Trade

Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. 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.

History of trade

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. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.{{mn|Ideas150|1}}

Related Topics:
Communication - Peter Watson - History of long-distance commerce - Circa

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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 BCE The Phoenicians were noted sea traders, travelling 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.

Related Topics:
Obsidian - Flint - Stone age - Jewelry - Egypt - 3000 BCE - Phoenicians - Mediterranean Sea - Britain - Tin - Bronze - 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 China. Roman commerce allowed their empire to flourish and endure. Their widespread empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy.

Related Topics:
Greek - Civilization - Roman empire - 5th century - Spice - China - Roman commerce - 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. Nevertheless some trade did occur. The Radhanites were a medieval guild of Jewish merchants who allowed trade between the Christians in Europe and the Muslims of the near east.

Related Topics:
Western europe - Radhanite - Jew - Christian - Europe - Muslim - Near east

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

From the 8th century to the 11th century centuries, 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.

Related Topics:
8th century - 11th century - Viking - Varangians - Scandinavia - Russia - Northern Europe - Baltic

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Vasco da Gama started the Spice trade in 1498. The spice trade was of major economic importance and helped spur the Age of Exploration. Spices brought to Europe from distant lands were some of the most valuable commodities for their weight, sometimes rivaling gold.

Related Topics:
Vasco da Gama - Spice trade - 1498 - Age of Exploration - Spice - Gold

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

In the 16th century, Holland was the centre of free trade, imposing no exchange controls, and advocating the free movement of goods.

Related Topics:
Holland - Exchange control

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Trade in the East Indies was dominated by Portugal in the 16th century, the Netherlands in the 17th century, and the British in the 18th century.

Related Topics:
East Indies - Portugal - 16th century - Netherlands - 17th century - British - 18th 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 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 import and export controls "dupery", which hurt the trading nation at the expense of specific industries.

Related Topics:
1776 - Adam Smith - An Inquiry into the Nature and Causes of the Wealth of Nations - Mercantilism - Economic - Specialization - Division of labour - Productive - Import - Export

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

In 1799, the Dutch East India Company, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.

Related Topics:
1799 - Dutch East India Company - Bankrupt

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade might benefit the industrially weak as well as the strong, in the famous theory of comparative advantage. In Principles of Political Economy Ricardo advanced the doctrine still considered the most counterintuitive in economics:

Related Topics:
1817 - David Ricardo - James Mill - Robert Torrens - Comparative advantage - Principles of Political Economy - 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.

Related Topics:
John Stuart Mill - Monopoly - Terms of trade - Tariff - Reciprocity - Economic surplus

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

This was followed within a few years by the infant industry scenario developed by Mill anticipated New Trade Theory by 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 industrialize and out-compete English exporters.

Related Topics:
Infant industry - New Trade Theory - Protect - Industrialize - English

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The Great Depression was a major economic recession that ran from 1929 to 1941. During this period, there was a great drop in trade and other economic indicators.

Related Topics:
Great Depression - 1929 - 1941

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The lack of free trade was considered by many as a principal cause of the depression, and World War II. 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 organizations became operational in 1946 after a enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.

Related Topics:
World War II - 1944 - 1947 - General Agreement on Tariffs and Trade

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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

Related Topics:
20th century - 2000s

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

• 1992 European Union lifted barriers to internal trade in goods and labour.
• January 11994 NAFTA took effect
• 1994 The GATT Marrakech Agreement specified formation of the WTO.
• January 11995 World Trade Organization was created to facilitate free trade, by mandating mutual most favoured nation trading status between all signatories.
• As of mid-2005, there is a proposal for a Central American Free Trade Agreement, which would also include the United States and the Domincan Republic.

Development of money

Main article: History 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.

Related Topics:
Commodity money - Iraq

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Currency was introduced as a standardized 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.

Related Topics:
Currency - Money

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Numismatists have examples of coins from the earliest large-scale societies, although these were initially unmarked lumps of precious metal{{mn|OriginsOfMoney|2}}.

Related Topics:
Numismatist - Precious metal

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The system of commodity money in many instances evolved into a system of representative money. In this system, the material that constitutes the money itself had very little intrinsic value, but none the less such money achieves significant market value through being scarce as an artifact.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

See also

• Silent trade
• Roman commerce
• The Silk Route, Amber Road and other trade routes
• slave trade, fur trade, cod trade
• The rise of banking
• History of international trade
• Merchant adventurers and trading companies: British East India Company, Muscovy Company, Virginia Company, Hudson's Bay Company and others
• Mercantilism
• Industrial Revolution, Second Industrial Revolution
• Capitalism
• Innovations in transport
• Colonialism and neo-colonialism
• Commodities, goods and intellectual property
• E-commerce
• Globalization
• Categories
• Category:Currency

Current trends

Doha rounds

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, and the major developing countries (represented by the G20). Agricultural subsidies are the most significant issue upon which agreement has been hardest to negotiate.

Related Topics:
World Trade Organization - Barriers to trade - Trade fairer - Developing countries - Developed countries - G20 - Agricultural subsidies

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

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

Related Topics:
Doha - Qatar - Cancun - Mexico - Geneva - Switzerland - Paris - France

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

China

Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reform. Previously the Communist nation had employed the Soviet-style centrally planned economy, with limited results. They would now utilize a more market-oriented economy, particularly in the so-called Special Economic Zones located in the Guangdong, Fujian, and Hainan.

Related Topics:
1978 - People's Republic of China - Communist - Soviet - Centrally planned economy - Market-oriented economy - Special Economic Zone - Guangdong - Fujian - Hainan

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The results of this reform has been spectacularly successful. By 2004, the GDP of the nation has quadrupled since 1978 and foreign trade exceeded $1 Trillion US. This occurred in spite of the backlash from the Tiananmen Square Massacre. The PRC maintains a $30 billion trade surplus, and is rapidly becoming a leader in industrial manufacturing.

Related Topics:
2004 - GDP - Tiananmen Square Massacre

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

In 1991 the PRC joined the Asia-Pacific Economic Cooperation group, a free-trade organization. More recently, in 1999 they also joined the World Trade Organization.

Related Topics:
1991 - Asia-Pacific Economic Cooperation - 1999 - World Trade Organization

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

See also: Economy of the People's Republic of China

~ ~ ~ ~ ~ ~ ~ ~ ~ ~