International Trade evolution

1. Evolution of
International Trade

2. 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

3. 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

4. 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

5. 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.

6. 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

7. 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)

8. 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.