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The Silk Road and spice trade routes connected Europe and Asia for much of the past two millenia and generated much wealth for all along the way. Cities in the middle of these routes, such as Constantinople and Venice, were able to extract a portion of this wealth by offering safe ports and bustling marketplaces. Those at its Western extremes, however, such as England and Portugal, had to pay numerous middlemen in order to get goods to flow in and out of their borders. And when these trade passageways were upended by the Ottoman Empire in the 15th century, European kingdoms turned to the open oceans.
The Portugese and Spanish led the way with new ships that could sail vast distances regardless of wind direction, opening up Africa and sailing routes to East Asia. The New World was next and before long, enormous amounts of gold began to flow across the Atlantic, as well as new crops such as potato, tomato and cacao. The changed the balance of world trade and power away from the Easterm Mediterranean and towards the west.
One of the by-products of this greater wealth and productivity was a race by kingdoms to build up their treasuries. Whilst plundering the New World helped fill the coffers, it was also easily spent. Kings and Queens understood the benefit of growing their gold and silver stores and understood that this could occur if the country exported more than that which was imported (other than simply exploiting the resources of colonies). Thus, the policy of mercanatlism, which was intervention in markets to ensure a trade surplus, guided the trade deliberations of European nations for centuries.
However, one major issue with such a policy was that it tended to lead to reduced trade as countries looked to limit imports as much as possible. Indeed, on aggregate, only half of all countries can run a trade surplus at any one time and hence mercantalism is only a reasonable policy in isolation. To combat this issue, new theories of international trade began to be developed throughout the 18th and 19th centuries, which started to switch the focus from trade surplus to trade growth. Concepts such as absolute and comparative advantage and free markets began to take hold; and the age of free trade was ready to begin, fuelled by the industrial revolution.
However, as with all policies, free trade and globalisation produced an array adverse impacts. Over the past two centuries this has included the further exploitation of less developed countries, hollowing out of national industries and destruction of environments and cultures. One approach to rectifying many of these issues is that of fair trade, which looks to improve the ethics of globalisation.
Another major movement that has found its ways into ministries of trade around the world is that of neomercantalism. As the name suggests, this theory of trade is based upon the principles of mercantalism, with a key objective being the pursuit of trade surplus and dominance. Neomercantalism places the nation above free-trade principles and leads to policies of trade barriers, control of capital and manipulation of the domestic currency.
In truth, no country would be considered purely free trade, with many trade policies hiding neomercantalist tenets. This is natural and often warranted (e.g. to protect food security, energy security, etc). However, it is abundantly clear that the level and growth of wealth throughout the world, is largely due to the globalisation and free trade of the past century.
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