evolution of international trade
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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.
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