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3. INTERNATIONAL TRADING SYSTEMS

4. International trading
systems are not new
• Silk Road
• oldest known international trade
route
• silk (one of the most profitable
products) was traded through this
network
• Traders used the Silk Road regularly
from 130 BCE when the Chinese Han
dynasty opened trade to the West
until 1453 BCE
• Ottoman Empire closed off trade
• Age of Discovery (Age of Exploration)

5. was INTERNATIONAL,
but it was not truly
GLOBAL

6. When did full economic globalization begin?
• age of globalization when
• “all important populated continents began
to exchange products continuously-both
with each other directly and indirectly via
other continents – and in values sufficient
to generate crucial impacts on all trading
partners.”(Flynn &Giraldez,nd)
• establishment of galleon trade in 1571
(connected Manila in the Philippines and
Acapulco in Mexico)

7. Age of Mercantilism
(16th-18th centuries)
• They competed one another to sell
more goods as a means to boost
their country’s income
• To defend their products from
competitors who sold golds more
cheaply, these regimes (mainly
monarchies) imposed high tariffs
and forbade colonies to trade with
other nations, restricted trade
routes and subsidized its exports

8. An open more trade system
emerged in 1867
• United Kingdom, United States and other
European nations adopted the gold
standard at the international monetary
conference in Paris
• GOAL:
• to create a common system that would allow
for more efficient trade and prevent the
isolationism of the mercantilist era.
All based on the value of GOLD- common basis
for currency prices and a fixed exchanges rate
system

9. Great Depression 1920a-1930s) worst and
longest recession ever experienced by the
Western World
• Some economists argued that
that it was largely cause by the
gold standard, since it limited
the amount of circulating
money and therefore, reduced
demand and consumption.
• The recovery of United States
really began when having
abandoned the gold standard-
(Eichengreen, B. nd)

10. The world economy operated based on what
are called fiat currencies
Allows government to freely and
actively manage of money their
economies by increasing or decreasing
the amount of money in circulation
they see fit