Long-Distance Trade from the Voyages of Discovery to the First World War, 1500–1914
- C. Knick HarleyC. Knick HarleyDepartment of Economics, Nuffield College, University of Oxford
The highly integrated world economy at the outbreak of World War I emerged from discoveries and technological change in previous centuries. Territories unknown to the economy of Eurasia offered profitable opportunities if capital and labor could be mobilized to cheaply produce products that could bear the high cost of transportation that prevailed before industrialization. In the 16th century, American monetary metals mined using European technology and local labor, and sold worldwide, had major repercussions, including increasing trade between Europe and Asia. From the mid-17th century, sugar and tobacco in the Americas, developed on the backs of imported African slaves, produced an Atlantic economy that included the mainland colonies of British America. In the 19th century, technological innovation became the main driving force. First, it cheapened textile production in Britain and creating a massive demand for raw cotton. Then technology radically reduced the cost of transportation on both land and sea. Lower transportation costs spurred greater international specialization and, equally importantly, brought frontiers in continental interiors into the world economy. During the later 19th century, commercial and financial institutions arose that supported increased global economic integration.