FX International Payments
By Karen Lynch
International traders circa 2018 could learn from the past, be surprised at just how old some of their “modern” business practices really are, or simply find comfort in knowing that their predecessors shared some of their circumstances.
This six-part history of international trade chronicles the evolution of global commerce by looking at such key aspects as technology, multinational corporations, foreign exchange, global supply chains, trade agreements, and tariffs.
Technology has long driven international trade, and each major technological development has created disruption as well as benefits. By one report, the standardization of shipping containers did more to globalize commerce than 50 years’ worth of trade agreements. What lessons can be drawn from past innovations as international trade is again transformed – this time in the emerging era of digital trade?
The storied trading companies of 17th and 18th century European imperialism wielded such vast power in international trade that they even printed their own money and raised their own armies. Fast forward to today, when millions of small and midsize enterprises (SMEs) can “go global” virtually overnight via the internet, powerful e-commerce platforms, and global shipping companies. Times have changed, but international trade still bears the mark of these first-ever multinational corporations.
In the 13th century, a Florentine coin with a fixed gold content of 72 grains became the standard currency for international trade in Europe and the benchmark against which the value of other coins was measured. Thus was born an early form of the foreign exchange market, which has evolved in ways early international traders would never have imagined.
Global supply chain evolution has involved a complex mix of advancing technology, management innovations, international trade relations, business imperatives, and the shifting equation of labor and transportation costs from country to country. Progress has been remarkable, to the point where it’s hard to imagine how supply chains could function in the early days of international trade.
One nation’s export is another nation’s import – a basic fact that has also acted as a source of geopolitical tensions throughout history. International trade agreements have eased market access and advanced global economic integration over time. But the history of trade has not been a straight line, as waves of international trade agreements have been interspersed with setbacks and reversals.
Businesses could look to the history of international trade as tariffs rise on the horizon. While the trend over time has been toward lower to no tariffs, it has been a rocky path, with notable exceptions and isolated incidents providing lessons for any future developments. Read Article…
Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.