Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-14T11:17:30.667Z Has data issue: false hasContentIssue false

17 - International Transactions: Real Trade and Factor Flows

from Part II - Factors Governing Differential Outcomes in the Global Economy

Published online by Cambridge University Press:  03 June 2021

By
Wolfgang Keller ,
Markus Lampe  and
Carol H. Shiue
Edited by
Stephen Broadberry  and
Kyoji Fukao
Stephen Broadberry
Affiliation:
University of Oxford
Kyoji Fukao
Affiliation:
Hitotsubashi University, Tokyo
Get access

Summary

This chapter describes broad regional and temporal trends in the evolution of international trade and international factor flows between 1700 and 1870, including key differences in trade costs across space and time. We find trade links in western Europe and the European colonies of North America intensified at the same time these regions experienced the initial Industrial Revolution and the spread of industrialization, which led to sustained economic growth. At the same time, global differences in specialization and income emerged. To understand the contribution of global market forces as well as colonialism to these differences, the chapter lays out theoretical reasons for links between trade and economic growth and examines related historical arguments and evidence. We conclude that trade contributed to global divergence, but the magnitude and mechanisms through which trade affected global welfare lies not so much in the direct impact of trade and specialization as in multiplier effects emerging from the interactions of trade with other factors that affect economic development.

Keywords

international tradetrade theorymarket integrationspecializationglobalizationtrade costsgains from tradecolonialismempiresmigrationtrade and industrialization
Type
Chapter
Information
The Cambridge Economic History of the Modern World , pp. 412 - 437
Publisher: Cambridge University Press
Print publication year: 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

References

Acemoglu, D., Johnson, S. and Robinson, J. A. (2001). ‘The Colonial Origins of Comparative Development: An Empirical Investigation’, American Economic Review, 91(5), 1369–1401.Google Scholar
Acemoglu, D., Johnson, S. and Robinson, J. A. (2005). ‘The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth’, American Economic Review, 95(3), 546–579.Google Scholar
Allen, R. (2011). Global Economic History: A Very Short Introduction, Oxford University Press.Google Scholar
Bernhofen, D. M. and Brown, J. C. (2005). ‘An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan’, American Economic Review, 95(1), 208–225.CrossRefGoogle Scholar
Bogart, D. (2014). ‘The Transport Revolution in Industrializing Britain: A Survey’, in Floud, R., Humphries, J. and Johnson, P. (eds.), The Cambridge Economic History of Modern Britain, vol. 1: 1700–1870, 4th ed., Cambridge University Press.Google Scholar
Chilosi, D. and Federico, G. (2015). ‘Early Globalizations: The Integration of Asia in the World Economy, 1800–1938’, Explorations in Economic History, 57, 1–18.Google Scholar
Chilosi, D., Murphy, T. E., Studer, R. and Tunçer, A. C. (2013). ‘Europe’s Many Integrations: Geography and Grain Markets, 1620–1913’, Explorations in Economic History, 50, 46–68.CrossRefGoogle Scholar
Costinot, A. and Rodriguez-Clare, A. (2014). ‘Trade Theory with Numbers: Quantifying the Consequences of Globalization’, in Gopinath, G., Helpman, E. and Rogoff, K. (eds.), Handbook of International Economics, vol. 4, Amsterdam: Elsevier, 197–261.Google Scholar
Desmet, K. and Parente, S. L. (2012). ‘The Evolution of Markets and the Revolution of Industry: A Unified Theory of Growth’, Journal of Economic Growth, 17(3), 205–234.Google Scholar
de Vries, J. (1994). ‘The Industrial Revolution and the Industrious Revolution’, Journal of Economic History, 54(2), 249–270.CrossRefGoogle Scholar
de Zwart, P. and van Zanden, J. L. (2018). The Origins of Globalization: World Trade and the Making of the Global Economy, 1500–1800, Cambridge University Press.CrossRefGoogle Scholar
Dixit, A. K. and Norman, V. D. (1980). Theory of International Trade: A Dual, General Equilibrium Approach, Cambridge University Press.CrossRefGoogle Scholar
Dobado-González, R., García-Hiernaux, A. and Guerrero, D. E. (2015). ‘West versus Far East: Early Globalization and the Great Divergence’, Cliometrica, 9(2), 235–264.CrossRefGoogle Scholar
Donaldson, D. (2018). ‘Railroads of the Raj: Estimating the Impact of Transportation Infrastructure’, American Economic Review, 108(4–5), 899–934.Google Scholar
Federico, G. (2012). ‘How Much Do We Know About Market Integration in Europe?’, Economic History Review, 65(2), 470–497.Google Scholar
Federico, G. and Tena-Junguito, A. (2016). ‘World Trade, 1800–1938: A New Dataset’, EHES Working Papers in Economic History, 93.Google Scholar
Federico, G. and Tena-Junguito, A. (2017). ‘A Tale of Two Globalizations: Gains from Trade and Openness 1800–2010’, Review of World Economics, 153, 601–626.Google Scholar
Federico, G. and Tena-Junguito, A. (2018). ‘American Divergence: Lost Decades and Emancipation Collapse in Latin America and the Caribbean 1820–1870’, European Review of Economic History, 22(2), 185–209.Google Scholar
Findlay, R. (1990). ‘The “Triangular Trade” and the Atlantic Economy of the Eighteenth Century: A Simple General-Equilibrium Model’, Essays in International Finance, Princeton University, 177.Google Scholar
Findlay, R. and O’Rourke, K. H. (2009). Power and Plenty. Trade, War and the World Economy in the Second Millennium, Princeton University Press.Google Scholar
Fogel, R. W. (1964). Railroads and American Economic Growth: Essays in Econometric History, Baltimore: Johns Hopkins University Press.Google Scholar
Frankel, J. and Romer, D. (1999). ‘Does Trade Cause Growth?’, American Economic Review, 89(3), 379–399.Google Scholar
Grossman, G. E. and Helpman, E. (1991). Innovation and Growth in the Global Economy, Cambridge, MA: MIT Press.Google Scholar
Harley, C. N. (1994). ‘Foreign Trade: Comparative Advantage and Performance’, in Floud, R. and McCloskey, D. (eds.), The Economic History of Britain Since 1700, vol. 1: 1700–1860, 2nd ed., Cambridge University Press, 300–331.Google Scholar
Head, K. and Mayer, T. (2014). ‘Gravity Equations: Workhorse, Toolkit, and Cookbook’, in Gopinath, G., Helpman, E. and Rogoff, K. (eds.), Handbook of International Economics, vol. 4, Amsterdam: Elsevier, 131–195.Google Scholar
Helpman, E. and Krugman, P. (1985). Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy, Cambridge, MA: MIT Press.Google Scholar
Jacks, D. S. (2009). ‘On the Death of Distance and Borders: Evidence from the Nineteenth Century’, Economics Letters, 105(3), 203–233.CrossRefGoogle Scholar
Keller, W. and Shiue, C. H. (2014). ‘Endogenous Formation of Free Trade Agreements: Evidence from the Zollverein’s Impact on Market Integration’, Journal of Economic History, 74(4), 1168–1204.CrossRefGoogle Scholar
Keller, W. and Shiue, C. H. (2020). ‘Market Integration and Institutional Change’, Review of World Economics, 156, 251–285.Google Scholar
Keller, W. and Shiue, C. H. (forthcoming). ‘Foreign Trade and Investment’, Ch. 12, in Ma, D. and von Glahn, R. (eds.), The Cambridge Economic History of China, Vol. 2, Part 2, Cambridge University Press.Google Scholar
Keller, W., Li, B. and Shiue, C. H. (2011). ‘China’s Foreign Trade: Perspectives from the Past 150 Years’, The World Economy, 34(6), 853–892.CrossRefGoogle Scholar
Keller, W., Andres Santiago, J. and Shiue, C. H. (2017). ‘China’s Domestic Trade during the Treaty-Port Era’, Explorations in Economic History, 63, 26–43.CrossRefGoogle Scholar
Keller, W., Lampe, M. and Shiue, C. H. (2020). ‘International Transactions: Real Trade and Factor Flows between 1700 and 1870’, National Bureau of Economic Research Working Paper 26865.Google Scholar
Kelly, M. and Ó Gráda, C. (2019). ‘Speed under Sail during the Early Industrial Revolution (c. 1750–1830)’, Economic History Review, 72(2), 459–480.Google Scholar
Krugman, P. (1991). Geography and Trade, Cambridge, MA: MIT Press.Google Scholar
Lampe, M. and Sharp, P. (2019). ‘Cliometric Approaches to International Trade’, in Diebolt, C. and Haupert, M. (eds.), Handbook of Cliometrics, 2nd. ed., Heidelberg: Springer, link.springer.com/referenceworkentry/10.1007%2F978-3-642-40458-0_8-1 (accessed 12 October 2020).Google Scholar
Maddison, A. (2005). Growth and Interaction in the World Economy: The Roots of Modernity, Washington, DC: AEI Press.Google Scholar
Matsuyama, K. (1992). ‘Agricultural Productivity, Comparative Advantage, and Economic Growth’, Journal of Economic Theory, 58(2), 317–334.Google Scholar
McCloskey, D. (1994). ‘1780–1860, A Survey’, in Floud, R. and McCloskey, D. N. (eds.), The Economic History of Britain since 1700, vol. 1: 1700–1860, Cambridge University Press, 300–331.Google Scholar
Meissner, C. M. (2014). ‘Growth from Globalization? A View from the Very Long Run’, in Aghion, P. and Durlauf, S. N. (eds.), Handbook of Economic Growth, vol 2, Amsterdam: Elsevier, 1033–1069.Google Scholar
Nunn, N. (2007). ‘Relationship-Specificity, Incomplete Contracts and the Pattern of Trade’, Quarterly Journal of Economics, 122(2), 569–600.Google Scholar
Nunn, N. and Trefler, D. (2014). ‘Domestic Institutions as a Source of Comparative Advantage’, in Gopinath, G., Helpman, E. and Rogoff, K. (eds.), Handbook of International Economics, vol. 4, Amsterdam: Elsevier, 263–315.Google Scholar
O’Brien, P. K. (1982). ‘European Economic Development: The Contribution of the Periphery’, Economic History Review, 35, 1–18.Google Scholar
O’Rourke, K. H. (2006). ‘The Worldwide Economic Impact of the French Revolutionary and Napoleonic Wars, 1793–1815’, Journal of Global History, 1(1), 123–149.Google Scholar
O’Rourke, K. H. and Williamson, J. G. (1999). Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, Cambridge, MA: MIT Press.Google Scholar
O’Rourke, K. H., Prados de la Escosura, L. and Daudin, G. (2010). ‘Trade and Empire’, in Broadberry, S. and O’Rourke, K. H. (eds.), The Cambridge Economic History of Modern Europe, vol. 1: 1700–1870, Cambridge University Press, 96–121.Google Scholar
Ossa, R. (2015). ‘Why Trade Matters After All’, Journal of International Economics, 97(2), 266–277.CrossRefGoogle Scholar
Pascali, L. (2017). ‘The Wind of Change: Maritime Technology, Trade and Economic Development’, American Economic Review, 107(9), 2821–2854.Google Scholar
Persson, K. G. and Sharp, P. (2015). An Economic History of Europe: Knowledge, Institutions and Growth, 600 to the Present, 2nd ed., Cambridge University Press.Google Scholar
Pomeranz, K. (2002). ‘Political Economy and Ecology on the Eve of Industrialization: Europe, China, and the Global Conjuncture’, American Historical Review, 107(2), 425–446.Google Scholar
Shiue, C. H. (2005). ‘From Political Fragmentation Towards a Customs Union: Border Effects of the German Zollverein, 1815 to 1855’, European Review of Economic History, 9(2), 129–162.CrossRefGoogle Scholar
Shiue, C. H. and Keller, W. (2007). ‘Markets in China and Europe on the Eve of the Industrial Revolution’, American Economic Review, 97(4), 1189–1216.Google Scholar
Solar, P. M. and Hens, L. (2016). ‘Ship Speeds during the Industrial Revolution: East India Company Ships, 1770–1828’, European Review of Economic History, 20(1), 66–78.Google Scholar
Steinwender, C. (2018). ‘Real Effects of Information Frictions: When the States and the Kingdom Became United’, American Economic Review, 108(3), 657–696.Google Scholar
Stolper, W. F. and Samuelson, P. A. (1941). ‘Protection and Real Wages’, Review of Economic Studies, 9(1), 58–73.Google Scholar
Studer, R. (2008). ‘India and the Great Divergence: Assessing the Efficiency of Grain Markets in Eighteenth- and Nineteenth-Century India’, Journal of Economic History, 68(2), 393–437.Google Scholar
Tena-Junguito, A., Lampe, M. and Tâmega, F. (2012). ‘How Much Trade Liberalization Was There in the World Before and After Cobden-Chevalier?’, Journal of Economic History, 72(3), 708–740.Google Scholar
Thomas, R. P. and McCloskey, D. N. (1981). ‘Overseas Trade and Empire 1700–1860’, in Floud, R. and McCloskey, D. N. (eds.), The Economic History of Britain since 1700, vol. 1: 1700–1860, Cambridge University Press, 87–102.Google Scholar
Trefler, D. (1995). ‘The Case of the Missing Trade and Other Mysteries’, American Economic Review, 85(5), 1029–1046.Google Scholar
Wallerstein, I. (1974). The Modern World System I: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth Century, San Diego: Academic Press.Google Scholar
Zahedieh, N. (2014). ‘Overseas Trade and Empire’, in Floud, R., Humphries, J. and Johnson, P. (eds.), The Cambridge Economic History of Modern Britain, vol. 1: 1700–1870, Cambridge University Press, 392–420.CrossRefGoogle Scholar
Bértola, L., and Ocampo, J. A. (2012). The Economic Development of Latin America since Independence, Oxford University Press.Google Scholar
Bowen, H. (2007), East India Company: Trade and Domestic Financial Statistics, 1755–1838 [computer file]. Colchester: UK Data Archive [distributor]. SN: 5690, doi.org/10.5255/ukda-sn-5690-1 (accessed 9 November 2020).Google Scholar
Chaudhury, K. N. (1978). The Trading World of Asia and the English East India Company 1660–1760, Cambridge University Press.Google Scholar
Crafts, N. F. R. (1985). British Economic Growth during the Industrial Revolution, Oxford: Clarendon Press.Google Scholar
Cuenca Esteban, J. (2001). ‘The British Balance of Payments, 1772–1820: India Transfers and War Finance’, Economic History Review, 59(1), 58–86.CrossRefGoogle Scholar
Cuenca Esteban, J. (2008). ‘Statistics of Spain’s Colonial Trade, 1747–1820: New Estimates and Comparisons with Great Britain’, Revista de Historia Económica – Journal of Iberian and Latin American Economic History, 26, 323–354.Google Scholar
Das Gupta, A. (1970). ‘Trade and Politics in Eighteenth Century India’, reprinted in Alam, M. and Subrahmanyam, S. (eds.), (1998), The Mughal State, 1526–1750, Oxford University Press, 361–397.Google Scholar
Daudin, G. (2001). Le role du commerce dans la croissance: une réflexion à partir de la France du XXVIIe siècle, unpublished doctoral thesis, Université Paris I – Pantheón-Sorbonne.Google Scholar
Irwin, D. A. (2006). ‘Exports and Imports of Merchandise, Gold, and Silver: 1790–2002’, Table Ee362–375 in Carter, S. B., Gartner, S. S., Hains, M. R., Olmsted, A. L., Sutch, R. and Wright, G. (eds.), Historical Statistics of the United States, Earliest Times to the Present: Millennial Edition, Cambridge University Press. dx.doi.org/10.1017/ISBN-9780511132971.Ee362-611 (accessed 13 October 2020).Google Scholar
Mancall, P. C., Rosenbloom, J. L. and Weiss, T. (2006). ‘Exports and Slow Economic Growth in the Lower South Region, 1720–1800’, National Bureau of Economic Research Working Paper 12045.Google Scholar
Mancall, P. C., Rosenbloom, J. L. and Weiss, T. (2008). ‘Commodity Exports, Invisible Exports and Terms of Trade for the Middle Colonies, 1720 to 1775’, National Bureau of Economic Research Working Paper 14334.Google Scholar
Reid, A. (1997). ‘A New Phase in Commercial Expansion in Southeast Asia, 1760–1850’, in Reid, A. (ed.), The Last Stand of Asian Autonomies: Responses to Modernity in the Diverse States of Southeast Asia and Korea, 1750–1900, London: Macmillan, 57–81.Google Scholar
Rosenbloom, J. L. and Weiss, T. (2014). ‘Economic Growth in the Mid-Atlantic Region: Conjectural Estimates for 1720 to 1800’, Explorations in Economic History, 51, 41–59.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×