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Commodity market integration from 1500

Commodity market integration from 1500. How do we measure market integration? Two phases: 1500-1820; 1820-2000 1. driven by European demand (too high transport and transaction costs). 2. driven by decreasing transport costs (Transport revolution) and free-trade. The initial trigger.

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Commodity market integration from 1500

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  1. Commodity market integration from 1500 How do we measure market integration? Two phases: 1500-1820; 1820-2000 1. driven by European demand (too high transport and transaction costs). 2. driven by decreasing transport costs (Transport revolution) and free-trade

  2. The initial trigger the starting point: a self-sufficiency economy per capita income increase driven by mid 14th century Black Death and a change in the demand pattern why pepper? bourgeoisie rise and the need for status-symbols

  3. The new matrix of international trade what does the increase in pepper prices shows? 1. European demand shifts are crucial 2. slow changes determined by explorations explorations establish new networks among economy-worlds an important change: Americas are included in the frame-work

  4. The new matrix of international trade the “basket” of imported commodities slowly changes diversification of imports from demand for luxury goods: high price/weight ratio to more complex demand: including lower price/weight ratio commodities

  5. Keeping demand high what about American silver? and ... what about the Japanese one? plantation economy support the cumulative effect of core-periphery relation it all allows European demand to continue to grow

  6. Do we see market integration? from 1500 a break with the past in long-distance trade but what about market integration? using price convergence as a prove of integration among different markets yet, no evidence of before 1800 income growth is the main driver of long distance trade increase (about 50-60%)

  7. Monopolies and long distance trade state control over long distance trade, chartered companies Vereenigde Oostindische Compagnie East India Company irreplaceable commodities as a key for state revenue military power in support of international trade

  8. A stylized picture of income led international trade increase the trigger of Black death new trade patterns the role of silver growing military power colonial revenues

  9. The Napoleonic interlude 1793-1815 20 years of war policies aiming at blocking international trade the result is a period of disintegration of previous trade networks plus a lasting heritage of protectionism

  10. world trade, 1815-1914 the second phase (1820-2000), from commodity market integration to world trade declining transport costs are the main driverof integration free-trade also provide a relevant push

  11. Nineteenth-century Trade Policy Europe 1860, a huge step toward liberalization 1870-1880, protection once again Americas different patterns between North and Latin America Asia a forced liberalization

  12. Nineteenth-century Commodity Market Integration 19th century, the real “break with the past” in market integration the astonishing growth of trade compared to production (GDP) increase price convergence is visible across the planet: wheat spread Liverpool-Chicago, from 58% to 16% (1870-1913) cotton spread Liverpool-Bombay, from 57% to 20% (1873-1913)

  13. Nineteenth-century Commodity Market Integration when world commerce combines with industrialization processes ... division of labor is visible on the global scale W. Europe exports manufactured goods N. America is in balance the rest of the World exports primary goods a clear distinction between industrial and agricultural/natural resources producers

  14. The interwar years, market dis-integration “war economy” impact on trade new core-periphery balances and the problem of oversupply quotas and tariffs: the spread of restrictions to international commerce the echo effect of the Great Depression: market dis-integration

  15. Post WW II commodity market integration declining transport costs are no longer the main driver of integration free-trade policies (openness), suspect number one for market integration manufactured goods, a dual trend Europe and the Americas Asia a protected niche: agriculture

  16. Post WW II commodity market integration is 20th century’s degree of integration higher or lower than 19th century’s? a complex puzzle, including: - volumes and freedom of trade - increase in per capita income - a presumed price convergence - a change in the “basket” of traded commodities

  17. Concluding remarks an expansion in range and volumes of goods traded since 16th century market integration in the long run the process however is not straight-line, and there have been steps back the main drivers (transports and policy) at times combine together, at times clash on

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