Macroscope | West is fighting futile war against global trade’s inevitable shift east

Thinking of the world as being divided into economic and financial hemispheres – one headed by the United States and the other by China – is a regular occurrence these days. This is common but oversimplified thinking as something much bigger and more complex is happening.

In one such recent analysis, Hong Kong-based economic research firm Gavekal traced back the origins of the fractionating process we are seeing now nearly 600 years to the fall of Constantinople to the Ottoman Empire in 1453. This, they say, was “bad news for the then-Christian world” as it meant the Ottomans came to control most of the Mediterranean Sea and the Silk Road. If Europeans wanted silk or spices, they had to pay high prices for them.

That was, unless another route could be found to link Europe with India and China, Gavekal Group founder Louis-Vincent Gave noted in the report. Such routes were indeed found – directly via Vasco da Gama’s voyage around Africa to India and indirectly through Christopher Columbus’ exploration of the Americas. With these voyages of discovery by Spanish, Portuguese and Italian navigators, the world’s centre of economic gravity shifted from the Mediterranean to the Atlantic.

As the report observes, “if trade gets blocked in one place, it may reappear in another one and be that much more powerful”. The Ottomans could not have known it, but by blocking Silk Road trade they ended up giving impetus to the modern era and gradually transformed the Mediterranean Sea into an economic backwater.