Empire Effect versus Crowding Out Effect: Shipping Productivity in the North Atlantic from 1764 to 1860

22 Pages Posted: 6 May 2017  

Jari A. Eloranta

Appalachian State University

Vincent Geloso

Texas Tech University

Vadim Kufenko

University of Hohenheim - Institute of Economics

Date Written: May 5, 2017

Abstract

While there is a rich literature on the benefits of empire in terms of the provision of key public goods—notably security for international trade—the costs have been downplayed. In this paper, we focus on merchant shipping data between Canada and Britain between 1764 and 1860 to measure these costs. Imperial hegemony would have implied greater security for shippers and this, in turn, would have stimulated investments in productivity. However, we contend that a counter-effect would have operated simultaneously. The provision of greater security meant greater military navies which crowded out merchant navies in terms of availability of capital and labor. We argue that the benefit of the “security effect” has to be weighed against the cost of the “crowding-out” effect. We find that the “crowding-out effect” was larger than the “security effect.” For “security effects” to overpower “crowding out effects,” one had to have a very small navy in absolute terms but a large one relative to other military powers.

Keywords: empire effect; crowding-out; defense economics; British navy

JEL Classification: H56; N40; E60

Suggested Citation

Eloranta, Jari A. and Geloso, Vincent and Kufenko, Vadim, Empire Effect versus Crowding Out Effect: Shipping Productivity in the North Atlantic from 1764 to 1860 (May 5, 2017). Available at SSRN: https://ssrn.com/abstract=2963620 or http://dx.doi.org/10.2139/ssrn.2963620

Jari A. Eloranta

Appalachian State University ( email )

Boone, NC 28608
United States

Vincent Geloso (Contact Author)

Texas Tech University ( email )

1901 University Avenue
Lubbock, TX Texas 79410
United States

Vadim Kufenko

University of Hohenheim - Institute of Economics ( email )

Schloss-Mittelhof (Ost)
70593 Stuttgart
Germany

Paper statistics

Downloads
34
Abstract Views
1,114