The transatlantic telegraph’s introduction is a lesson from history on how information technology can improve firms’ ability to forecast demand

When new technology leads to a dramatic change in the availability of information, how do firms and markets respond? In a unique historical ‘experiment’, Claudia Steinwender evaluates the trade impact of the submarine transatlantic telegraph cable that connected Europe and North America in the mid-nineteenth century

Real Effects of Information Frictions: When the States and the Kingdom Became United

This paper exploits a unique historical experiment to estimate how information frictions distort international trade: the establishment of the transatlantic telegraph in 1866. I use newly collected data on cotton prices, trade, and information flows from historical newspapers and find that the average and volatility of the transatlantic price difference fell after the telegraph, while average trade flows increased and became more volatile. Using a trade model in which exporters use the latest news about a foreign market to forecast expected prices, I estimate the efficiency gains of the telegraph to be equivalent to 8 percent of export value

Industrial policy and the great divergence

We discuss recent work evaluating the role of the government in shaping the economy during the long 19th century, a practice we refer to as industrial policy. We show that states deployed a vast variety of different policies aimed at, primarily, but not exclusively, fostering industrialization. We discuss the thin, but growing literature that evaluates the economic effects of these policies. We highlight some fruitful avenues for future study

How free trade changes domestic firms’ ability to innovate

Trade flows are complex. Protecting some domestic firms may have inadvertent impacts on others, write Pian Shu and Claudia Steinwende

Molecular diversity of the Metarhizium anisopliae lineage in an agricultural field

Entomopathogenic fungal isolates identified by morphology as Metarhizium anisopliae may belong to different species when identified by molecular characters. We isolated Metarhizium spp. from an experimental agricultural field under both conventional and organic farming regimes using Tenebrio molitor as bait insect to assess the molecular diversity within the soil. Isolates were analyzed using DNA sequencing and applying SSR markers. Within the former M. anisopliae lineage, we found M. brunneum (86.3%), M. robertsii (11.3%) and M. majus (3.4%) in the soil samples. Several genotypes of each species were identified based on SSR markers. Differences in abundance of the species and their genotypes suggest different adaptations to the soil environment of the agricultural field. There were no effects of conventinal or organic farming regimes on diversity of the fungi

Import competition, heterogeneous preferences of managers and productivity

When managers have objectives beyond maximizing monetary profits, inefficiencies may arise. An increase in competition may then force managers to improve the productivity of the firm in order to ensure survival. While this hypothesis has received ample theoretical attention, empirical evidence is scarce, mainly because preferences of managers are typically unobserved. In this paper, we exploit the fact that a large literature has documented specific non-monetary preferences of family managers. Using Spanish firm-level data, we compare how family-managed and professionally-managed firms react to import competition shocks. We find that import competition leads to productivity increases in family-managed firms that are initially unproductive. Productivity improvements are driven by family management as opposed to family ownership or non-managing family members. Furthermore, we show that these managers increase efficiency by reducing material usage, which is consistent with them trying to increase their short-term cash flow in order to survive. Finally, productivity improvements seem to be particularly pronounced in multi-generational family firms that also introduce organizational changes

Who stands on the shoulders of Chinese (scientific) giants? Evidence from chemistry

In recent decades, Chinese researchers have become preeminent contributors to the scientific enterprise, as reflected by the number of publications originating from Chinese research institutions. China's rise in science has the potential to push forward the global frontier, but mere production of knowledge does not guarantee that others are able to build on it. In this manuscript, we study how fertile Chinese research is, as measured by citations. Using publication and citation data for elite Chemistry researchers, we show that Chinese authored articles receive only half the citations from the US compared to articles from other countries. We show that even after carefully controlling for the "quality" of Chinese research, Chinese PIs' articles receive 28% fewer citations from US researchers. Our results imply that US researchers do not build as readily on the work of Chinese researchers, relative to the work of other foreign scientists, even in a setting where Chinese scientists have long excelled