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Industrial Catching Up in the Poor Periphery 1870-1975

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  • Williamson, Jeffrey G
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    Abstract

    This paper documents industrial output and labor productivity growth around the poor periphery 1870-1975 (Latin America, the European periphery, the Middle East, South Asia, Southeast Asia and East Asia). Intensive and extensive industrial growth accelerated there over this critical century. The precocious poor periphery leaders underwent a surge and more poor countries joined their club. Furthermore, by the interwar the majority were catching up on Germany, the US and the UK, a process that accelerated even more up to 1950-1975. What explains the spread of the industrial revolution world-wide and this catching up? Productivity growth certainly made their industries more competitive in home and foreign markets, but other forces mattered as well. A falling terms of trade raised the relative price of manufactures in domestic markets, as did real exchange rate depreciation. In addition, increasingly cheap fuel and non-fuel intermediates from globally integrating markets seems to have taken resource advantages away from the European and North American leaders, and integrating world financial markets also reduced the cheap capital advantage of the leaders. However, ever-cheaper labor was not a serious cause of industrial catch up, offering little support for the Krugman-Venables (1995) model. Furthermore, tariffs did not foster industrial catch up either, but rather poor industry performance fostered high tariffs. Markets and policies mattered, not just institutions.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8335.

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    Date of creation: Apr 2011
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    Handle: RePEc:cpr:ceprdp:8335

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    Related research

    Keywords: Early Third World industrialization; history; input costs; productivity; trade policy; world markets;

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    References

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    1. David N. Weil, 1996. "Appropriate Technology and Growth," Working Papers 96-24, Brown University, Department of Economics.
    2. Pablo Astorga, 2009. "A Century of Economic Growth in Latin America," Oxford University Economic and Social History Series _075, Economics Group, Nuffield College, University of Oxford.
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    7. Yael S. Hadass & Jeffrey G. Williamson, 2001. "Terms of Trade Shocks and Economic Performance 1870-1940: Prebisch and Singer Revisited," NBER Working Papers 8188, National Bureau of Economic Research, Inc.
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    13. Blattman, Christopher & Hwang, Jason & Williamson, Jeffrey G., 2007. "Winners and losers in the commodity lottery: The impact of terms of trade growth and volatility in the Periphery 1870-1939," Journal of Development Economics, Elsevier, vol. 82(1), pages 156-179, January.
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    Cited by:
    1. Felice, Emanuele & Carreras, Albert, 2012. "When did modernization begin? Italy's industrial growth reconsidered in light of new value-added series, 1911–1951," Explorations in Economic History, Elsevier, vol. 49(4), pages 443-460.

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