The effects of market integration: trade and welfare during the first globalization, 1815-1913

We investigate the effect of the decline in trade costs on trade, terms of trade and welfare of Europe (the United Kingdom and the Netherlands) and three large exporters (India, Indonesia and the United States) during the first globalization using a ‘bottom-up’ approach. We measure total route and product specific trade costs for a representative sample of commodities with price gaps predicted by observed trade costs. We use a simple microeconomic model and we buttress our findings with additional econometric testing. We find that price convergence accounted for almost all the improvement in terms of trade of producing countries and increased significantly welfare in both producing and especially consuming countries, while its positive effect on bilateral trade was often swamped by other factors. The findings caution against the substation of proxies to actual measures of trade costs

Early globalizations: the integration of Asia in the world economy, 1800–1938

This paper contributes to the debate on globalization and the great divergence with a comprehensive analysis of the integration of Asia in the world market from 1800 to the eve of World War II. We examine the patterns of convergence in prices for a wide range of commodities between Europe and the main Asian countries (India, Indonesia, Japan and China) and we compare them with convergence between Europe and the East Coast of the United States, hitherto the yardstick for the 19th century. Most price convergence occurred before 1870, mainly as a consequence of the abolition of the European trading monopolies with Asia, and, to a lesser extent, the repeal of duties on Atlantic trade. After 1870, price differentials continued to decline thanks to falling freights and to better communication after the lay-out of telegraph cables. There was only little disintegration in the inter-war years

Globalization, welfare and inequality: evidence from transoceanic market integration, 1815-1913

This article contributes to the growing historical literature on the ‘first globalization’ (1815-1913) and income inequality in countries that exported agricultural products. International market integration is expected to increase the demand for exports and therefore their prices. We estimate the effects of increased prices from international market integration on national welfare and income inequality between and within regions in three major exporters of agricultural products, namely, British India, Colonial Indonesia and the United States, using the prices of eleven key primary commodities. Market integration significantly increased aggregate welfare, but the gains were unevenly distributed. Producing regions gained up to nearly 6% of their GDP. Since the regions that made most welfare gains were also the poorest in their countries, market integration mitigated inequality between regions. Within the southern United States and Java, plantation owners obtained most gains, causing a substantial increase in inequality between persons

Puncturing the Malthus delusion: structural change in the British economy before the industrial revolution, 1500-1800

Accounts of structural change in the pre-modern British economy vary substantially. We present the first time series of male labour sectoral shares before 1800, using a large sample of probate and apprenticeship data to produce national and county-level estimates. England experienced a rapid decline in the agricultural share between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw only limited changes. Our results provide further evidence of early structural change, highlighting the significance of the mid-seventeenth century as a turning point in English economic development

Structural change and economic growth in the British economy before the Industrial Revolution, 1500-1800

Structural transformation is a key indicator of economic development. We present the first time series of male labour sectoral shares for England and Wales before 1800, using a large sample of probate and apprenticeship data to produce national and county-level estimates. England experienced a rapid decline in the share of workers in agriculture between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw few changes. Our results show that England experienced unusually early structural change and highlight the mid-seventeenth century as a turning point

China inside out: explaining silver flows in the triangular trade, c.1820s-1870s

This paper analyses a new, large dataset of silver prices, as well as silver and merchandise trade flows in and out of China in the crucial decades of the mid-19th century when the Empire was opened to world trade. Silver flows were associated with the interaction between heterogenous monetary preferences and availability of specific coins. Before the 1850s, money markets became increasingly efficient, as reliance on bills of exchange allowed exports to grow in times when sound money was in short supply. When a new standard for silver eventually emerged, there was a new peak in China’s silver imports

Benefits of empire? Capital market integration north and south of the Alps, 1350-1800

This paper addresses two questions. First, when and to what extent did capital markets integrate north and south of the Alps? Second, how mobile was capital? Analysing a unique new dataset on pre-modern urban annuities, we find that northern markets were consistently better integrated than Italian markets. Long-term integration was driven by initially peripheral places in the Netherlands and Upper Germany integrating with the rest of the Holy Roman Empire where the distance and volume of inter-urban investments grew primarily in the sixteenth century. The institutions of the Empire contributed to stronger market integration north of the Alps

Benefits of empire? Capital market integration north and south of the Alps, 1350-1800

This paper addresses two questions. First, when and to what extent did capital markets integrate north and south of the Alps? Second, how mobile was capital? Analysing a unique new dataset on pre-modern urban annuities, we find that northern markets were consistently better integrated than Italian markets. Long-term integration was driven by initially peripheral places in the Netherlands and Upper Germany integrating with the rest of the Holy Roman Empire where the distance and volume of inter-urban investments grew primarily in the sixteenth century. The institutions of the Empire contributed to stronger market integration north of the Alp