Cotton Textiles and the Great Divergence: Lancashire, India and Shifting Competitive Advantage, 1600-1850

50 Pages Posted: 25 Aug 2005

See all articles by Stephen N. Broadberry

Stephen N. Broadberry

London School of Economics & Political Science (LSE)

Bishnupriya Gupta

University of Warwick - Department of Economics

Date Written: August 2005

Abstract

The growth of cotton textile imports into Britain from India opened up new opportunities for import substitution as the new cloths, patterns and designs became increasingly fashionable. However, high silver wages in Britain as a result of high productivity in other tradable goods and services, meant that British producers of cotton textiles could not use labor-intensive Indian production methods. The growth in British labor productivity that resulted from the search for labor-saving technological progress meant that unit labor costs became lower than in India despite the much higher wages in Britain. However, the full effects of the rise in British productivity were delayed until after the Napoleonic Wars by increasing wage and raw cotton costs before supply adjusted to the major increase in demand for inputs. On balance, the effects of British protective measures were neutral.

Keywords: Cotton, competitive advantage, unit labor costs, Lancashire, India

JEL Classification: N60, N70, O14, O31

Suggested Citation

Broadberry, Stephen N. and Gupta, Bishnupriya, Cotton Textiles and the Great Divergence: Lancashire, India and Shifting Competitive Advantage, 1600-1850 (August 2005). CEPR Discussion Paper No. 5183, Available at SSRN: https://ssrn.com/abstract=790866

Stephen N. Broadberry (Contact Author)

London School of Economics & Political Science (LSE) ( email )

+44 0 24 7652 3446 (Phone)
+44 0 24 7652 3032 (Fax)

Bishnupriya Gupta

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

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