INTERNATIONAL
BUSINESS AND
TRADE
AUGUST 25
EASTERN VISAYAS STATE UNIVESITY
Authored by: Louwingie Riel
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Entry Module
The Primer to International Trade and Business
“No nation was ever ruined by trade.”
Benjamin Franklin
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International Trade
In layman’s terms, trade is the actual exchange of capital, goods, and services for either
the production of other goods/services or direct consumer use. Once trade is done
across international borders or territories, this is recognized as International Trade. Any
exchange of goods, services or transactions that transcends outside the country borders,
is a participant in the international market directly or indirectly.
For more than 8,000 years, the desire for goods from distant countries has driven the
evolution of complex international trade networks. In which, the first international trade
network discovered by archeologists appeared in approximately 3,500 BC in the ancient
Mesopotamia (modern-day Iran and Iraq). Mention must also be made of the trade
networks existing in China during 1,000-2,000 BC, the ‘Silk Road’ – the ancient
transcontinental network of trade routes that connected the East with the West. Before
Greek civilization, the Mediterranean Sea was an international trade center very
successfully organized by Phoenicia – an ancient region currently known as Lebanon.
Phoenicians were notable merchants, traders, and colonizers of the Mediterranean in
the 1st millennium BCE.
The Silk Road was and is a
network of trade routes
connecting the East and West;
from the 2nd century BCE to
the 18th century CE it was
central to the economic,
cultural, political, and religious
interactions between these
regions. [2]
Formally established during
the Han Dynasty of China in
130 BCE, which linked the
regions of the ancient world in
commerce between 130 BCE-
1453 CE. [3]
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A network of mostly land but also sea trading routes, the Silk Road stretched from China to Korea and
Japan in the East, and connected China through Central Asia to India in the south and to Turkey and Italy
in the West.[4]
Given a brief beginning of international trade transactions, it focuses not on mere
exchange of goods and ownership but more on the construction and bond of trade
networks. Trade Network is the network of enterprises engaged in the sale of
commodities to the population and the supply of commodities to trading
organizations.[1]
Basically, goods and services are provided to meet consumer satisfaction as the industry
gain its profit. As business retention and growth is sought, trade networks are created
to encourage long-term relationship as well as mutual trust. This builds alliance and ease
access of resources that benefits the business, the government, and the people.
TIMELINE OF GLOBAL TRADE
As above stated, with the ever growing want in the distribution of goods and services
abroad, the expansion of trade networks has made these trade routes leave a lasting
imprint in cultures and markets across the world, which in many cases can still be seen
today. Below are 18 goods that have shaped the global economy from prehistory to the
present day.
WINE Georgia (Southern-Europe)
6TH MILLENIUM BC
The earliest traces of wine come from Georgia (located at the intersection of
Eastern Europe and Western Asia), where it was made and stored in large
earthenware pots (called as kvevri or qvevri) buried in the ground to stay cool
and is used in every stage in wine production. But to trade wine, it had to be
transported and the use of kvevri made it difficult to do so. In the Bronze Age,
wine was first carried in amphorae – large, bulbous pottery vases with handles
near the neck, lined with wax and firstly sealed with the use of a clay stopper.
These amphorae were easy to produce and transport, and includes benefits
when used for the transportation of Wine:
a. The long slim neck reduced the surface area of wine that would be
exposed to oxygen.
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b. The tapered bottom allowed sediment to collect and the amphora itself
to be easily buried when cooler, long-term storage was called for.
c. The tapered bottom also proved to be useful in keeping its contents from
sloshing around during its sea journey.
d. They fit well in the ships of the day.
e. The handles ease the load of carrying them.
AMBER Poland (Europe); Lithuania (Europe); Latvia (Europe)
4TH MILLENIUM BC
From around 3500BC – 2500BC, there was a lively trade in amber from the Baltic
coast in Northern Europe to Southern Europe. Amber – tree sap left over from
prehistoric forests, often with trapped insects or plant matter inside – was
plentiful in the Baltic but highly prized for decorative purposes further south
along the Mediterranean and Adriatic coasts where there was little to none. The
demand for these stones grew so high that it led to forgeries as early as 2000 BC.
Amber were vastly used and valued by Greeks, as jewelry and decorative objects,
and by Romans, as adornments and household items like miniature plastics,
vessels for wine, incense bottles, and more. It was also believed that it contains
mysterious qualities such as protection, curing disease, and warding off evil.
SPICES India (South Asia); Indonesia (South Asia)
1ST MILLENIUM BC
For centuries, the spice trade centered around Arabia, with merchants said to
have invented tales to guard the origins of their wares. Spices were some of the
very first truly globally traded products, paving the way for the trade networks
we rely on today.
The spice trade was the world’s biggest industry, where it established and
destroyed empires; led to discoveries of new continents; and as well helped lay
the foundation of the modern world.
Initially, the spice trade was conducted mostly by camel caravans over land
routes, with the great help of the Silk Road, connecting Asia with the
Mediterranean world. Trade on the Silk Road was a significant factor in the
development of the great civilizations of China, India, Egypt, Persia, Arabia, and
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Rome. And as time enhanced the world’s trade routes, sea trade routes was the
main reason that the spice trade grew. Arab traders were sailing directly to spice-
producing lands before the Common Era. In East Asia, the Chinese crossed the
waters of the Malay Archipelago to trade in the Spice Islands (the Moluccas or
the East Indies).
Just a short revelation to the value of spices of today. The Roman Empire, who
set up a powerful trading center in Alexandria, Egypt and held the command of
all the spices entering in the Greco-Roman World, used salt as payment for
Roman soldiers which led to the word “salary” and the phrase “worth his salt”.
And for centuries, countless groups battled for the control of the spice trade.
SILK China (East Asia)
2ND CENTURY BC
Often seen as one of the first truly global trade routes, the Silk Road that ran
from China to Rome. It began when Chinese silk merchants sought to exchange
their valuable wares for the large and powerful horses of Central Asia. The road’s
heyday ended around the 15 Century AD, as traders from the West found faster
routes via sea to the East, cutting out the Central Asia traders.
Silk was very much adorned and valued and is still a moving demand up to this
day. This fabric was firstly discovered and produced in Neolithic China in early
2700 BCE. Since silk is produced by silk worms through their cocoons, the Chinese
have cultivated mulberry leaves to tend these silk worms as they gather threads
from their cocoons and weave the silk known as Sericulture. This approach was
only known and done in ancient China for years. Archaeological records also
showed that the Indus Valley civilization in the north of the Indian subcontinent
was also making silk contemporary with the Neolithic Chinese, using the
Antheraea moth to produce silk threads for weaving.
Silk have been made highly demanded throughout the trade routes and brought
the fame of China at which the Romans have called the Chinese “Seres” meaning
“the land of silk”. And as demand and knowledge grew, the Chinese could no
longer keep the secret of silk production in which Korea and Japan began to
manufacture silk.
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GLASS Egypt (East Africa); Israel (Southwest Asia); Syria (Southwest Asia)
1ST CENTURY BC
According to archaeological evidences, the first true glass was made in in coastal
north Syria, Mesopotamia or ancient Egypt around 3500 BC. Although,
arguments were still shown that Phoenician merchants had made the first glass
around 5000 BC, according to Roman historian Pliny.
The very first glass known to stone age people, were used as weapons and
decorative objects thru obsidian. And as time passed, glass beads were made in
Africa, but became commonly used in international trade throughout the Islamic
period and was further developed in Egypt. As glassblowing technologies were
developed in present-day Syria in the 1st Century BC, glass objects became more
prevalent in daily life.
PAPER China (East Asia)
2ND CENTURY AD
This was firstly made in China at the start of the 2 nd Century AD. It is very much
recorded that the first papermaking process was during the Eastern Han period
in China. Traditionally attributed to the eunuch court official Cai Lun (formerly
Romanized as Ts’ai Lun), the inventor of paper. This single material changed most
ways from communication -massively spreading literatures and literacy - to
currency trading and our alternative for plastic, today.
SALT Morocco (North Africa); Italy (Europe); Germany (Europe)
5TH CENTURY
Across cultures, a ravenous demand for salt – for use in food and traditional
medicine – has driven long-distance trade for millennia. Moorish merchants in
the sub-Sahara, routinely traded salt ounce for ounce of gold, whereas slabs of
rock salt called ‘amôlés became the coin of realm in Abyssinia.
Several trade routes for salt evolved during the late Roman Empire and
throughout the Middle Ages, from the Via Salaria (Salt Route) in Italy to the Old
Salt Road in Germany. Salt brought great impact to the Romans, using it as an
antiseptic thus it’s Roman word “sal”, a first cousin to Salus the goddess of
health. In the 5th Century, Ghana routes unfurled across the Sahara Desert, to
trade salt – abundant in North-West Africa, including present-day Morocco –
with gold from nations to the South such as Ghana.
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GOLD Ghana (West Africa); Mali (West Africa)
7TH CENTURY
Gold has held a position of status and awe since the beginning of human
civilization, and the metal’s influence on history is unparalleled. It has inspired
wars, provided wealth, and shaped the course of human history.
The Kingdom of Lydia, now located in Western Turkey, was the first nation to use
gold and its alloys to create and use as a system of trade. Then the Greeks used
gold as their form of currency and sign of status and wealth across their nation.
While the Romans were the first to create gold coins as a widespread currency.
In Medieval West Africa, now known as Ghana and Mali, gold was abundant in
its soils and rivers. They have traded with gold and salt, equally, as well as, shells,
ivory, kola, nuts, cloth, slaves, other metal goods, and beads. Ghana was known
to be the “Land of Gold” as it was very much abundant in Western Africa,
specifically within the Trans-Saharan Trade. Annual caravans transported gold by
camel across the desert. Some traders still make the same grueling journey
today. The trade in gold across the Sahara saw relatively small quantities arriving
in the North at any one time. When the 14th Century emperor Mūsā I of Mali
travelled to Cairo in Egypt with a ton of gold, he famously overwhelmed the
market.
TEA China (East Asia); India (South Asia); Japan (East Asia)
9TH CENTURY
Camellia sinensis – the tea plant – thrives throughout China, India and Sri Lanka,
to name a few. A Chinese legend has it that prehistoric ruler of China, Shennong,
was sitting beneath a tree when its leaves fell into his kettle. He drank the
infusion and discovered its mind-clarifying properties. In the 9th Century, tea
became firmly rooted beyond China, when it was adopted in Japan as a drink for
monks and the elite classes. Later, around the 17th Century, the drink became
popular in Europe. This simple tea was also traded for everything, from ponies
to jewels, dried herbs and spices.
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WHISKY Ireland (Europe); Scotland (Europe)
12TH CENTURY
Ireland and Scotland have vied for the title of birthplace of whisky, and it is still
an open question as to whom got there first. Scotch Whisky production far
outstrips Irish, with Scotch attaining an international reputation that few other
spirits equal.
Whisky was meant “water of life”, for it was used as an internal anesthetic and
an external antibiotic. It was then introduced to North America with Irish and
Scottish immigrants and has vastly spread across the globe.
ORANGES Spain (Europe); India (South Asia); China (East Asia)
15TH CENTURY
The orange is originally native not to the groves of Florida, but the foothills of
the Himalayas. It was brought further afield to the Mediterranean around the
15th Century, most likely by Italian or Portuguese travelers. Along with other
citrus fruits, it played an important role as global trade expanded, helping ships’
crews to stave off scurvy. Sailors planted citrus trees along the coasts of their
voyage routes, aiding in the trade and spread of oranges around the world.
COFFEE Ethiopia (East Africa); Yemen (Southwest Asia)
15TH CENTURY
Coffee cultivation began in earnest around the 15th Century. Since then it has
sparked a series of social revolutions, from the European coffee houses of the
17th Century, to Italy’s timeless espresso bar culture, to today’s cult shops from
London to Shanghai.
Legend says that the potential of these coffee beans founded in the ancient
coffee forests in the Ethiopian plateau, was discovered by the goat herder, Kaldi.
It was said that he noticed his goats became so energetic, not wanting to sleep
at night, after eating the berries of a certain tree. Kaldi then reported his findings
to the abbot of the local monastery, who made a drink with the berries and
resulted to his alertness all throughout the long hours of the evening prayer. As
the story spread east and reached in to the Arabian Peninsula, coffee cultivation
and trade began. By the 15th Century, coffee was being grown in the Yemeni
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district of Arabia and by the 16th Century it was known in Persia, Egypt, Syria, and
Turkey.
FLOWERS Netherlands (Europe)
17TH CENTURY
Netherlands has been at the heart of the flower trade for centuries. Today
countries such as Kenya are increasingly competitive as producers, bringing jobs
and economic development to rural areas with sparse opportunities. They have
held the global flower trade for more than 200 years and still holds the 1st
topmost flower producing country, worldwide.
BICYCLES France (Europe)
19TH CENTURY
One of the earliest models of bicycles was called the “velocipede”.
The bike was fast by name, fast by nature – partly because it lacked brakes.
Despite precarious origins, the bicycle has evolved into one of the world’s most
popular methods of transport.
Bicycles made beginnings to the change of societies, such as:
a. Road construction, Road signs and maps
b. Women fashion
c. Transportation, lessened the dependence on horses
d. Helped in relieving poverty
e. Military and postal services
f. Sports
g. One of the best eco-friendly transportation and exercise, today.
h. The breakthrough in the invention of airplanes.
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SEMICONDUCTORS USA (North America); UK (Europe)
19TH CENTURY
Discovered in the year 1833, as the essential part of electronic circuits, laying the
foundation for modern computing. Semiconductors are known as the building
blocks of modern computation. The explosion of trade in semiconductors that
led on from this has transformed almost all area of our lives.
Semiconductor devices called transistors are the tiny electronic switches that run
computations inside our computers. Scientists in the US built the first silicon
transistor in 1947. Before silicon was found, mechanics of computing performed
by vacuum tubes were slow and bulky. Manufacturing transistors out of silicon
allowed them to be made small enough to fit on a microchip, opening the gates
to a rush of gadgets that have become smaller and smarter by the year.
WIND TURBINES USA (North America); Scotland (Europe)
19TH CENTURY
In the year 1887, wind turbines were developed by inventors in US and Scotland
and was continuously invented in the 19th Century being the first turbines to
harness wind power for electricity. But modern wind power is considered to have
been first developed in Denmark, where horizontal-axis wind turbines were built
in 1891 and a 22.8-metre wind turbine began operation in 1897.
Wind is used to produce electricity with the kinetic energy created by air in
motion. This is transformed into electrical energy using wind turbines or wind
energy conversion systems. The kinetic energy of the wind, by moving the shaft,
which is connected to a generator producing electrical energy through
electromagnetism. Today, more than 515 Gigawatts of power comes from the
wind globally, making up 4% of the world’s electricity supply.
HANDBAGS Italy (Europe); China (East Asia)
20TH CENTURY
Within the 20th Century, women labor began to rapidly emerge in which
handbags became indispensable, leading to a surge in trade in crafted leather
bags.
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The oldest known handbag dates 5000 years ago which was worn by a man
named Ötzi the Iceman. Although handbags became popular in early Europe,
from the definition of usage to wealth status and exposure up to fashion
statements, bags were discovered in ancient China for its main use of preserving
tea flavors in paper bags during the late Tang Dynasty.
WATCHES UK (Europe); Switzerland (Europe)
20TH CENTURY
The watch came to be called from the Middle English word “wacchen” that
literally means “to keep alert”. The individual who was able to generate the first
portable clock was Peter Henlein from Nuremberg, German. But the origins of
the watch appeared from Europe in the 15th Century where the “Father of English
Clockmaking” – Thomas Tompion – pioneered the improvements in timekeeping
mechanisms.
Queen Elizabeth I received a wristwatch in the 16th Century as a gift, but they
were slow to catch on more widely. They became popular in times of war, when
military maneuvers had to be planned and coordinated with precision, as well as
indicating East-West measurable maritime location. In the mid-19th Century, the
Swiss were dominating the market for timepieces, predominantly pocket-
watches. Watches finally took over the mass market in the early 20th Century,
after soldiers returning from the First World War helped make them fashionable.
THE TRADE ROUTES
1. Silk Road
- The very most used and famous ancient trading network between China and
the Far East to the Middle East and Europe, which led to the tremendous link
of ancient China civilizations and the Roman Empire.
2. Spice Route
- This was also known as the maritime silk road, it stretches from the West
coast of Japan, through the islands of Indonesia, around India to the lands of
the Middle East then across the Mediterranean to Europe.
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3. Incense Route
- This route was developed for the transportation of frankincense and myrrh
that are only found in the Southern end of the Arabian Peninsula – known
today as Yemen and Oman.
- Frankincense comes from the dried sap of Boswellia trees and Myrrh comes
from the lifeblood of the Commiphora. These valuable goods are very much
inclined to Roman Catholicism, where each of them have symbolic means
together with gold. Gold symbolizes kingship on Earth or Royalty;
Frankincense signifies deity or denotes the Holy Priest and burned for the use
of incense; and Myrrh – as an embalming oil – represents death as it moved
its way into perfumes and medicines.
4. Amber Road
- The Romans, who valued this stone for both decorative and medicinal
purposes, developed an Amber Road linking the Baltics with the rest of
Europe.
5. Tea Horse Road
- This route became one of the most dangerous routes due to the numerous
rivers present within. As the name implied, this route was mostly used and
generated with the trading between Tibetan war horses and Chinese tea.
This made better understand that its road was a network of caravan paths
winding through the mountains of Sichuan, Yunnan and Tibet in Southwest
China.
6. Salt Route
- Knowing that salt have always been the most famously used and in demand
produce for preservation (both food and the dead), an antiseptic, food
flavoring, and anciently used as salary as well, this was made enormously
scarce in ancient times. Thus, areas who are rich with this common mineral
became important trading centers and rose the Roman Salt Route “Via
Salaria” which ran from Ostia – near Rome – across Italy to the Adriatic coast.
- Another Old Salt Route existed across Europe that ran 62 miles from
Lüneburg in northern Germany, which was one of the plentiful salt
sources in northern Europe to Lübek on the north German coast.
7. Trans-Saharan Trade Route
- The Trans-Saharan Trade Route from North Africa to West Africa was
actually made up of a number of routes, creating a criss-cross of trading
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links across the vast expanse of desert. Gold, slaves, salt, and cloth
were mostly traded along this route across the Sahara.
8. Tin Route
- From the Bronze Age to the Iron Age, the Tin Route was a major artery
that provided early settlements with access to a vital ingredient for
metal-making: tin. Copper must be alloyed with tin to make bronze, an
advance that occurred in the Near East around 2800 BCE and created a
stronger, better metal than the type used previously. This new
technology created a demand for tin, and as it is not found in many
places, the resource became an important item for trade.
- Cornwall in Southwestern Britain had tin mines, thus the Tin Route
connects from Cornwall to France, Greece, and beyond.
CAUSES OF INTERNATIONAL TRADE:
1. Different Resource Endowments
2. Technology Developments
3. Transportation and Communication Development
4. Existence of Economies of Scale in Production
5. Government Policies Existed
EFFECTS OF INTERNATIONAL TRADE:
1. The Economy
2. Labor
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References
[1] The Free Dictionary by Farlex; [Link]
[2] [Link]
[3] [Link]
10 Reasons Why Networking Is Essential For Your Career 2019 by Bianca Miller Cole;
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west.
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