
Trade involves the transfer of
goods and services
Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...
from one person or entity to another, often in exchange for
money
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: m ...
. Economists refer to a
system
A system is a group of interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its open system (systems theory), environment, is described by its boundaries, str ...
or network that allows trade as a
market
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
*Marketing, the act of sat ...
.
Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize
barter
In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...
(i.e. trading things without the use of money
) as an early form of trade,
money was invented before written history began. Consequently, any story of how money first developed is mostly based on conjecture and logical inference. Letters of
credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
,
paper money
Paper money, often referred to as a note or a bill (North American English), is a type of negotiable promissory note that is payable to the bearer on demand, making it a form of currency. The main types of paper money are government notes, which ...
, and
non-physical money have greatly simplified and promoted trade as buying can be separated from selling, or
earning. Trade between two traders is called
bilateral trade
Bilateral trade or clearing trade is trade exclusively between two states, particularly, barter trade based on bilateral deals between governments, and without using hard currency for payment. Bilateral trade agreements often aim to keep trade d ...
, while trade involving more than two traders is called
multilateral trade.
In one modern view, trade exists due to specialization and the
division of labor
The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (Departmentalization, specialisation). Individuals, organisations, and nations are endowed with or acquire specialis ...
, a predominant form of
economic activity
Economics () is a behavioral science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyse ...
in which individuals and groups concentrate on a small aspect of production, but use their output in trade for other products and needs.
Trade exists between regions because different regions may have a
comparative advantage
Comparative advantage in an economic model is the advantage over others in producing a particular Goods (economics), good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior t ...
(perceived or real) in the production of some trade-able goodsincluding the production of scarce or limited natural resources elsewhere. For example, different regions' sizes may encourage
mass production
Mass production, also known as mass production, series production, series manufacture, or continuous production, is the production of substantial amounts of standardized products in a constant flow, including and especially on assembly lines ...
. In such circumstances, trading at
market price
A price is the (usually not negative) quantity of payment or compensation expected, required, or given by one party to another in return for goods or services. In some situations, especially when the product is a service rather than a phy ...
between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the
spice trade
The spice trade involved historical civilizations in Asia, Northeast Africa and Europe. Spices, such as cinnamon, cassia, cardamom, ginger, pepper, nutmeg, star anise, clove, and turmeric, were known and used in antiquity and traded in t ...
and
grain trade
The grain trade refers to the local and international trade in cereals such as wheat, barley, maize, rice, and other food grains. Grain is an important trade item because it is easily stored and transported with limited spoilage, unlike other agri ...
have both historically been important in the development of a global, international economy.
Retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholes ...
trade consists of the
sale of goods or
merchandise
Merchandising is any practice which contributes to the sale of Product (business), products ("merch" colloquially) to a retail consumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative w ...
from a very fixed location (such as a
department store
A department store is a retail establishment offering a wide range of consumer goods in different areas of the store under one roof, each area ("department") specializing in a product category. In modern major cities, the department store mad ...
,
boutique
A () is a retail shop that deals in high end fashionable clothing or accessories. The word is French for "shop", which derives ultimately from the Ancient Greek
Ancient Greek (, ; ) includes the forms of the Greek language used in anc ...
, or
kiosk
Historically, a kiosk () was a small garden pavilion open on some or all sides common in Iran, Persia, the Indian subcontinent, and in the Ottoman Empire from the 13th century onward. Today, several examples of this type of kiosk still exist ...
),
online
In computer technology and telecommunications, online indicates a state of connectivity, and offline indicates a disconnected state. In modern terminology, this usually refers to an Internet connection, but (especially when expressed as "on lin ...
or by
mail
The mail or post is a system for physically transporting postcards, letter (message), letters, and parcel (package), parcels. A postal service can be private or public, though many governments place restrictions on private systems. Since the mid ...
, in small or individual lots for direct
consumption
Consumption may refer to:
* Eating
*Resource consumption
*Tuberculosis, an infectious disease, historically known as consumption
* Consumer (food chain), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of n ...
or use by the purchaser.
Wholesale
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
trade is the traffic in goods that are sold as merchandise to
retailer
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesal ...
s, industrial, commercial, institutional, or other professional
business
Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...
users, or to other wholesalers and related subordinated services.
Historically, openness to
free trade
Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
substantially increased in some areas from 1815 until the outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
of the 1930s. Trade openness increased substantially again from the 1950s onward (albeit with a slowdown during the
oil crisis of the 1970s). Economists and
economic historians
Economic history is the study of history using methodological tools from economics or with a special attention to economic phenomena. Research is conducted using a combination of historical methods, statistical methods and the application of ...
contend that current levels of trade openness are the highest they have ever been.
Etymology
''Trade'' is from
Middle English
Middle English (abbreviated to ME) is a form of the English language that was spoken after the Norman Conquest of 1066, until the late 15th century. The English language underwent distinct variations and developments following the Old English pe ...
''trade'' ("path, course of conduct"), introduced into English by Hanseatic merchants, from
Middle Low German
Middle Low German is a developmental stage of Low German. It developed from the Old Saxon language in the Middle Ages and has been documented in writing since about 1225–34 (). During the Hanseatic period (from about 1300 to about 1600), Mid ...
''trade'' ("track, course"), from
Old Saxon
Old Saxon (), also known as Old Low German (), was a Germanic language and the earliest recorded form of Low German (spoken nowadays in Northern Germany, the northeastern Netherlands, southern Denmark, the Americas and parts of Eastern Eur ...
''trada'' ("spoor, track"), from
Proto-Germanic
Proto-Germanic (abbreviated PGmc; also called Common Germanic) is the linguistic reconstruction, reconstructed proto-language of the Germanic languages, Germanic branch of the Indo-European languages.
Proto-Germanic eventually developed from ...
''*tradō'' ("track, way"), and cognate with
Old English
Old English ( or , or ), or Anglo-Saxon, is the earliest recorded form of the English language, spoken in England and southern and eastern Scotland in the Early Middle Ages. It developed from the languages brought to Great Britain by Anglo-S ...
''tredan'' ("to tread").
''
Commerce
Commerce is the organized Complex system, system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered large-scale exchange (distribution through Financial transaction, transactiona ...
'' is derived from the
Latin
Latin ( or ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken by the Latins (Italic tribe), Latins in Latium (now known as Lazio), the lower Tiber area aroun ...
''commercium'', from ''cum'' "together" and ''merx'', "merchandise."
History
Prehistory
Trade originated from
human communication
Human communication, or anthroposemiotics, is a field of study dedicated to understanding how humans Communication, communicate. Humans' ability to communicate with one another would not be possible without an understanding of what we are refere ...
in
prehistoric
Prehistory, also called pre-literary history, is the period of human history between the first known use of stone tools by hominins million years ago and the beginning of recorded history with the invention of writing systems. The use o ...
times. Prehistoric peoples exchanged goods and services with each other in a
gift economy
A gift economy or gift culture is a system of exchange where valuables are not sold, but rather given without an explicit agreement for immediate or future rewards. Social norms and customs govern giving a gift in a gift culture; although there ...
before the innovation of modern-day currency.
Peter Watson dates the
history of long-distance commerce to years ago.
[ Watson (2005), Introduction.]
In the Mediterranean region, the earliest contact between cultures involved members of the species ''Homo sapiens'', principally using the Danube river, at a time beginning 35,000–30,000
BP.

There is evidence of the exchange of
obsidian
Obsidian ( ) is a naturally occurring volcanic glass formed when lava extrusive rock, extruded from a volcano cools rapidly with minimal crystal growth. It is an igneous rock. Produced from felsic lava, obsidian is rich in the lighter element ...
and
flint
Flint, occasionally flintstone, is a sedimentary cryptocrystalline form of the mineral quartz, categorized as the variety of chert that occurs in chalk or marly limestone. Historically, flint was widely used to make stone tools and start ...
during the
Stone Age
The Stone Age was a broad prehistory, prehistoric period during which Rock (geology), stone was widely used to make stone tools with an edge, a point, or a percussion surface. The period lasted for roughly 3.4 million years and ended b ...
. Trade in obsidian is believed to have taken place in
New Guinea
New Guinea (; Hiri Motu: ''Niu Gini''; , fossilized , also known as Papua or historically ) is the List of islands by area, world's second-largest island, with an area of . Located in Melanesia in the southwestern Pacific Ocean, the island is ...
from 17,000 BCE.
Robert Carr Bosanquet
Robert Carr Bosanquet (1871–1935) was a British archaeologist, who excavated in the Aegean and in Britain. He was the first Professor of Classical Archaeology at the University of Liverpool, teaching there from 1906 to 1920. He was particul ...
investigated trade in the Stone Age by excavations in 1901. The first clear archaeological evidence of trade in manufactured goods is found in south west Asia.
Archaeological evidence of obsidian use provides data on how this material was increasingly the preferred choice rather than
chert
Chert () is a hard, fine-grained sedimentary rock composed of microcrystalline or cryptocrystalline quartz, the mineral form of silicon dioxide (SiO2). Chert is characteristically of biological origin, but may also occur inorganically as a prec ...
from the late Mesolithic to Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean region.
Obsidian provided the material to make cutting utensils or tools, although since other more easily obtainable materials were available, use was exclusive to the higher status of the tribe using "the rich man's flint". Obsidian has held its value relative to flint.
Early traders traded Obsidian at distances of 900 kilometres within the Mediterranean region.
Trade in the Mediterranean during the Neolithic of Europe was greatest in this material.
[.] Networks were in existence at around 12,000 BCE
[.] Anatolia was the source primarily for trade with the Levant, Iran and Egypt according to Zarins study of 1990.
Melos
Milos or Melos (; , ; ) is a volcanic Greek island in the Aegean Sea, just north of the Sea of Crete. It is the southwestern-most island of the Cyclades group.
The ''Venus de Milo'' (now in the Louvre), the '' Poseidon of Melos'' (now in the ...
and
Lipari
Lipari (; ) is a ''comune'' including six of seven islands of the Aeolian Islands (Lipari, Vulcano, Panarea, Stromboli, Filicudi and Alicudi) and it is located in the Tyrrhenian Sea off the northern coast of Sicily, Southern Italy; it is ...
sources produced among the most widespread trading in the Mediterranean region as known to archaeology.
[.]
The
Sari-i-Sang mine in the mountains of Afghanistan was the largest source for trade of
lapis lazuli
Lapis lazuli (; ), or lapis for short, is a deep-blue metamorphic rock used as a semi-precious stone that has been prized since antiquity for its intense color. Originating from the Persian word for the gem, ''lāžward'', lapis lazuli is ...
. The material was most largely traded during the
Kassite period of Babylonia beginning 1595 BCE.
Adam Smith traces the origins of commerce to the very start of
transactions in
prehistoric
Prehistory, also called pre-literary history, is the period of human history between the first known use of stone tools by hominins million years ago and the beginning of recorded history with the invention of writing systems. The use o ...
times. Apart from traditional
self-sufficiency
Self-sustainability and self-sufficiency are overlapping states of being in which a person, being, or system needs little or no help from, or interaction with others. Self-sufficiency entails the self being enough (to fulfill needs), and a sel ...
, trading became a principal
faculty for prehistoric people, who
barter
In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...
ed what they had for goods and services from each other. Anthropologists have found no evidence of barter systems that did not exist alongside systems of credit.
Ancient History
Mediterranean and Near East
The earliest evidence of writing is deeply bound up in trade, as
a system of clay tokens used for accounting – found in Upper Euphrates valley in Syria dated to the 10th millennium BCE – is one of the earliest versions of writing.
Ebla
Ebla (Sumerian language, Sumerian: ''eb₂-la'', , modern: , Tell Mardikh) was one of the earliest kingdoms in Syria. Its remains constitute a Tell (archaeology), tell located about southwest of Aleppo near the village of Mardikh. Ebla was ...
was a prominent trading center during the third millennia BCE, with a network reaching into Anatolia and north Mesopotamia.
[.][.]
Materials used for creating
jewelry
Jewellery (or jewelry in American English) consists of decorative items worn for personal adornment such as brooches, ring (jewellery), rings, necklaces, earrings, pendants, bracelets, and cufflinks. Jewellery may be attached to the body or the ...
were traded with Egypt since 3000 BCE. Long-range trade routes first appeared in the 3rd millennium BCE, when
Sumer
Sumer () is the earliest known civilization, located in the historical region of southern Mesopotamia (now south-central Iraq), emerging during the Chalcolithic and Early Bronze Age, early Bronze Ages between the sixth and fifth millennium BC. ...
ians in
Mesopotamia
Mesopotamia is a historical region of West Asia situated within the Tigris–Euphrates river system, in the northern part of the Fertile Crescent. Today, Mesopotamia is known as present-day Iraq and forms the eastern geographic boundary of ...
traded with the
Harappan civilization of the
Indus Valley
The Indus ( ) is a transboundary river of Asia and a trans- Himalayan river of South and Central Asia. The river rises in mountain springs northeast of Mount Kailash in the Western Tibet region of China, flows northwest through the disp ...
. The
Phoenicians
Phoenicians were an ancient Semitic group of people who lived in the Phoenician city-states along a coastal strip in the Levant region of the eastern Mediterranean, primarily modern Lebanon and the Syrian coast. They developed a maritime civi ...
were noted sea traders, traveling across the
Mediterranean Sea
The Mediterranean Sea ( ) is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean basin and almost completely enclosed by land: on the east by the Levant in West Asia, on the north by Anatolia in West Asia and Southern Eur ...
, and as far north as
Britain
Britain most often refers to:
* Great Britain, a large island comprising the countries of England, Scotland and Wales
* The United Kingdom of Great Britain and Northern Ireland, a sovereign state in Europe comprising Great Britain and the north-eas ...
for sources of
tin
Tin is a chemical element; it has symbol Sn () and atomic number 50. A silvery-colored metal, tin is soft enough to be cut with little force, and a bar of tin can be bent by hand with little effort. When bent, a bar of tin makes a sound, the ...
to manufacture
bronze
Bronze is an alloy consisting primarily of copper, commonly with about 12–12.5% tin and often with the addition of other metals (including aluminium, manganese, nickel, or zinc) and sometimes non-metals (such as phosphorus) or metalloid ...
. For this purpose they established trade colonies the Greeks called
emporia.
Along the coast of the Mediterranean, researchers have found a positive relationship between how well-connected a coastal location was and the local prevalence of archaeological sites from the Iron Age. This suggests that a location's trade potential was an important determinant of human settlements.
The
complaint tablet to Ea-nāṣir, dated 1750 BCE, documents the tribulations of a copper merchant at the time.
From the beginning of Greek
civilization
A civilization (also spelled civilisation in British English) is any complex society characterized by the development of state (polity), the state, social stratification, urban area, urbanization, and symbolic systems of communication beyon ...
until the fall of the
Roman Empire
The Roman Empire ruled the Mediterranean and much of Europe, Western Asia and North Africa. The Roman people, Romans conquered most of this during the Roman Republic, Republic, and it was ruled by emperors following Octavian's assumption of ...
in the 5th century, a financially lucrative trade brought valuable
spice
In the culinary arts, a spice is any seed, fruit, root, Bark (botany), bark, or other plant substance in a form primarily used for flavoring or coloring food. Spices are distinguished from herbs, which are the leaves, flowers, or stems of pl ...
to Europe from the far east, including India and China.
Roman commerce
Roman commerce was a major sector of the Roman economy during the later generations of the Republic and throughout most of the imperial period. Fashions and trends in historiography and in popular culture have tended to neglect the economic basis ...
allowed its empire to flourish and endure. The latter Roman Republic and the
Pax Romana
The (Latin for ) is a roughly 200-year-long period of Roman history that is identified as a golden age of increased and sustained Roman imperialism, relative peace and order, prosperous stability, hegemonic power, and regional expansion, a ...
of the Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant
piracy
Piracy is an act of robbery or criminal violence by ship or boat-borne attackers upon another ship or a coastal area, typically with the goal of stealing cargo and valuable goods, or taking hostages. Those who conduct acts of piracy are call ...
, as Rome had become the sole effective sea power in the
Mediterranean
The Mediterranean Sea ( ) is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean basin and almost completely enclosed by land: on the east by the Levant in West Asia, on the north by Anatolia in West Asia and Southern ...
with the conquest of Egypt and the near east.
In ancient Greece
Hermes
Hermes (; ) is an Olympian deity in ancient Greek religion and mythology considered the herald of the gods. He is also widely considered the protector of human heralds, travelers, thieves, merchants, and orators. He is able to move quic ...
was the god of trade (commerce) and weights and measures. In ancient Rome, ''
Mercurius'' was the god of merchants, whose festival was celebrated by traders on the 25th day of the fifth month. The concept of free trade was an antithesis to the will and economic direction of the sovereigns of the ancient Greek states. Free trade between states was stifled by the need for strict internal controls (via taxation) to maintain security within the treasury of the sovereign, which nevertheless enabled the maintenance of a ''
modicum'' of civility within the structures of functional community life.
The fall of the Roman empire and the succeeding
Dark Ages brought instability to
Western Europe
Western Europe is the western region of Europe. The region's extent varies depending on context.
The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the Western half of the ancient Mediterranean ...
and a near-collapse of the trade network in the western world. Trade, however, continued to flourish among the kingdoms of Africa, the Middle East, India, China, and Southeast Asia. Some trade did occur in the west. For instance,
Radhanite
The Radhanites or Radanites (; ) were early medieval Jewish merchants, active in the trade between Christendom and the Muslim world during roughly the 8th to the 10th centuries.
Many trade routes previously established under the Roman Empire cont ...
s were a medieval guild or group (the precise meaning of the word is lost to history) of
Jew
Jews (, , ), or the Jewish people, are an ethnoreligious group and nation, originating from the Israelites of ancient Israel and Judah. They also traditionally adhere to Judaism. Jewish ethnicity, religion, and community are highly inte ...
ish merchants who traded between the
Christians
A Christian () is a person who follows or adheres to Christianity, a monotheistic Abrahamic religion based on the life and teachings of Jesus Christ. Christians form the largest religious community in the world. The words '' Christ'' and ''C ...
in Europe and the
Muslim
Muslims () are people who adhere to Islam, a Monotheism, monotheistic religion belonging to the Abrahamic religions, Abrahamic tradition. They consider the Quran, the foundational religious text of Islam, to be the verbatim word of the God ...
s of the Near East.
Indo-Pacific

The first true maritime trade network in the Indian Ocean was by the
Austronesian peoples
The Austronesian people, sometimes referred to as Austronesian-speaking peoples, are a large group of peoples who have settled in Taiwan, maritime Southeast Asia, parts of mainland Southeast Asia, Micronesia, coastal New Guinea, Island Melan ...
of
Island Southeast Asia
Maritime Southeast Asia comprises the Southeast Asian countries of Brunei, Indonesia, Malaysia, the Philippines, Singapore, and East Timor.
The terms Island Southeast Asia and Insular Southeast Asia are sometimes given the same meaning as Mari ...
.
Initiated by the indigenous peoples of
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia. The main geography of Taiwan, island of Taiwan, also known as ''Formosa'', lies between the East China Sea, East and South China Seas in the northwestern Pacific Ocea ...
and the
Philippines
The Philippines, officially the Republic of the Philippines, is an Archipelagic state, archipelagic country in Southeast Asia. Located in the western Pacific Ocean, it consists of List of islands of the Philippines, 7,641 islands, with a tot ...
, the
Maritime Jade Road
Maritime may refer to:
Geography
* Maritime Alps, a mountain range in the southwestern part of the Alps
* Maritime Region, a region in Togo
* Maritime Southeast Asia
* The Maritimes, the Canadian provinces of Nova Scotia, New Brunswick, and Pri ...
was an extensive trading network connecting multiple areas in Southeast and East Asia. Its primary products were made of jade mined from Taiwan by
Taiwanese indigenous peoples
Taiwanese indigenous peoples, formerly called Taiwanese aborigines, are the indigenous peoples of Taiwan, with the nationally recognized subgroups numbering about 600,303 or 3% of the Geography of Taiwan, island's population. This total is incr ...
and processed mostly in the Philippines by indigenous Filipinos, especially in
Batanes
Batanes, officially the Province of Batanes (; Ilocano: ''Probinsia ti Batanes''; , ), is an archipelagic province in the Philippines, administratively part of the Cagayan Valley region. It is the northernmost province in the Philippines, an ...
,
Luzon
Luzon ( , ) is the largest and most populous List of islands in the Philippines, island in the Philippines. Located in the northern portion of the List of islands of the Philippines, Philippine archipelago, it is the economic and political ce ...
, and
Palawan
Palawan (, ), officially the Province of Palawan (; ), is an archipelagic province of the Philippines that is located in the region of Mimaropa. It is the largest province in the country in terms of total area of . The capital and largest c ...
. Some were also processed in
Vietnam
Vietnam, officially the Socialist Republic of Vietnam (SRV), is a country at the eastern edge of mainland Southeast Asia, with an area of about and a population of over 100 million, making it the world's List of countries and depende ...
, while the peoples of
Malaysia
Malaysia is a country in Southeast Asia. Featuring the Tanjung Piai, southernmost point of continental Eurasia, it is a federation, federal constitutional monarchy consisting of States and federal territories of Malaysia, 13 states and thre ...
,
Brunei
Brunei, officially Brunei Darussalam, is a country in Southeast Asia, situated on the northern coast of the island of Borneo. Apart from its coastline on the South China Sea, it is completely surrounded by the Malaysian state of Sarawak, with ...
,
Singapore
Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...
,
Thailand
Thailand, officially the Kingdom of Thailand and historically known as Siam (the official name until 1939), is a country in Southeast Asia on the Mainland Southeast Asia, Indochinese Peninsula. With a population of almost 66 million, it spa ...
,
Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania, between the Indian Ocean, Indian and Pacific Ocean, Pacific oceans. Comprising over List of islands of Indonesia, 17,000 islands, including Sumatra, ...
, and
Cambodia
Cambodia, officially the Kingdom of Cambodia, is a country in Southeast Asia on the Mainland Southeast Asia, Indochinese Peninsula. It is bordered by Thailand to the northwest, Laos to the north, and Vietnam to the east, and has a coastline ...
also participated in the massive trading network. The maritime road is one of the most extensive sea-based trade networks of a single geological material in the prehistoric world. It was in existence for at least 3,000 years, where its peak production was from 2000 BCE to 500 CE, older than the
Silk Road
The Silk Road was a network of Asian trade routes active from the second century BCE until the mid-15th century. Spanning over , it played a central role in facilitating economic, cultural, political, and religious interactions between the ...
in mainland Eurasia and the later
Maritime Silk Road
The Maritime Silk Road or Maritime Silk Route is the maritime section of the historic Silk Road that connected Southeast Asia, East Asia, the Indian subcontinent, the Arabian Peninsula, eastern Africa, and Europe. It began by the 2nd century BCE ...
. The Maritime Jade Road began to wane during its final centuries from 500 CE until 1000 CE. The entire period of the network was a golden age for the diverse societies of the region.
Sea-faring Southeast Asians also established trade routes with
Southern India
South India, also known as Southern India or Peninsular India, is the southern part of the Deccan Peninsula in India encompassing the states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana as well as the union territories of ...
and
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka, also known historically as Ceylon, is an island country in South Asia. It lies in the Indian Ocean, southwest of the Bay of Bengal, separated from the Indian subcontinent, ...
as early as 1500 BC, ushering an exchange of material culture (like
catamaran
A catamaran () (informally, a "cat") is a watercraft with two parallel hull (watercraft), hulls of equal size. The wide distance between a catamaran's hulls imparts stability through resistance to rolling and overturning; no ballast is requi ...
s,
outrigger boat
Outrigger boats are various watercraft featuring one or more lateral support floats known as outriggers, which are fastened to one or both sides of the main hull (watercraft), hull. They can range from small dugout (boat), dugout canoes to large ...
s, sewn-plank boats, and paan) and
cultigen
A cultigen (), or cultivated plant, is a plant that has been deliberately altered or selected by humans, by means of genetic modification, graft-chimaeras, plant breeding, or wild or cultivated plant selection. These plants have commercial val ...
s (like
coconut
The coconut tree (''Cocos nucifera'') is a member of the palm tree family (biology), family (Arecaceae) and the only living species of the genus ''Cocos''. The term "coconut" (or the archaic "cocoanut") can refer to the whole coconut palm, ...
s,
sandalwood
Sandalwood is a class of woods from trees in the genus ''Santalum''. The woods are heavy, yellow, and fine-grained, and, unlike many other aromatic woods, they retain their fragrance for decades. Sandalwood oil is extracted from the woods. Sanda ...
,
banana
A banana is an elongated, edible fruit – botanically a berry – produced by several kinds of large treelike herbaceous flowering plants in the genus '' Musa''. In some countries, cooking bananas are called plantains, distinguishing the ...
s, and
sugarcane
Sugarcane or sugar cane is a species of tall, Perennial plant, perennial grass (in the genus ''Saccharum'', tribe Andropogoneae) that is used for sugar Sugar industry, production. The plants are 2–6 m (6–20 ft) tall with stout, jointed, fib ...
); as well as connecting the material cultures of India and China.
Indonesians
Indonesians (Indonesian language, Indonesian: ''orang Indonesia'') are citizens or people who are identified with the country of Indonesia, regardless of their ethnic or religious background. There are more than Ethnic groups in Indonesia, 1,300 ...
, in particular were trading in spices (mainly
cinnamon
Cinnamon is a spice obtained from the inner bark of several tree species from the genus ''Cinnamomum''. Cinnamon is used mainly as an aromatic condiment and flavouring additive in a wide variety of cuisines, sweet and savoury dishes, biscuits, b ...
and
cassia) with
East Africa
East Africa, also known as Eastern Africa or the East of Africa, is a region at the eastern edge of the Africa, African continent, distinguished by its unique geographical, historical, and cultural landscape. Defined in varying scopes, the regi ...
using
catamaran
A catamaran () (informally, a "cat") is a watercraft with two parallel hull (watercraft), hulls of equal size. The wide distance between a catamaran's hulls imparts stability through resistance to rolling and overturning; no ballast is requi ...
and
outrigger boat
Outrigger boats are various watercraft featuring one or more lateral support floats known as outriggers, which are fastened to one or both sides of the main hull (watercraft), hull. They can range from small dugout (boat), dugout canoes to large ...
s and sailing with the help of the
Westerlies
The westerlies, anti-trades, or prevailing westerlies, are prevailing winds from the west toward the east in the middle latitudes between 30 and 60 degrees latitude. They originate from the high-pressure areas in the horse latitudes (about ...
in the Indian Ocean. This trade network expanded to reach as far as Africa and the
Arabian Peninsula
The Arabian Peninsula (, , or , , ) or Arabia, is a peninsula in West Asia, situated north-east of Africa on the Arabian plate. At , comparable in size to India, the Arabian Peninsula is the largest peninsula in the world.
Geographically, the ...
, resulting in the Austronesian colonization of
Madagascar
Madagascar, officially the Republic of Madagascar, is an island country that includes the island of Madagascar and numerous smaller peripheral islands. Lying off the southeastern coast of Africa, it is the world's List of islands by area, f ...
by the first half of the first millennium AD. It continued up to historic times, later becoming the Maritime Silk Road.
Mesoamerica
The emergence of exchange networks in the Pre-Columbian societies of and near to Mexico are known to have occurred within recent years before and after 1500 BCE.
Trade networks reached north to
Oasisamerica
Oasisamerica is a cultural region of Indigenous peoples in North America. Their precontact cultures were predominantly agrarian, in contrast with neighboring tribes to the south in Aridoamerica. The region spans parts of Northwestern Mexico an ...
. There is evidence of established maritime trade with the cultures of northwestern South America and the Caribbean.
Middle Ages
During the
Middle Ages
In the history of Europe, the Middle Ages or medieval period lasted approximately from the 5th to the late 15th centuries, similarly to the post-classical period of global history. It began with the fall of the Western Roman Empire and ...
, commerce developed in Europe by trading
luxury goods
In economics, a luxury good (or upmarket good) is a good (economics), good for which demand (economics), demand increases more than what is proportional as income rises, so that expenditures on the good become a more significant proportion of ove ...
at trade fairs. Wealth became converted into movable wealth or
capital
Capital and its variations may refer to:
Common uses
* Capital city, a municipality of primary status
** Capital region, a metropolitan region containing the capital
** List of national capitals
* Capital letter, an upper-case letter
Econom ...
. Banking systems developed where money on account was transferred across national boundaries. Hand-to-hand markets became a feature of town life and were regulated by town authorities.
Western Europe established a complex and expansive trade network with cargo ships being the main carrier of goods;
cogs and
hulks are two examples of such cargo ships. Many ports would develop their own extensive trade networks. The English port city of
Bristol
Bristol () is a City status in the United Kingdom, cathedral city, unitary authority area and ceremonial county in South West England, the most populous city in the region. Built around the River Avon, Bristol, River Avon, it is bordered by t ...
traded with peoples from Iceland, all along the western coast of France, and south to present-day Spain.

During the Middle Ages, Central Asia was the economic center of the world.
[ Beckwith (2011), p. xxiv.] The
Sogdians :''This category lists articles related to historical Iranian peoples''
Historical
Peoples
Iranian
Iranian
Iranian
Iranian () may refer to:
* Something of, from, or related to Iran
** Iranian diaspora, Iranians living outside Iran
** Iranian arch ...
dominated the east–west trade-route known as the
Silk Road
The Silk Road was a network of Asian trade routes active from the second century BCE until the mid-15th century. Spanning over , it played a central role in facilitating economic, cultural, political, and religious interactions between the ...
from after the 4th century CE until the 8th century CE, with
Suyab
Suyab (; Middle Chinese: /suʌiH jiᴇp̚/), also known as ''Ordukent'' (modern-day ''Ak-Beshim''), was an ancient Silk Road city located some 50 km east from Bishkek, and 8 km west southwest from Tokmok, in the Chu river valley, pres ...
and
Talas ranking among their main centers in the north. Sogdians functioned as the main
caravan
Caravan or caravans may refer to:
Transport and travel
*Campervan, a type of vehicle also known as a motor caravan
*Caravan (travellers), a group of travellers journeying together
**Caravanserai, a place where a caravan could stop
*Caravan (trail ...
merchants of Central Asia.
From the Middle Ages, the
maritime republics
The maritime republics (), also called merchant republics (), were Italian Thalassocracy , thalassocratic Port city, port cities which, starting from the Middle Ages, enjoyed political autonomy and economic prosperity brought about by their mar ...
, in particular
Venice
Venice ( ; ; , formerly ) is a city in northeastern Italy and the capital of the Veneto Regions of Italy, region. It is built on a group of 118 islands that are separated by expanses of open water and by canals; portions of the city are li ...
,
Pisa
Pisa ( ; ) is a city and ''comune'' (municipality) in Tuscany, Central Italy, straddling the Arno just before it empties into the Ligurian Sea. It is the capital city of the Province of Pisa. Although Pisa is known worldwide for the Leaning Tow ...
and
Genoa
Genoa ( ; ; ) is a city in and the capital of the Italian region of Liguria, and the sixth-largest city in Italy. As of 2025, 563,947 people live within the city's administrative limits. While its metropolitan city has 818,651 inhabitan ...
, played a key role in trade in the Mediterranean. From the 11th to the late-15th centuries, the Venetian Republic and the Republic of Genoa were major trade-centers. They dominated trade in the Mediterranean and the Black Sea, maintaining a trading monopoly between Europe and the Near East for centuries.
From the 8th to the 11th centuries, the Vikings and Varangians traded as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Route from the Varangians to the Greeks , Varangians travelled to Kievan Rus', Kyivan Rus' and to the Black and Caspian Seas. The Hanseatic League, an alliance of trading cities, maintained a trade monopoly over most of Northern Europe and the Baltic region, Baltic between the 13th and 17th centuries.
The Age of Sail and the Industrial Revolution
Portuguese explorer Vasco da Gama pioneered the European
spice trade
The spice trade involved historical civilizations in Asia, Northeast Africa and Europe. Spices, such as cinnamon, cassia, cardamom, ginger, pepper, nutmeg, star anise, clove, and turmeric, were known and used in antiquity and traded in t ...
in 1498 when he reached History of Kozhikode, Calicut after sailing around the Cape of Good Hope at the southern tip of the African continent. Prior to this, the flow of spice into Europe from India was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped spur the Age of Discovery in Europe. Spices brought to Europe from the Eastern world were some of the most valuable commodities for their weight, sometimes rivaling gold.
From 1070 onward, kingdoms in West Africa became Economic history of Africa, significant members of global trade.
This came initially through the movement of gold and other resources sent out by Muslims, Muslim traders on the Trans-Saharan trade, Trans-Saharan trading network.
Beginning in the 16th century, European merchants would purchase gold, spices, cloth, timber and Atlantic slave trade, slaves from West African states as part of the triangular trade.
This was often in exchange for cloth, iron, or cowrie shells which were used locally as currency.
Founded in 1352, the Bengal Sultanate was a major trading nation in the world and often referred to by Europeans as the wealthiest country with which to trade.
In the 16th and 17th centuries, the Portuguese gained an economic advantage in the Kingdom of Kongo due to different philosophies of trade.
Whereas Portuguese traders concentrated on the accumulation of capital, in Kongo spiritual meaning was attached to many objects of trade. According to economic historian Toby Green, in Kongo "giving more than receiving was a symbol of spiritual and political power and privilege."
In the 16th century, the Seventeen Provinces were the center of free trade, imposing no exchange controls, and advocating the free movement of goods. Trade in the East Indies was dominated by Portugal in the 16th century, the Dutch Republic in the 17th century, and the United Kingdom, British in the 18th century. The Spanish Empire developed regular trade links across both the Atlantic and the Pacific Oceans.
In 1776, Adam Smith published the paper ''An Inquiry into the Nature and Causes of the Wealth of Nations''. It criticized 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 International trade, import and export controls "dupery", which hurt the trading nation as a whole for the benefit of specific industries.
In 1799, the Dutch East India Company, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.
19th century
In 1817, David Ricardo, James Mill and Robert Torrens (economist), Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of
comparative advantage
Comparative advantage in an economic model is the advantage over others in producing a particular Goods (economics), good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior t ...
. In Principles of Political Economy and Taxation Ricardo advanced the doctrine still considered the most counterintuitive in 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 (international relations), 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. This was followed within a few years by the infant industry scenario developed by Mill promoting the theory that the government had the duty to protectionism, 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. Milton Friedman later continued this vein of thought, showing that in a few circumstances tariffs might be beneficial to the host country; but never for the world at large.
20th century
The
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators.
The lack of free trade was considered by many as a principal cause of the depression causing stagnation and inflation. Only during World War II did the recession end in the United States. Also 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 $ Bank for International Settlements). These organizations became operational in 1946 after enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.
The European Union became the world's largest exporter of manufactured goods and services, the biggest export market for around 80 countries.
21st century
Today, trade is merely a subset within a complex system of Corporation, companies which try to maximize their profits by offering Product (business), products and Service (economics), services to the Market (economics), market (which consists both of individuals and other companies) at the lowest production cost. A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve
free trade
Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
, has sometimes harmed Third World, third-world markets for local products.
Free trade
Free trade is a policy by which a government does not discriminate against imports or exports by applying tariffs or subsidies. This policy is also known as laissez-faire policy. This kind of policy does not necessarily imply a country will then abandon all control and taxation of imports and exports.
Free trade advanced further in the late 20th century and early 2000s:
* 1992 European Union lifted barriers to internal trade in good (economics), goods and labour (economics), labour.
* January 1, 1994 the North American Free Trade Agreement (NAFTA) took effect.
* 1994 The GATT Marrakech Agreement specified formation of the WTO.
* January 1, 1995 World Trade Organization was created to facilitate
free trade
Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
, by mandating mutual most favored nation trading status between all signatories.
* EC was transformed into the European Union, which accomplished the Economic and Monetary Union (EMU) in 2002, through introducing the Euro, and creating this way a real single market between 13 member states as of January 1, 2007.
* 2005, the Central American Free Trade Agreement was signed; It includes the United States and the Dominican Republic.
Perspectives
Protectionism
Protectionism is the policy of restraining and discouraging trade between states and contrasts with the policy of free trade. This policy often takes the form of tariffs and restrictive Import quota, quotas. Protectionist policies were particularly prevalent in the 1930s, between the
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
and the onset of World War II.
Religion
Islamic teachings encourage trading (and condemn usury or interest).
Judeao-Christian teachings do not prohibit trade. They do prohibit fraud and dishonest measures. Historically they forbade charging interest on loans.
Development 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. In the Aztec Empire, under the rule of Moctezuma II, Montezuma cocoa beans became legitimate currency.
Currency was introduced as standardised 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.
Numismatists have examples of coins from the earliest large-scale societies, although these were initially unmarked lumps of precious metal.
[Gold was an especially common form of early money, as described in #Davies2002, Davies (2002).]
Trends
Doha rounds
The Doha round of World Trade Organization negotiations aimed to lower trade barrier, barriers to trade around the world, with a focus on making fair trade, trade more fair for developing countries. Talks have been hung over a divide between the rich developed countries, represented by the G20, and the major developing countries. Agricultural subsidies are the most significant issue upon which agreement has been the hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building. The Doha round began in Doha, Qatar.
China
Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reforms in China, economic reform. In contrast to the previous USSR, Soviet-style centrally planned economy, the new measures progressively relaxed restrictions on farming, agricultural distribution and, several years later, urban enterprises and labor. The more market-oriented approach reduced inefficiencies and stimulated private investment, particularly by farmers, which led to increased productivity and output. One feature was the establishment of four (later five) Special Economic Zones located along the South-east coast.
The reforms proved spectacularly successful in terms of increased output, variety, quality, price and demand. In real terms, the economy doubled in size between 1978 and 1986, doubled again by 1994, and again by 2003. On a real per capita basis, doubling from the 1978 base took place in 1987, 1996 and 2006. By 2008, the economy was 16.7 times the size it was in 1978, and 12.1 times its previous per capita levels. International trade progressed even more rapidly, doubling on average every 4.5 years. Total two-way trade in January 1998 exceeded that for all of 1978; in the first quarter of 2009, trade exceeded the full-year 1998 level. In 2008, China's two-way trade totaled US$2.56 trillion.
In 1991 China joined the Asia-Pacific Economic Cooperation group, a trade-promotion forum. In 2001, it also joined the World Trade Organization.
International trade
International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of Gross Domestic Product, GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing.
Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialization, and India, which historically had a more closed policy. South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.
Trade sanctions
Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an United States embargo against Cuba, embargo against Cuba for over 60 years. Embargoes are usually on a temporary basis. For example, Armenia put a temporary embargo on Turkish products and bans any imports from Turkey on December 31, 2020. The situation is prompted by food security concerns given Turkey's hostile attitude towards Armenia.
Fair trade
The "fair trade" movement, also known as the "trade justice" movement, promotes the use of Manual labour, labour, environmental movement, environmental and Social issues, social standards for the production of goods, particularly those exported from the Third World, Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.
Importing firms voluntarily adhere to fair trade standards or governments may enforce them through a combination of employment law, employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the common prohibition of good (economics), goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with labeling requirements.
As such, it is a form of Protectionism.
See also
*
Commerce
Commerce is the organized Complex system, system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered large-scale exchange (distribution through Financial transaction, transactiona ...
* Business
* Economics
Notes
Bibliography
*
*
*
*
* (Covers sea-trading over the whole world from ancient times),
* Rössner, Philipp
''Economy / Trade''EGO – European History Online Mainz, Germany
Institute of European History 2017, retrieved: March 8, 2021
pdf.
*
External links
*
Agritrade Resource material on trade by ACP countries
World Bank'sWorld Integrated Trade Solution provides summary trade statistics and custom query features
World Bank'sPreferential Trade Agreement Database
{{Authority control
Trade,
Society
az:Kommersiya