PROPOSAL

The importance of international shipping in international trade

[Name of the Institute]

The importance of international shipping in international trade

CHAPTER 1: INTRODUCTION

Studies of the emergence of modern economic growth in later industrializing economies usually focus on manufacturing and seldom emphasize the importance of service sector activities. Analysis of the Greek economy in the nineteenth century is indicative of this line of thinking. During this period, and particularly during the first 50 years of the existence of the Greek state established in 1830, the shipping sector was a major source of accumulation of capital second only in importance to agriculture (Harlaftis, 2005, pp. 147).

Despite this fact, there has been no attempt by economists or economic historians to make direct estimates of its magnitude. In the nineteenth century Greek merchant shipping comprised the most important cargo fleet in the Mediterranean and one of the 10 largest cargo fleets in Europe. This fleet, which specialized in tramp shipping, was not confined to transporting the trade undertaken by the small Greek kingdom but extended its interests to facilitate international trade between other countries. It became one of the main European carriers for the dominant economy of the time, the British Empire, and followed the sea routes of its expansion (Harlaftis, 2002, pp. 34).

As a result the income generated by the shipping activities of the Greek fleet was created beyond the production boundaries of the Greek state and became part of the uncalculated 'invisible earnings', that is, a continuous influx of funds, which triggered economic development during the nineteenth century. The objective of this research is to show the significance of shipping earnings in relation to the Greek economy in the nineteenth century and suggest its bearing upon the country's economic development.

Background of the Study

Greek shipping development depended directly upon the increasing demand for primary materials in the countries of Western Europe which were then in the process of industrialization. Deep-sea-going trade became increasingly dominated by a small number of bulk commodities throughout the world's oceans; in the second half of the nineteenth century, grain, cotton, and coal were the main bulk cargoes that filled the holds of the world fleet. Furthermore, the transition from sail to steam, apart from increasing the availability of cargo space, caused a revolutionary decline in freight rates, further contributing to the increase of international sea-borne trade. Europe remained at the heart of the world sea-trade system: until the eve of the First World War, 75 per cent of world exports in value and almost 65 per cent of relevant world imports concerned this continent.

Therefore it should come as no surprise that European countries owned the largest part (about 85 per cent) of the deep-sea-going world fleet during this period. Table 1 indicates the importance of Greece as it is included among the 10 largest European fleets. In 1850, just 20 years after the Greek state was established, it reached proportions close to those of the Norwegian fleet (Hoffman, 2000, pp. 1450).

Although by 1880 the Greek fleet could ...