Slide 1: Global economic exchanges Flow of trade, capital and labour The Three Flows: The Three Flows Economists identify three types of movement or flows within international economic exchanges; the flow of trade, the flow of capital and the flow of labour. The Flow of Trade: The Flow of Trade The flow of trade refers to the trade in goods between different parts of the globe. Trade assumed different proportions and manners in the way it was carried out, in different time periods. Ancient trade : Ancient trade Long-distance trade played a major role in the cultural and artistic exchanges that took place between the major centers of civilization in Europe and Asia during antiquity. The trade routes served principally to transfer raw materials, foodstuffs, and luxury goods from areas with surpluses to others where they were in short supply. China, for example, supplied West Asia and the Mediterranean world with silk, while spices were obtained principally from South Asia. The trade routes were the communications highways of the ancient world. New inventions, religious beliefs, artistic styles, languages, and social customs, as well as goods and raw materials, were transmitted by people moving from one place to another to conduct business. Ancient trade routes: Ancient trade routes Medieval trade: Medieval trade The Middle Ages saw the rapid expansion of Medieval trade and commerce. The most important factor in the expansion of trade and commerce were the Crusades. The Crusades, which had facilitated the relations with Eastern countries, developed a taste in the West for their indigenous productions, gave vigour to this foreign commerce and trade, and made it more productive by removing the obstacles to its progress . The Medieval navigators imported spices, groceries, linen, Egyptian paper, pearls, perfumes, and other rare articles. In exchange they offered precious metals in bars rather than coined, and during this period ,they exported iron, wines, oil, and wax. England prospered during the Middle Ages due to the trade in the wool ,brought from England. Modern trade: Modern trade The development of oceangoing warships and efmerchant carriers in the 15th and 16th centuries led to expansion of commerce. As the cost of transporting cargoes over long distances fell, grain was imported on a large scale from the Baltic to the Netherlands and other parts of Europe. New ocean routes between Europe and the East allowed imports from Asia at lower prices and in greater volume . The discovery of the Americas created trade in new commodities as tobacco and logwood. Spanish exploitation of the rich gold and silver deposits in Mexico ,Peru transformed the character of international commerce. Europe finally possessed precious metals for which ample demand existed in the Far East. In return for Asian imports, Europe exchanged silver coin minted in Mexico, Spain, Italy, and Holland. Slide 8: Using technology and skills developed in transoceanic navigation, the Europeans captured the Asian shipping trade. European vessels transported Japanese copper to China and India, Indian cotton textiles to southern Asia, and Persian carpets to India. In the years that followed, commerce was transformed again, this time by the Industrial Revolution. Because the first Industrial Revolution occurred in Europe, that continent was at the center of the global commercial network for much of the 19th century. European economies depended on foreign markets to supply raw materials and to demand manufactured goods. The growth of industrial production, therefore, was accompanied by a rapid expansion of commerce. Between 1750 and 1914, world trade increased in value fivefold. Flow Of Capital: Flow Of Capital Capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies . The capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. The 1st World war led to snapping of economic links between some of the world’s largest economic powers. So Britain borrowed large sums of money from US banks as well as the US public. Thus the war transformed the US from being an international debtor to an international creditor i.e. at the war’s end, the US and its citizens owned more overseas assets than foreign governments and citizens owned in the US. This was the first major capital transfer taking place. Slide 10: Growing food and other crops for the world market required capital. Large plantations could borrow it from banks and markets. But humble peasants took help from the Indian banker like the Shikaripuri shroffs and Nattukottai Chettiars. They were amongst the many groups of bankers and traders who financed export agriculture in Central and Southeast Asia, using either their own funds or those borrowed from European banks. They had a sophisticated system to transfer money over large distances, and even developed indigenous forms of corporate organization. Indian traders and moneylenders also followed European colonizers into Africa. Hyderabadi Sindhi traders, however, ventured beyond European colonies. Slide 11: From the 1860s they established flourishing emporia at busy ports worldwide, selling local and imported curios to tourists whose numbers were beginning to swell, thanks to the development of safe and comfortable passenger vessels. This was an example of the earlier developments in the system of capital flows across the globe even from colonized countries in the Nineteenth century. Flow Of Labour: Flow Of Labour An indentured servant was typically a young, unskilled laborer contracted to work for an employer for a fixed period of time, typically three to seven years, in exchange for transportation, food, clothing, lodging during the term of their indenture. They included men and women; most were under age 21, and became helpers on farms or house servants. They were not paid wages. Slide 13: In the nineteenth century, hundreds of Indian and Chinese labourers went to work on plantations, in mines, and in road and railway construction projects around the world. In India, indentured labourers were hired under contracts which promised return travel to India after they had worked five years on their employer’s plantation. Slide 14: Indentured servitude was one of the primary forms of labor supply in colonial America from the 1620s through the time of the American Revolution. Shortly after the Revolution, however, indentured servants became less a part of the American labor force while slavery grew into greater prominence. The transition from servants to slaves occurred at different rates and times depending on the colonial region, but it is a transition made due to the changing of relative labor costs faced by colonial planters. With the expansion of staple crop production in the colonies came an increasing demand for skilled workers, and the price of indentured agricultural labor increased. The cost of indentured labor rose by nearly 60 percent throughout the 1680s in some colonial regions, evidence of the shift of relative labor costs for these skilled indentured workers, especially in comparison the steady labor costs of African slaves.