shiozawa^[24] succeeded in removing this deficiency. The Ricardian trade theory was now constructed in a form to include intermediate input trade for the most general case of many countries and many goods. This new theory is called Ricardo-Sraffa trade theory.

Largest countries by total international trade[link]

Rank	Country	Total International Trade (Billions of USD)	Date of information
-	World	27,567.0	2010 est.
-	European Union (Extra-EU27)	4,475.0	2011 est.[25]
1	United States	3,825.0	2011 est.
2	China	3,561.0	2011 est.
3	Germany	2,882.0	2011 est.
4	Japan	1,595.5	2011 est.
5	France	1,263.0	2011 est.
6	United Kingdom	1,150.3	2011 est.
7	Netherlands	1,091.0	2011 est.
8	South Korea	1,084.0	2011 est.
9	Italy	1,050.1	2011 est.
-	Hong Kong	944.8	2011 est.
10	Canada	910.2	2011 est.
11	Singapore	818.8	2011 est.
12	Russia	808.7	2011 est.
13	India	792.3	2011 est.
14	Spain	715.2	2011 est.
15	Mexico	678.2	2011 est.
16	Belgium	664.4	2011 est.
17	Taiwan	623.7	2011 est.
18	Switzerland	607.9	2011 est.
19	Australia	502.3	2011 est.
20	Brazil	470.4	2011 est.

Source : Exports. Imports. The World Factbook.

Top traded commodities (exports)[link]

Source: International Trade Centre^[26]

See also[link]

Lists:

• List of countries by current account balance
• List of countries by imports
• List of countries by exports
• List of international trade topics
• List of economists

Notes[link]

References[link]

• Jones, Ronald W. (1961). "Compartive Advantage and the Theory of Tariffs". The Review of Economic Studies 28 (3): 161–175. DOI:10.2307/2295945. 
• McKenzie, Lionel W. (1954). "Specialization and Efficiency in World Production". The Review of Economic Studies 21 (3): 165–180. 
• Samuelson, Paul (2001). "A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods". Journal of Economic Literature 39 (4): 1204–1214. 

External links[link]

Data[link]

Official statistics[link]

Data on the value of exports and imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes:

• United Nations Commodity Trade Database
• WTO Statistics Portal
• Statistical Portal: OECD
• European Union International Trade in Goods Data
• European Union International Trade in Services Data (sub-collection of the Balance of payment statistics)
• European Union Exports and Imports (sub-collection of the National accounts statistics)
• Food and Agricultural Trade Data by FAO
• Brazilian Trade Data

The definitions and methdological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services). Metadata providing information on definitions and methods are often published along with the data.

Other data sources[link]

• Resources for data on trade, including the gravity model
• Asia-Pacific Trade Agreements Database (APTIAD)
• Asia-Pacific Research and Training Network on Trade (ARTNeT)
• International Trade Resources
• World Integrated Trade Solution (WITS)

Other external links[link]

• The Expected Benefits of Trade Liberalization for World Income and Development: Opening the "Black Box" of Global Trade Modeling by Antoine Bouët (2008)
• The McGill Faculty of Law runs a Regional Trade Agreements Database that contains the text of almost all preferential and regional trade agreements in the world. ptas.mcgill.ca
• Interactive Ricardian Model Simulator
• Consumers for World Trade Education Fund electronic trade library
• International trade, Encyclopædia Britannica
• Benefits of International Trade
• Should trade be considered a human right?
• Penn Program on Regulation's Import Safety Page
• Articles on EU international trade in Statistics explained.

Look up international in Wiktionary, the free dictionary.

International mostly means something (a company, language or organization) that involves more than one country. The term international as a word means involvement of, interaction between or encompassing more than one nation, or generally beyond national boundaries. For example, international law, which is applied by more than one country over the world, and international language which is a language spoken by residents of more than one country.

In American English, "International" is also commonly used as a euphemism for "foreign" or even "foreigner."^[1][2]

Origin of the word[link]

The term international was coined by the utilitarian philosopher Jeremy Bentham in his Introduction to Principles of Morals and Legislation, which was printed for publication in 1780 and published in 1789. Bentham wrote: "The word international, it must be acknowledged, is a new one; though, it is hoped, sufficiently analogous and intelligible. It is calculated to express, in a more significant way, the branch of law which goes commonly under the name of the law of nations.^[3] The word was adopted in French in 1801.^[4] Thomas Erskine Holland noted in his article on Bentham in the 11th edition of the Encyclopedia Britannica that "Many of Bentham's phrases, such as 'international,' 'utilitarian,' 'codification,' are valuable additions to our language; but the majority of them, especially those of Greek derivation, have taken no root in it."

Meaning in particular fields[link]

• In team sports, "international" is a match between two national teams, or two players capped by a national team.

• In politics, "The International" may refer to a political international.

• In linguistics, an international language is one spoken by the people of more than one nation, usually by many. Also called world language. English, Spanish, French and Arabic are considered to be world languages.^[5]

• In interlinguistics, international often has to do with languages rather than nations themselves. An "international word" is one that occurs in more than one language. These words are collected from widely spoken source or control languages, and often used to establish language systems that people can use to communicate internationally, and sometimes for other purposes such as to learn other languages more quickly. The vocabulary of Interlingua has a particularly wide range, because the control languages of Interlingua were selected to give its words and affixes their maximum geographic scope.^[6] In part, the language Ido is also a product of interlinguistic research.

• In arts, an international art movement is an art movement with artists from more than one country, usually by many. Some international art movements are Letterist International, Situationist International, Stuckism International.

"International" is not the same as "global"; the latter implies "one world" as a single unit, while "international" recognizes the differences between different places.

See also[link]

• Globalization
• Multinational Corporation
• Multinational State
• Supranational
• United Nations
• World community

References[link]

External links[link]

• Meaning of international on The Free Dictionary
• Meaning of international on Cambridge dictionary.

Sources[link]

• Ankerl, Guy. Global communication without universal civilization. INU societal research. Vol.1: Coexisting contemporary civilizations : Arabo-Muslim, Bharati, Chinese, and Western. Geneva: INU Press. ISBN 2-88155-004-5. 

Trader in Germany, 16th century

San Juan de Dios Market in Guadalajara, Jalisco

Trade is the transfer of ownership of goods and services from one person or entity to another by getting something in exchange from the buyer. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead 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 later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.

Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.^[1] Wholesale trade is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.^[2]

Trading can also refer to the action performed by traders and other market agents in the financial markets.

History of trade[link]

The neutrality of this article is questioned because of its systemic bias. In particular, there may be a strong bias in favor of European history. Please see the discussion on the talk page. Please do not remove this message until the issue is resolved. (August 2010)

Prehistory[link]

Trade originated with the start of communication in prehistoric times. Trading was the main facility of prehistoric people, who bartered goods and services from each other before the innovation of the modern day currency. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.^[3]

Ancient history[link]

A silver statuette of Mercury the Roman god of trade. Part of the Berthouville Treasures

Trade is believed to have taken place throughout much of recorded human history. There is evidence of the exchange of obsidian and flint during the stone age. Materials used for creating jewelry were traded with Egypt since 3000 BC. Long-range trade routes first appeared in the 3rd millennium BC, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea traders, traveling across the Mediterranean Sea, and as far north as Britain for sources of tin to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia. From the beginning of Greek civilization until the fall of the Roman empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including India and China. Roman commerce allowed its empire to flourish and endure. The Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy.

The fall of the Roman empire, and the succeeding Dark Ages brought instability to Western Europe and a near collapse of the trade network in the western world. Trade however continued to flourish among the kingdoms of Africa, Middle East, India, China and Southeast Asia. Some trade did occur in the west. For instance, Radhanites were a medieval guild or group (the precise meaning of the word is lost to history) of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East.

Middle Ages[link]

During the Middle Ages, Central Asia was the economic center of the world.^[4] The Sogdians dominated the East-West trade route known as the Silk Road after the 4th century AD up to the 8th century AD, with Suyab and Talas ranking among their main centers in the north. They were the main caravan merchants of Central Asia.

From the 8th to the 11th century, the Vikings and Varangians 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 over most of Northern Europe and the Baltic, between the 13th and 17th centuries.

Age of Discovery[link]

Vasco da Gama pioneered the European Spice trade in 1498 when he reached Calicut 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 in Europe. Spices brought to Europe from the Eastern world were some of the most valuable commodities for their weight, sometimes rivaling gold.

In the sixteenth century, the Seventeen Provinces were the centre 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, Holland in the 17th century, and the British in the 18th century. The Spanish Empire developed regular trade links across both the Atlantic and the Pacific Oceans.

Danzig in the 17th century

In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes of the Wealth of Nations. It criticised Mercantilism, and argued that economic specialisation 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 rationalisations of 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.

Berber Trade with Timbuktu, 1853

Age of Reason[link]

In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of comparative advantage. 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 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 government had the "duty" to protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialise 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.^[5]

Twentieth century[link]

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. Only during the World War II the recession ended 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 and Bank for International Settlements). These organisations 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.

Free trade[link]

Free trade advanced further in the late 20th century and early 2000s:

• 1992 European Union lifted barriers to internal trade in goods and 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, by mandating mutual most favoured nation trading status between all signatories.
• EC was transformed into the European Union, which accomplished the Economic and Monnetary 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.

Protectionism[link]

Protectionism is the policy of restraining and discouraging trade between states and contrasts with the policy of free trade. This policy often takes of form of tariffs and restrictive quotas. Protectionist policies were particularly prevalent in the 1930s, between the great depression and the onset of World War II.

Religion[link]

Muslim teachings encourage trading (and condemn usury or interest). By trade the whole society get benefits but interest makes rich more rich and poor more poor.^[6][7]

Judeo-Christian teachings encourage traders to avoid dishonest gain.^{[citation needed]}

Development of money[link]

Ancient Athenian Greek Drachma coin

Roman denarius

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 Mexico under Montezuma^{[disambiguation needed ]} cocoa beans were money. [1]

Currency was introduced as a 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.^[8]

Ancient Sparta minted coins from iron to discourage its citizens from engaging in foreign trade.

Current trends[link]

Doha rounds[link]

The Doha round of World Trade Organization negotiations aims to lower barriers to trade around the world, with a focus on making 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 hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building.

The Doha round began in Doha, Qatar, and negotiations have subsequently continued in: Cancún, Mexico; Geneva, Switzerland; and Paris, France and Hong Kong.

China[link]

Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reform. In contrast to the previous 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, that 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 the PRC joined the Asia-Pacific Economic Cooperation group, a trade-promotion forum. In 2001, it also joined the World Trade Organization. See also: Economy of the People's Republic of China

International trade[link]

A series on Trade
World trade
Policy Import Export Balance of trade Comparative advantage Trade law Trade pact Trade bloc Trade creation Trade diversion Export orientation Import substitution Trade finance Trade facilitation Trade route Domestic trade Tax, tariff and trade
Restriction Trade barriers Tariffs Non-tariff barriers Import quotas Tariff-rate quotas Quota share Import licenses Customs duties Export subsidies Technical barriers Bribery Exchange rate controls Embargo Safeguards Countervailing duties Anti-dumping duties Voluntary export restraints
History Mercantilism Protectionism Laissez-faire Free trade Economic nationalism Economic integration
Organizations World Trade Organization World Customs Organization International Monetary Fund Preferential trading area Free trade area Customs union Single market Economic union Monetary union Fiscal union Customs and monetary union Economic and monetary union
Issues Intellectual property rights Smuggling Competition policy Government procurement Outsourcing Globalization Fair trade Trade justice Emissions trading Trade sanctions War Currency Customs Trade Trade and development
Lists Imports Exports Tariffs Largest consumer markets Leading trade partners
By Country Trade mission Trading nation United States Argentina Pakistan Romania Vietnam India
v t e

International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of 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. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalization".

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 (although it has begun to open its economy, as of 2005). 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[link]

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 embargo against Cuba for over 40 years.

Trade barriers[link]

Although there are usually few trade restrictions within countries, international trade is usually regulated by governmental quotas and restrictions, and often taxed by tariffs. Tariffs are usually on imports, but sometimes countries may impose export tariffs or subsidies. All of these are called trade barriers. If a government removes all trade barriers, a condition of free trade exists. A government that implements a protectionist policy establishes trade barriers.

Fair trade[link]

The fair trade movement, also known as the trade justice movement, promotes the use of labour, environmental and social standards for the production of commodities, particularly those exported from the 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.^[9]

Importing firms voluntarily adhere to fair trade standards or governments may enforce them through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the common prohibition of 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 fair trade labeling requirements.

Notes[link]

Bibliography[link]

Economics portal

Wikimedia Commons has media related to: Trade

• Beckwith, Christopher I (2011) [2009]. Empires of the Silk Road: A History of Central Eurasia from the Bronze Age to the Present. Princeton: University Press. ISBN 978-0-691-15034-5. 
• Bernstein, William (2008). A Splendid Exchange: How Trade Shaped the World (2009 British ed.). London: Atlantic Books. ISBN [[Special:BookSources/9711843548034|9711843548034]]. 
• Davies, Glyn (2002) [1995]. Ideas: A History of Money from Ancient Times to the Present Day. Cardiff: University of Wales Press. ISBN 978-0-7083-1773-0. http://www.ex.ac.uk/~RDavies/arian/origins.html. 
• Nomani, Farhad; Rahnema, Ali (1994). Islamic Economic Systems. New Jersey: Zed Books. ISBN 1-85649-058-0. 
• Watson, Peter (2005). Ideas: A History of Thought and Invention from Fire to Freud. New York: HarperCollins Publishers. ISBN 978-0-06-621064-3.