Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade

61 Pages Posted: 20 Jan 2015 Last revised: 7 Mar 2015

See all articles by Michael Huberman

Michael Huberman

University of Montreal

Christopher M. Meissner

University of California, Davis

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Date Written: January 2015

Abstract

In the Belle Époque, Belgium recorded an unprecedented trade boom, but growth in output per capita was lackluster. We seek to reconcile this ostensible paradox. Because of the sharp decline in both fixed and variable trade costs, the trade boom was as much about the expansion in the number of products delivered and markets served as it was about shipping more of the same old products. We use a new highly disaggregated data set on bilateral exports at the product level to illustrate these claims. In line with new trade theory, the effect of trade on productivity was mediated by sector-level firm heterogeneity and product differentiation. In new technology sectors, like tramways, the high degree of firm heterogeneity amplified the effect of trade on productivity. But in other sectors, mainly old staple industries like cotton textiles, a high level of firm uniformity muted the effect of trade. Into the twentieth century, old staples trumped new technology sectors, per capita income growing modestly as a result.

Suggested Citation

Huberman, Michael and Meissner, Christopher M. and Oosterlinck, Kim, Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade (January 2015). NBER Working Paper No. w20851. Available at SSRN: https://ssrn.com/abstract=2551659

Michael Huberman (Contact Author)

University of Montreal ( email )

C.P. 6128 succursale Centre-ville
Montreal, Quebec H3C 3J7
Canada

Christopher M. Meissner

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

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