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

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  • Broadberry, Stephen N
  • Gupta, Bishnupriya

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 labour-intensive Indian production methods. The growth in British labour productivity that resulted from the search for labour-saving technological progress meant that unit labour 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5183.

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Date of creation: Aug 2005
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Handle: RePEc:cpr:ceprdp:5183

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Keywords: competitive advantage; cotton; India; Lancashire; unit labour costs;

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  1. Irfan Habib, 1980. "The Technology and Economy of Mughal India," The Indian Economic & Social History Review, , vol. 17(1), pages 1-34, January.
  2. Harley, C. Knick, 2001. "The Antebellum Tariff: Different Products Or Competing Sources? A Comment On Irwin And Temin," The Journal of Economic History, Cambridge University Press, vol. 61(03), pages 799-805, September.
  3. Carole Shammas, 1994. "The decline of textile prices in England and British America prior to industrialization," Economic History Review, Economic History Society, vol. 47(3), pages 483-507, 08.
  4. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 563-606, May.
  5. S. Arasaratnam, 1980. "Weavers, Merchants and Company: The Handloom Industry in Southeastern India 1750-1790," The Indian Economic & Social History Review, , vol. 17(3), pages 257-281, July.
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  7. Patrick O'Brien & Trevor Griffiths & Philip Hunt, 1991. "Political components of the industrial revolution: Parliament and the English cotton textile industry, 1660-1774," Economic History Review, Economic History Society, vol. 44(3), pages 395-423, 08.
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  9. Gary Saxonhouse & Gavin Wright, 1987. "Stubborn mules and vertical integration: the disappearing constraint?," Economic History Review, Economic History Society, vol. 40(1), pages 87-94, 02.
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Cited by:
  1. David Mayer Foulkes., 2007. "Subdesarrollo y globalización," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 155-192, May.
  2. Nico Voigtländer & Hans-Joachim Voth, 2006. "Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution," Journal of Economic Growth, Springer, vol. 11(4), pages 319-361, December.

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