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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
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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
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The Cambridge Economic History of the Modern World , pp. 412 - 437
Publisher: Cambridge University Press
Print publication year: 2021

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References

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