Evolution of International Trade

History of International Business Early traders

Well before the time of Christ, Phoenician and Greek merchants

China stimulated the emergence of an internationally integrated trading system“all roads lead to China”

17th Century mercantilism/colonialism British East India Company Dutch East India Company Portugal and France

Business by the Romans

Pax Romana, or Roman Peace ensured that merchants were able to travel safely and rapidly.

Common coinage simplified business transactions. Rome developed a systematic law, central market

locations, and an effective communication system; all of which enabled international business to flourish in the Roman Empire.

The growth of the Roman Empire occurred mainly through the linkages of business

Other important International Trade Relations

Greek and Phoenician merchants traded before Christ China, world’s leading manufacturer for 1,800 years,

replaced by Britain about 1840 Ottoman Empire trade routes before 1300: Middle East,

Europe, North Africa, Asia East India Company 1600: branches throughout Asia;

Dutch East India Company The 17th and 18th centuries: the “age of mercantilism” Significant multinationals in late 1800s: Singer Sewing

Machine, J&P Coates, Ford Motor Company

The Smoot-Hawley Act

In 1930’s, the U.S. passed the Smoot-Hawley Act, which raised import duties to reduce the volume of goods coming into the U.S.

The act was passed in the hope that it would restore domestic employment.

The result was a worldwide depression and the collapse of the world financial system.

A gradual display of events in International Business

19th Century: Broader concept of the integration of economies and societies

1870: Began first phase of Globalization

1919: World War II: 

End of first phase of Globalization, Industrial revolution in UK, Germany and the USA

Sharp increase in the trade with import and export by colonial empires

1913: GDP 22.1

After 1913: Increased Trade Barriers to Protect Domestic Production

1930’s: Declined Trade Ratio, GDP 9.1

A gradual display of events in International Business

After 1930’s: World Nations felt the need for International Co-operation in global trade and balance of payments affairs

Establishment of IMF and IBRD (World Bank)

1947: 23 countries conducted negotiations in order to prevent the protectionist policies and to revive the economies from recession aiming at establishment of World Trade organization

1947: Establishment of GATT (General Agreement on Trade and Tariffs)

A gradual display of events in International Business

1980s: efforts to convert GATT into WTO

1st Jan 1995: GATT was replaced by WTO (World Trade Organization)

Trade Liberalization

1990 – 2000: The Term IB (International Business) has emerged from the term International Marketing.

There are two Phases of the evolution of the term International Business

1. International Trade to International Marketing 

2. International Marketing to International Business

After 1990: Rapid Internationalization ad globalization

Today: Interpreting the PESTIN factors of International Trade environment more clearly.