Long-distance trade is an enduring characteristic in the history of civilizations. Even if limited, it played an important role in the diffusion of ideas, religions, and cultures. However, up to the 16th century, the extent of trade was limited for two major reasons:
- Nature of trade. Markets tended to be small, even in areas with large populations. Income levels were low, and discretionary income was limited beyond what the elite could afford. Therefore, many trade items were high-value luxury commodities (e.g., spices, gems, perfumes) that conferred the joint advantages of greater mobility and a focus on demand. Still, when maritime transportation and river shipping were available, long-distance trade of bulk commodities such as grain, wine, and olive oil was possible. There were many intermediaries involved in long distance trade since it was uncommon that the full transport leg was assumed by a single actor. This created a multiplicity of additional transaction costs since each actor was levying a margin.
- Limiting factors. The main technical constraint on trade was the limited capacity and speed of inland transportation, implying a maritime focus for long-distance trade. This maritime focus, however, was a risk factor due to unreliable navigation and the related risks of losses. Various currencies and units of measure further impeded trade, even if gold- or silver-based. The high value of trade goods provides a strong incentive to tax them, so each time a good entered a jurisdiction such as a city-state, a tariff was levied. Further, the high value of goods also posed a risk of piracy and the additional security costs this entails.
There were exceptions to these general conditions that made long-distance trade more prevalent. The Chinese and Roman empires maintained extensive transportation systems, supporting an active trade related to their relative prosperity.
A few notable ancient trade routes include:
- The incense route (from 1800 BCE) connected the Indian subcontinent with the southern part of the Arabian Peninsula through coastal navigation. Black pepper and cinnamon were collected from India and carried to ports such as Aden, the commodities combined with incense (a tree product) were placed on caravans across the peninsula, from which they reached Egypt (Alexandria) and the Mediterranean.
- The Silk Road and Arab sea routes (from 100 BCE).
- The Hanseatic League (from 1400) established a network of maritime routes connecting city-states (around 200, including Lubeck, Danzig, Antwerp, Malmo) around the Baltic and the North Sea, which supported practices such as free trade and extraterritoriality.