• Selected
• Entire List

Abstract:
Some world historians attach globalization big bang' significance to 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an end run around Africa and snatches monopoly rents away from the Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Other world historians insist that globalization stretches back even earlier. There is a third view which argues that the world economy was fragmented and completely de-globalized before the 19th century. None of these three competing views has explicitly shown the difference between trade expansion driven by booming demand and supply within the trading economies (e.g., the underlying fundamental, population growth), and trade expansion driven by the integration of markets between trading economies (e.g., the central manifestation of globalization, commodity price convergence). This paper makes that distinction, and then offers two novel empirical tests which allow us to discriminate between these three competing views. Both tests show: there is no evidence supporting the view that the world economy was globally integrated prior to 1492 and/or 1498; there is also no evidence supporting the view that these two dates had the economic impact on the global economy that world historians assign to them; but there is abundant evidence supporting the view that the 19th century contained a very big globalization bang. These tests involve a close look at the connections between factor prices, commodity prices and endowments world wide.

Abstract:
This Paper surveys trends in both international economic integration and inequality over the past 150 years, as well as the links between them. In doing so, it distinguishes between (a) the different dimensions of globalization; and (b) between-country and within-country inequality. Theory suggests that globalization will have very different implications for within-country inequality, depending on the dimension of globalization involved (e.g. trade versus factor flows), on the country concerned, and on the distribution of endowments; the historical record provides ample evidence of this ambiguous relationship. Late 19th century globalization had large effects on within-country income distribution, but the effect on inequality differed greatly across countries: both trade and migration (but not capital flows) made the rich New World more unequal, and the (less rich) Old World more equal. The evidence on the links between within-country inequality and globalization in the late 20th century is mixed. The balance of evidence suggests that globalization has been a force for between-country convergence in both the late 19th and late 20th centuries; long run patterns of divergence are due to other factors (e.g. the unequal spread of the Industrial Revolution).

Inequality, history

Abstract:
This paper surveys trends in both international economic integration and inequality over the past 150 years, as well as the links between them. In doing so, it distinguishes between (a) the different dimensions of globalization; and (b) between-country and within-country inequality. Theory suggests that globalization will have very different implications for within-country inequality, depending on the dimension of globalization involved (e.g. trade versus factor flows), on the country concerned, and on the distribution of endowments; the historical record provides ample evidence of this ambiguous relationship. Late 19th century globalization had large effects on within-country income distribution, but the effect on inequality differed greatly across countries: both trade and migration (but not capital flows) made the rich New World more unequal, and the (less rich) Old World more equal. The evidence on the links between within-country inequality and globalization in the late 20th century is mixed. The balance of evidence suggests that globalization has been a force for between-country convergence in both the late 19th and late 20th centuries; long run patterns of divergence are due to other factors (e.g. the unequal spread of the Industrial Revolution).

Abstract:
This book provides the first systematic, integrated, analytical account of the evolution of the international economy during the last millennium. It emphasizes the two-way interaction between trade and geopolitics, and the importance of such interactions for world economic development.

Abstract:
Does democracy encourage free trade? It depends. Broadening the franchise involves transferring power from non-elected elites to the wider population, most of whom will be workers. The Hecksher- Ohlin-Stolper-Samuelson logic says that democratization should lead to more liberal trade policies in countries where workers stand to gain from free trade; and to more protectionist policies in countries where workers will benefit from the imposition of tariffs and quotas. We test and confirm these political economy implications of trade theory hypothesis using data on democracy, factor endowments, and protection in the late nineteenth century.

factor endowments, Heckscher-Ohlin trade theory, Stolper- Samuelson theorem and tariffs

Abstract:
Does democracy encourage free trade? It depends. Broadening the franchise involves transferring power from non-elected elites to the wider population, most of whom will be workers. The Hecksher-Ohlin-Stolper-Samuelson logic says that democratization should lead to more liberal trade policies in countries where workers stand to gain from free trade; and to more protectionist policies in countries where workers will benefit from the imposition of tariffs and quotas. We test and confirm these political economy implications of trade theory hypothesis using data on democracy, factor endowments, and protection in the late nineteenth century.

Factor endowments, Heckscher-Ohlin trade theory, Stolper-Samuelson theorem and tariffs

Abstract:
Does democracy encourage free trade? It depends. Broadening the franchise involves transferring power from non-elected elites to the wider population, most of whom will be workers. The Hecksher-Ohlin-Stolper-Samuelson logic says that democratization should lead to more liberal trade policies in countries where workers stand to gain from free trade; and to more protectionist policies in countries where workers will benefit from the imposition of tariffs and quotas. We test and confirm these political economy implications of trade theory hypothesis using data on democracy, factor endowments, and protection in the late nineteenth century.

Abstract:
There are two contrasting views of pre-19th century trade and globalization. First, there are the world history scholars like Andre Gunder Frank who attach globalization 'big bang' significance to the dates 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an end run around Africa and snatches monopoly rents away from the Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Second, there is the view that the world economy was fragmented and completely de- globalized before the 19th century. This paper offers a novel way to discriminate between these two competing views and we use it to show that there is no evidence that the Ages of Discovery and Commerce had the economic impact on the global economy that world historians assign to them, while there is plenty of evidence of a very big bang in the 19th century. The test involves a close look at the connections between factor prices, commodity prices and endowments world wide.

Abstract:
There are two contrasting views of pre-19th century trade and globalization. First, there are the world history scholars like Andre Gunder Frank who attach globalization 'big bang' significance to the dates 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an end run around Africa and snatches monopoly rents away from the Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Second, there is the view that the world economy was fragmented and completely de-globalized before the 19th century. This paper offers a novel way to discriminate between these two competing views and we use it to show that there is no evidence that the Ages of Discovery and Commerce had the economic impact on the global economy that world historians assign to them, while there is plenty of evidence of a very big bang in the 19th century. The test involves a close look at the connections between factor prices, commodity prices and endowments world wide.

Abstract:
Technological change was unskilled-labour-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labour biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

demography, endogenous growth, trade

Abstract:
Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in Baconian knowledge and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

Abstract:
Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profitmaximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

Endogenous growth, Demography, Trade

Abstract:
The aim of the paper is to see whether individuals' attitudes towards globalization are consistent with the predictions of Heckscher-Ohlin theory. The theory predicts that the impact of being skilled or unskilled on attitudes towards trade and immigration should depend on a country's skill endowments, with the skilled being less anti-trade and antiimmigration in more skill-abundant countries (here taken to be richer countries) than in more unskilled-labour-abundant countries (here taken to be poorer countries). These predictions are confirmed, using survey data for 24 countries. The high-skilled are pro-globalization in
rich countries; while in some of the very poorest countries in the sample being high-skilled has a negative (if statistically insignificant) impact on pro-globalization sentiment. More generally, an interaction term between skills and GDP per capita has a negative impact in regressions explaining anti-globalization sentiment. Furthermore, individuals view
protectionism and anti-immigrant policies as complements rather than as substitutes, as they would do in a simple Heckscher-Ohlin world.

globalization, attitudes, survey data, Hecksher-Ohlin theory

Abstract:
This Paper documents the size and timing of the world intercontinental trade boom following the great voyages in the 1490s of Columbus, da Gama and their followers. Indeed, a trade boom followed over the next three centuries. But what was its cause? The conventional wisdom in the world history literature offers globalization as the answer: it alleges that declining trade barriers, falling transport costs and overseas 'discovery' explains the boom. In contrast, this Paper reports the evidence that confirms that there was no commodity price convergence between continents, something that would have emerged had globalization been a force that mattered. Thus, the trade boom must have been caused by some combination of European import demand and foreign export supply from Asia and the Americas. The behaviour of the relative price of foreign importables in European cities should tell us which mattered most and when. We offer detailed evidence on the relative prices of such importables in European markets over the five centuries 1350-1850. We then offer a model which is used to decompose the sources of the trade boom 1500-1800.

Demand and supply, history, trade growth

Abstract:
This paper documents the size and timing of the world inter-continental trade boom following the great voyages in the 1490s of Columbus, da Gama and their followers. Indeed, a trade boom followed over the subsequent three centuries. But what was its cause? The conventional wisdom in the world history literature offers globalization as the answer: it alleges that declining trade barriers, falling transport costs and overseas 'discovery' explains the boom. In contrast, this paper reports the evidence that confirms unambiguously that there was no commodity price convergence between continents, something that would have emerged had globalization been a force that mattered. Thus, the trade boom must have been caused by some combination of European import demand and foreign export supply from Asia and the Americas. Furthermore, the behavior of the relative price of foreign importables in European cities should tell us which mattered most and when. We offer detailed evidence on the relative prices of such importables in European markets over the five centuries 1350-1850. We then offer a model which is used to decompose the sources of the trade boom 1500-1800.

Abstract:
Immigration barriers began being erected in the New World in the late 19th century. They were motivated by fears that the immigration of unskilled workers would increase inequality. Controlling for economic factors, there appears to have been little independent role for factors such as racism or xenophobia in driving the retreat from liberal migration policies. A statistical analysis of individual voter attitudes towards immigration in the late 20th century leads to somewhat different conclusions: nationalism is strongly associated with more hostile attitudes towards immigrants. Heckscher-Ohlin theory and the Borjas theory of immigrant self-selection also help explain individual voter attitudes.

immigration, political economy, nationalism, Heckscher-Ohlin theory, self-selection

Abstract:
The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labour productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends - from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter - must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wage-rental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.

Distribution, globalization, growth, Spain

Abstract:
The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labor productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends - from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter - must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wage-rental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.

Abstract:
The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labor productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends - from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter - must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wage-rental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.

Growth, distribution, globalization, Spain

Abstract:
This paper uses international survey data to document two stylized facts. First, risk aversion is associated with anti-trade attitudes. Second, this effect is smaller in countries with greater levels of government expenditure. The paper thus provides evidence for the microeconomic underpinnings of the argument associated with Ruggie (1982), Rodrik (1998) and others that government spending can bolster support for globalization by reducing the risk associated with it in the minds of voters.

risk, trade attitudes

Abstract:
This paper uses international survey data to document two stylized facts. First, risk aversion is associated with anti-trade attitudes. Second, this effect is smaller in countries with greater levels of government expenditure. The paper thus provides evidence for the microeconomic underpinnings of the argument associated with Ruggie (1982), Rodrik (1998) and others that government spending can bolster support for globalization by reducing the risk associated with it in the minds of voters.

Trade attitudes, risk

Abstract:
This paper uses international survey data to document two stylized facts. First, risk aversion is associated with anti-trade attitudes. Second, this effect is smaller in countries with greater levels of government expenditure. The paper thus provides evidence for the microeconomic underpinnings of the argument associated with Ruggie (1982), Rodrik (1998) and others that government spending can bolster support for globalization by reducing the risk associated with it in the minds of voters.

Abstract:
A recent endogenous growth literature has focused on the transition from a Malthusian world where real wages were linked to factor endowments, to one where modern growth has broken that link. In this Paper we present evidence on another, related phenomenon: the dramatic reversal in distributional trends - from a steep secular fall to a steep secular rise in wage-land rent ratios - which occurred some time early in the 19th century. What explains this reversal? While it may seem logical to locate the causes in the Industrial Revolutionary forces emphasized by endogenous growth theorists, we provide evidence that something else mattered just as much: the opening up of the European economy to international trade.

Malthus, growth, trade, distribution

Abstract:
A recent endogenous growth literature has focused on the transition from a Malthusian world where real wages were linked to factor endowments, to one where modern growth has broken that link. In this paper we present evidence on another, related phenomenon: the dramatic reversal in distributional trends -- from a steep secular fall to a steep secular rise in wage-land rent ratios -- which occurred some time early in the 19th century. What explains this reversal? While it may seem logical to locate the causes in the Industrial Revolutionary forces emphasized by endogenous growth theorists, we provide evidence that something else mattered just as much: the opening up of the European economy to international trade.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
The paper provides a comparative history of the economic impact of the Revolutionary and Napoleonic Wars. By focussing on the relative price evidence, it is possible to show that the conflict had major economic effects around the world. Britain's control of the seas meant that it was much less affected than other nations, such as France and the United States. Explicit welfare calculations are provided for four countries, Britain, France, Sweden and the United States. Welfare losses were largest in the US, where they were of the order of 5-6% per annum; by contrast, they lay between 3-4% per annum in France, and between 1.7-1.8% per annum in Britain. On the other hand, the conflict helped pave the way for the more liberal international economic environment of the long 19th century.

War, trade

Abstract:
The paper provides a comparative history of the economic impact of the Revolutionary and Napoleonic Wars. By focussing on the relative price evidence, it is possible to show that the conflict had major economic effects around the world. Britain's control of the seas meant that it was much less affected than other nations, such as France and the United States. Explicit welfare calculations are provided for four countries, Britain, France, Sweden and the United States. Welfare losses were largest in the US, where they were of the order of 5-6% per annum; by contrast, they lay between 3-4% per annum in France, and between 1.7-1.8% per annum in Britain. On the other hand, the conflict helped pave the way for the more liberal international economic environment of the long 19th century.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
The aim of the Paper is to see whether individuals' attitudes towards globalization are consistent with the predictions of Heckscher-Ohlin theory. The theory predicts that the impact of being skilled or unskilled on attitudes towards trade and immigration should depend on a country's skill endowments, with the skilled being less anti-trade and anti-immigration in more skill-abundant countries (here taken to be richer countries) than in more unskilled-labour-abundant countries (here taken to be poorer countries). These predictions are confirmed, using survey data for 24 countries. The high-skilled are pro-globalization in rich countries; while in some of the very poorest countries in the sample being high-skilled has a negative (if statistically insignificant) impact on pro-globalization sentiment. More generally, an interaction term between skills and GDP per capita has a negative impact in regressions, explaining anti-globalization sentiment. Furthermore, individuals view protectionism and anti-immigrant policies as complements rather than as substitutes, as they would do in a simple Heckscher-Ohlin world.

Globalization, attitudes, survey data, Heckscher-Ohlin theory

Abstract:
The aim of the paper is to see whether individuals' attitudes towards globalization are consistent with the predictions of Heckscher-Ohlin theory. The theory predicts that the impact of being skilled or unskilled on attitudes towards trade and immigration should depend on a country's skill endowments, with the skilled being less anti-trade and anti-immigration in more skill-abundant countries (here taken to be richer countries) than in more unskilled-labour-abundant countries (here taken to be poorer countries). These predictions are confirmed, using survey data for 24 countries. Being high-skilled is associated with more pro-globalization attitudes in rich countries; while in some of the very poorest countries in the sample being high-skilled has a negative (if statistically insignificant) impact on pro-globalization sentiment. More generally, an interaction term between skills and GDP per capita has a negative impact in regressions explaining anti-globalization sentiment. Furthermore, individuals view protectionism and anti-immigrant policies as complements rather than as substitutes, which is what simple Heckscher-Ohlin theory predicts.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
In his seminal publications between the 1930s and 1960s, Frederick Lane offered three hypotheses regarding the impact of the Voyages of Discovery that have guided debate ever since. First, pepper and other spice prices did not rise in European markets in the century before the 1490s, and thus could not have 'pulled in' the oceanic explorations by their rising scarcity. Second, Portuguese circumnavigation of Africa did not lower European spice prices across the 16th century, implying that the discovery of the Cape route had no permanent effect on Euro-Asian market integration. Third, 15th century Venetian spice markets were already well integrated with those in Iberia and northern Europe, implying that Portugal could not have had an intra-European market integrating influence in the 16th century. Lane developed these influential hypotheses by relying heavily on nominal spice prices from Venice and the Levant. This paper revisits Lane's hypotheses by using instead relative spice prices, that is, accounting for inflation. It also draws on evidence from Iberia and northern Europe. In addition, it explores European market integration before and after 1503, the year when da Gama returned from his financially successful second voyage. Lane's three hypotheses are rejected: the impact of the Portuguese was profound on all fronts. We conclude by using a simple model of monopoly and oligopoly to decompose the sources of the Cape route's impact on European markets.

Abstract:
In his seminal publications between the 1930s and 1960s, Frederick Lane offered three hypotheses regarding the impact of the Voyages of Discovery that have guided debate ever since. First, pepper and other spice prices did not rise in European markets in the century before the 1490s, and thus could not have 'pulled in' the oceanic explorations by their rising scarcity. Second, Portuguese circumnavigation of Africa did not lower European spice prices across the 16th century, implying that the discovery of the Cape route had no permanent effect on Euro-Asian market integration. Third, 15th century Venetian spice markets were already well integrated with those in Iberia and northern Europe, implying that Portugal could not have had an intra-European market integrating influence in the 16th century. Lane developed these influential hypotheses by relying heavily on nominal spice prices from Venice and the Levant. This paper revisits Lane's hypotheses by using instead relative spice prices, that is, accounting for inflation. It also draws on evidence from Iberia and northern Europe. In addition, it explores European market integration before and after 1503, the year when da Gama returned from his financially successful second voyage. Lane's three hypotheses are rejected: the impact of the Portuguese was profound on all fronts. We conclude by using a simple model of monopoly and oligopoly to decompose the sources of the Cape route's impact on European markets.

Market integration, spice trade, Voyages of Discovery

Abstract:
This Paper provides a summary of what is known about trends in international commodity market integration during the second half of the second millennium. The range of goods that have been traded between continents since the Voyages of Discovery has steadily increased over time, and there has been substantial commodity market integration over the period, driven by technology in the 19th century and politics in the late 20th century. This trend towards greater market integration was not, however, monotonic; it was periodically interrupted by shocks such as wars and world depressions, or by endogenous political responses to the distributional effects of globalization itself. In some periods politics has reinforced the effects of technology, while in other periods it has offset them. In several cases, severe shocks have had long-run effects on the international integration of commodity markets, as a result of politically induced hysteresis. Finally, we know remarkably little about international commodity market integration during the 20th century.

Trade, history

Abstract:
Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures prices over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history show unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third World shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus conditional on the century.

Commodity prices, development, history, volatility

Abstract:
Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures price over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history shows unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third World shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus conditional on the century.

Abstract:
Introduction As is well known, the Revolutionary and Napoleonic Wars of the late 18th and early 19th centuries were not just unusually lengthy and bloody, but involved widespread economic warfare as well. As early as 1793, when war broke out between Britain and France, France banned the importation of British manufactured goods, and Britain set in place a lockade of French ports. However, this trade disruption would be greatly increased after Napoleon's military victories over Austria, Prussia and Russia in 1805 and 1806. With much of the Continent under his control, Napoleon's mercantilist ambitions to starve the British economy of export revenues now seemed closer to fruition. There followed the famous Berlin Decree of November 1806, under which all ships arriving from Britain or her colonies were to be barred from France, as well as from vassal states such as Naples, Spain and Holland. The scope of this 'Continental Blockade' would widen further in 1807, following Napoleon's defeat of a Russian army at Friedland. Under the subsequent Treat of Tilsit, Russia and Prussia joined the blockade, and Portugal and Denmark would soon follow, with Sweden being forced to join in 1810.

Abstract:
This paper provides a summary of what is known about trends in international commodity market integration during the second half of the second millennium. The range of goods which have been traded between continents since the Voyages of Discovery has steadily increased over time, and there has been substantial commodity market integration over the period, driven by technology in the 19th century and politics in the late 20th century. However, this trend towards greater market integration was not monotonic; it was periodically interrupted by shocks such as wars and world depressions, or by endogenous political responses to the distributional effects of globalization itself. In some periods politics has reinforced the effects of technology, while in other periods it has offset them. In several cases, severe shocks have had long-run effects on the international integration of commodity markets, as a result of politically induced hysteresis. Finally, we know remarkably little about international commodity market integration during the 20th century.

Abstract:
As part of a process that has been at work since 1850, real wages among the current OECD countries converged during the late 19th century. The convergence was pronounced as that which we have seen in the post World War Il period. This paper uses computable general equilibrium models to isolate the sources of that economic convergence by assessing the relative performance of the two most important economies in the Old World and the New -- Britain and the USA. It turns out that between 1870 and 1910, the convergence forces that mattered were those that generated by commodity price convergence, stresses by Eli Heckscher and Bertil Ohlin, and mass migration, stressed by Knut Wicksell. It turns out that offsetting forces were contributing to late 19th century divergence, a finding consistent with economic historians' traditional attention to Britain's alleged failure and America's spectacular rise to industrial supremacy. The convergence forces, however, dominated for most of the period.

Abstract:
Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

Endogenous growth, demography, trade

Abstract:
This paper augments the new historical literature on factor price convergence. The focus is on the late nineteenth century, when economic convergence among the current OECD countries was dramatic; and the focus is on the convergence between Old World and New, by far the biggest participants in the global convergence during the period; and the focus is on land and labor, the two most important factors of production in the nineteenth century. Wage-rental ratios boomed in the Old World and collapsed in the New, moving the resource-rich and labor scarce New World closer to the resource-scarce and labor-abundant Old World. The paper uses both computable general equilibrium models and econometrics to identify the forces causing the convergence. These include: commodity price convergence and the Heckscher-Ohlin Theorem of factor price equalization; migration, capital-deepening and frontier disappearance, factors stressed by Malthus, Ricardo, Wicksell and Viner; and factor-saving biases associated with induced-innovational theory, an endogenous response to relative factor scarcities.

Abstract:
On average, the poor European periphery converged on the rich industrial core in the four or five decades prior to World War I. Some, like the three Scandinavian economies, used industrialization to achieve a spectacular convergence on the leaders, especially in real wages and living standards. Some, like Ireland, seemed to do it without industrialization. Some, like Italy, underwent less spectacular catch-up, and it was limited to the industrializing North. Some, like Iberia, actually fell back. What accounts for this variety? What role did trade and tariff policy play? What about emigration and capital flows? What about schooling? We offer a tentative assessment of these contending explanations and conclude that globalization was by far the dominant force accounting for convergence (and divergence) around the periphery. Some exploited it well, and some badly.

Abstract:
A recent literature argues that hierarchical religions such as Catholicism hamper the formation of trust, thus reducing the propensity to cooperate and damaging economic performance. This article looks for a link between Catholicism and the propensity to cooperate in the pre-1914 Irish dairy industry. Although the propensity to cooperate was higher in Denmark than in Ireland, and in Ulster than elsewhere in Ireland, Catholicism did not make cooperation more difficult in Ireland. Political conflict over land reforms and constitutional matters was to blame, not religion. Denmark's homogeneity, not its Protestantism, led to the success of cooperation there.

Abstract:
Trade theorists have come to understand that their theory is ambiguous on the question: Are trade and factor flows substitutes? While this sounds like an open invitation for empirical research, hardly any serious econometric work has appeared in the literature. This paper uses history to fill the gap. It treats the experience of the Atlantic economy between 1870 and 1940 as panel data with almost seven hundred observations. When shorter run business cycles and long swings' are extracted from the panel data, substitutability is soundly rejected. When secular relationships are extracted over longer time periods and across trading partners, once again substitutability is soundly rejected. Finally, the paper explores immigration policy and finds that policy makers never behaved as if they viewed trade and immigration as substitutes.

Abstract:
Scandinavia recorded very high growth rates between 1870 and 1914, catching up with the leaders. This paper estimates that about two-thirds of the Scandinavian catching up on Britain was due to the open economy forces of global factor and commodity market integration. All of the Scandinavian catching up on America was due to the same open economy forces. The question for the economist is: Why does the new growth theory spend so little time dealing with these open economy forces? The question for the economic historian is: Can the breakdown of global factor and commodity markets after 1914 explain a large share of the cessation of convergence up to 1950? Can the spectacular OECD convergence achieved after 1950 be explained by the resumption of the pre-1914 open economy conditions that contributed so much to Scandinavian catch-up?

Abstract:
This Paper explores the diffusion of two agricultural innovations in late 19th century Denmark and Ireland: the milk separator and the cooperative creamery. It asks whether variables identified as important for innovation and growth by cross-country regressions mattered in this instance: in particular, education, uncertain property rights, and social capital. The Paper finds that literacy and conflict regarding property rights impeded the diffusion of milk separators in Ireland, and that the propensity to cooperate there was lower among Catholics than among Protestants. These factors all help explain the superior performance of the Danish dairy industry during this period.

Innovation, agriculture, history

Abstract:
In his seminal publications between the 1930s and 1960s, Frederick Lane offered three hypotheses regarding the impact of the Voyages of Discovery that have guided debate ever since. First, pepper and other spice prices did not rise in European markets in the century before the 1490s, and thus could not have %u2018pulled in%u2019 the oceanic explorations by their rising scarcity. Second, Portuguese circumnavigation of Africa did not lower European spice prices across the 16th century, implying that the discovery of the Cape route had no permanent effect on Euro-Asian market integration. Third, 15th century Venetian spice markets were already well integrated with those in Iberia and northern Europe, implying that Portugal could not have had an intra-European market integrating influence in the 16th century. Lane developed these influential hypotheses by relying heavily on nominal spice prices from Venice and the Levant. This paper revisits Lane%u2019s hypotheses by using instead relative spice prices, that is, accounting for inflation. It also draws on evidence from Iberia and northern Europe. In addition, it explores European market integration before and after 1503, the year when da Gama returned from his financially successful second voyage. Lane%u2019s three hypotheses are rejected: the impact of the Portuguese was profound on all fronts. We conclude by using a simple model of monopoly and oligopoly to decompose the sources of the Cape route%u2019s impact on European markets.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
The late 19th century, and more precisely the period between the Irish Famine of 1845-49 and the First World War, was an era of largely free migration. As such, it constitutes a unique policy experiment, in which migration flows reflected underlying economic forces, rather than government policy. Moreover, since there was large-scale migration between relatively rich countries with relatively well-developed states, and since the migration was legal, it was extremely well-documented. There are three big lessons from the late 19th century. First, emigration is an incredibly effective way for poor countries to raise their living standards. By blocking immigration, rich countries are making it much harder for poor countries to catch up on the OECD. Second, emigration is ultimately a self-limiting process. Left to its own devices, emigration from a poor country will eventually decline, although this may be preceded by an initial period of increasing emigration rates. Third, international migration can have big effects on internal income distribution, both in the source country and in the country of origin; and this leads to strong pressure for immigration restrictions. This last, pessimistic, conclusion ignores the possibility, however, that domestic and foreign institutions could help governments maintain relatively open migration policies.

Migration, history

Abstract:
Technological change was unskilled-labor-biased during the early Industrial Revolution, but is skill-biased today. This is not embedded in extant unified growth models. We develop a model which can endogenously account for these facts, where factor bias reflects profit maximizing decisions by innovators. Endowments dictate that the early Industrial Revolution be unskilled-labor-biased. Increasing basic knowledge causes a growth takeoff, an income-led demand for fewer educated children, and the transition to skill-biased technological change. The simulated model tracks British industrialization in the 18th and 19th centuries and generates a demographic transition without relying on either rising skill premia or exogenous educational supply shocks.

demography, endogenous growth, unified growth theory

Abstract:
Technological change was unskilled-labor-biased during the early Industrial Revolution, but is skill-biased today. This is not embedded in extant unified growth models. We develop a model which can endogenously account for these facts, where factor bias reflects profit-maximizing decisions by innovators. Endowments dictate that the early Industrial Revolution be unskilled-labor-biased. Increasing basic knowledge causes a growth takeoff, an income-led demand for fewer educated children, and the transition to skill-biased technological change. The simulated model tracks British industrialization in the 18th and 19th centuries and generates a demographic transition without relying on either rising skill premia or exogenous educational supply shocks.

Abstract:
This article uses monthly trade data to document the decline in the seasonality in Danish butter exports that occurred from the 1880s onwards. This decline contrasted with steady or increasing seasonality elsewhere. Monthly butter prices in Britain, Denmark, and Ireland show that the incentives to shift into winter dairying were particularly high in the 1880s and 1890s; however, this cannot on its own explain the Danish shift, since our price data show that farmers elsewhere faced winter premia that were every bit as high as the Danish premia. The crucial factor in Denmark was the generation of empirical knowledge by the private and public sectors systematically analysing empirical evidence; the rapid diffusion of this knowledge in a highly educated society via lectures, exhibitions, written materials, and by institutions such as the new cooperative sector; and a willingness to absorb this knowledge by profit-maximizing farmers.

Abstract:
Many papers have explored the relationship between average tariff rates and economic growth, when theory suggests that the structure of protection is what should matter. We therefore explore the relationship between economic growth and agricultural tariffs, industrial tariffs, and revenue tariffs, for a sample of relatively well-developed countries between 1875 and 1913. Industrial tariffs were positively correlated with growth. Agricultural tariffs were negatively correlated with growth, although the relationship was often statistically insignificant at conventional levels. There was no relationship between revenue tariffs and growth.

Abstract:
For two decades, the consensus explanation of the British Industrial Revolution has placed technological change and the supply side at center stage, affording little or no role for demand or overseas trade. Recently, alternative explanations have placed an emphasis on the importance of trade with New World colonies, and the expanded supply of raw cotton it provided. We test both hypotheses using calibrated general equilibrium models of the British economy and the rest of the world for 1760 and 1850. Neither claim is supported. Trade was vital for the progress of the industrial revolution; but it was trade with the rest of the world, not the American colonies, that allowed Britain to export its rapidly expanding textile output and achieve growth through extreme specialization in response to shifting comparative advantage.

British Industrial Revolution, colonies, Great Divergence, growth, specialisation, trade

Abstract:
For two decades, the consensus explanation of the British Industrial Revolution has placed technological change and the supply side at center stage, affording little or no role for demand or overseas trade. Recently, alternative explanations have placed an emphasis on the importance of trade with New World colonies, and the expanded supply of raw cotton it provided. We test both hypotheses using calibrated general equilibrium models of the British economy and the rest of the world for 1760 and 1850. Neither claim is supported. Trade was vital for the progress of the industrial revolution; but it was trade with the rest of the world, not the American colonies, that allowed Britain to export its rapidly expanding textile output and achieve growth through extreme specialization in response to shifting comparative advantage.

Abstract:
Using data collected by the International Institute of Agriculture, we document the disintegration of international commodity markets between 1913 and 1938. There was dramatic disintegration during World War I, gradual reintegration during the 1920s, and then a very substantial disintegration after 1929. The period saw the unravelling of a great many of the integration gains of the 1870-1913 period. While increased transport costs certainly help to explain the wartime disintegration, they cannot explain the post-1929 increase in trade costs. Protectionism seems the most likely alternative candidate.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
Using data collected by the International Institute of Agriculture, we document the disintegration of international commodity markets between 1913 and 1938. There was dramatic disintegration during World War I, gradual reintegration during the 1920s, and then a very substantial disintegration after 1929. The period saw the unravelling of a great many of the integration gains of the 1870-1913 period. While increased transport costs certainly help to explain the wartime disintegration, they cannot explain the post-1929 increase in trade costs. Protectionism seems the most likely alternative candidate.

commodity markets, deglobalization, disintegration, Great Depression, interwar economy, trade

Abstract:
The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. It may still be too early to assess the effectiveness of current policy responses, but it is possible to analyze monetary and fiscal policies in the 1930s as a “natural experiment� or “counterfactual� capable of shedding light on the impact of recent policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for a panel of 27 countries in the period 1925-1939. The results suggest that monetary and fiscal stimulus was effective – that where it did not make a difference it was not tried. The results also shed light on the debate over fiscal multipliers in episodes of financial crisis. They are consistent with multipliers at the higher end of those estimated in the recent literature, consistent with the idea that the impact of fiscal stimulus will be greater when banking system are dysfunctional and monetary policy is constrained by the zero bound.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
This article explores the impact of the ‘Voyages of Discovery’ on European spice markets, asking whether the exploits of Vasco da Gama and others brought European and Asian spice markets closer together. To this end we compare trends in pepper and fine spice prices before and after 1503, the year when da Gama returned from his financially successful second voyage. Other authors have examined trends in nominal spice prices, but this article uses relative spice prices, that is, accounting for inflation. We find that the Voyages of Discovery had a major impact on European spice markets, and provide a simple model of monopoly and oligopoly to decompose the sources of the Cape route's impact on European markets. Finally, we offer some speculations regarding the impact of the Cape route on intra-European market integration.

Abstract:
Many papers have explored the relationship between average tariff rates and economic growth, when theory suggests that the structure of protection is what should matter. We therefore explore the relationship between economic growth and agricultural tariffs, industrial tariffs, and revenue tariffs, for a sample of relatively well-developed countries between 1875 and 1913. Industrial tariffs were positively correlated with growth. Agricultural tariffs were negatively correlated with growth, although the relationship was often statistically insignificant at conventional levels. There was no relationship between revenue tariffs and growth.

growth, history, tariffs

Abstract:
Trade theorists have come to understand that their theory is ambiguous on the question : are trade and factor flows substitutes? While this sounds like an open invitation for empirical research, hardly any serious econometric work has appeared in the literature. This paper uses history to fill the gap.