A Realistic Look at Commodity Bids and Sales
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List and explain (3) ways that financial institutions improve trade
what trade practices did the venetian use?
why did increase in trade lead to the growth of towns?
April 22nd, 2010 at 2:51 am
In business location is one of the most important factors to what kind of economy exists. Each location has inherent advantages that can lead to particular economic development. Trade is a particular economic activity, so the important trade centers have some commonalities because there geographic location makes them the most cost effective place to setup trade.
For example if you look at US imports of manufactured goods. This is a particular type of trade. China may send the boats to San Fransisco as opposed to Las angles because of the major rail line that crosses the US from San Fransisco (This may not be true, it is just an hypothetical). Because of the geographic location of San Francisco, next to water, large bay, and rail lines connecting it to the Midwest (the center of railroad activity) it makes it the most economic choice. This increase economic activity will cause the city to grow as there are more demands for jobs, and external money entering the local economy.
This can be seen also historically in other cites, that today may not be global hubs for trade, but use to be on trade routes. For example Venetian port use to be on Mediterranean trade routes. Trade with the Far East from Europe would come through the middle east and then cross the Mediterranean sea to Italy.
Being a trade center for the world, mean that goods pass through the city on it ways to other markets. This pass through is free economic activity because your local market is not consuming nor paying any price to produce. They are relaying and adding a a little cost to the product that goes into the local economy. This is good for jobs, investment, and much more.
Also when your city becomes a major trade center, then your products are more accessible to the world. So locallly produced products are shipped cheaper to other parts of the world. The mode of trade also impacts the trading centers.
For example in the days of the western expansion of the US, before railroads, trade went to the west via horse and carriage. This meant that the trademen had to stop multiple times to rest the horses. This is why there are so many cities about 30-60 miles away from each other. That would be about a days travel and then they would stop. The cities that ended up being the most connected to other cites would become trading centers.
Today most trade it done via huge shipping tankers and they go to hubs. When they reach the closest hub, they are transfer to rail, then that is later transported to 18 wheelers. Distribution centers are setup throughout the system. The largest distribution centers become the trade centers.