History of International Trade and Labor

Trade is an integral part of a nation’s success. According to the Heckscher-Olin Theory, the reason “for trade between two countries is that the countries differ with respect to the availability of the factors of production.” In most cases, one country may have more capital and less labor, but another country may have less capital and more labor. These countries can then trade their commodities with each other to increase their profit, income, and financial success.

It is believed that trade of both goods and services has been an ongoing activity between nations and people for nearly 150,000 years – since communication began. The earliest well documented accounts of trade occurred around 3000 BC with precious metals: specifically from the copper-rich nation of Cyprus.

So, we know that trade has been occurring throughout history for thousands of years, but when did globalization begin to boom? And because of this, when did companies, who obtained labor by trade, begin to treat their workers poorly and create a working atmosphere known as the sweatshop?

Looking back to the slave trade will perhaps give some insight on some of the conditions that modern day laborers face and maybe why such conditions exist. Dating back to the mid fifteenth century up until the nineteenth century slaves were traded from Africa to Europe and the Americas to work on plantations because of their previous experience with agriculture, being used to warmer climates, and ability to work for almost no payment. However, the conditions and treatment they faced were far from justified: they were brutally punished for wrongdoings, they were malnourished and frequently obtained diseases, and they were not compensated for the work they completed.

Sweatshops, which are also considered to be the modern form of slavery because of the similarities to the treatment of African American slaves, were first introduced in the late 1840s in Europe and New England. They were known more commonly as "homework,” where laborers were paid as little as 10 cents a day for nearly 18 hours of work in a home-based setting. In the late 19th century, this type of work seemed to escalate into factories and created what is now known as the sweatshop. In the 1880s sweatshops became more prominent in Ecuador and then into European nations in the textile mills. Companies hired immigrant women and children for such jobs, and the conditions they faced were awful. The jobs performed took many hours and were incredibly arduous, their payment was dismally small, and facilities were dirty and unhealthy. One may be questioning why someone would agree to such conditions, but it is because these immigrants were looking for any work they could find – as long as it paid. And the companies were willing to take advantage of the immigrants’ vulnerability and lack of knowledge regarding this type of labor. Additionally, the governments of the countries from which these workers came were not incredibly willing to stop such treatment because of the economic growth that this type of work brought the country. However, by the 1930s, because of the New Deal, joint liability, and the newly created 40-hour workweek, sweatshops slowly became less common, but not entirely eliminated.

Since the mid 1900s, globalization has increased drastically from the early 20th century as countries continually become more and more interconnected through trade and technology. Consequently, these sweatshops have become more common – most notably in Central and South America and Asia – among North American companies such as Wal-Mart, Nike, and The Gap. These companies are looking to make the largest profit possible, and hiring cheap labor from foreign countries is one way to do so. For many United States companies, several acts, initiatives, and other groups have been instilled that promote such international trade of labor. The General Agreement on Tariffs and Trade, the US Agency for International Development, and the Salvadoran Foundation for Economic and Social Development are just a few examples.

The globalization of the world and being able to trade goods and services between nations seems economically beneficial, but how far is too far? Unfair treatment of workers should not be a tolerated action when trading services among nations. What can be done to eradicate this behavior?

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Fair or Free Trade?

In today’s globalized world, the trade of goods and services is now incredibly prevalent between nations. It is becoming even more common for larger companies and corporations to seek both cheaper resources and cheaper labor in foreign and developing countries. Many companies seek international trade in order to be more successful without spending and using as much money to further their company in the production of a certain product. Trade of goods and services can have positive and negative aspects, both of which I would like to analyze and observe.

International trade is sometimes viewed as being incredibly unequal. Major corporations go to poor countries to get cheap labor. In many cases, the people working for these major companies in “sweatshops” are paid very little for the number of hours of hard labor they put into their jobs. In some cases, the treatment of workers is far less than ideal. Because of these low wages and not having to pay the workers much money, the companies are able to turn a very large profit off of their product. Such conditions are unfortunate, but some small help is being introduced to remedy this situation by the implementation of Fair Trade. Fair Trade attempts to eliminate poverty and allows farmers and laborers to receive a larger profit from the goods they produce as well as providing them with knowledge to increase their success in life.

However, utilizing international goods and services, or the concept of free trade, isn’t always such a negative concept. When large companies go to different countries to find labor for their product, there are several benefits to consider. In many cases, when companies choose to go to developing countries for labor, they are creating work. In the poorer countries, many people may be unemployed and looking for some type of job, and working for these corporations is a way for a person to make money to support his or her family. Additionally, economic success can also occur from the presence of these companies and help developing countries slowly become more prosperous.

This blog is for a class concentrated on the ideas of Globalization and Inequality. I think that the trade of services and goods is directly correlated to the overarching theme of the course. As the world is more globalized, the economy and trade are becoming increasingly international. In some cases, globalization may bring about both inequality and great benefit.

I chose to assess the topic of trade and not only the negative aspects of it, but also the positive in it as well. I think it is incredibly important to consider both sides of an argument to become more accepting and understanding of how others may perceive a certain issue. I hope that through more research about this topic I can become more enlightened, and hopefully inform others, about the concept of international trade and not only its faults, but also the benefit it brings.