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The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why

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  • Kevin H. O'Rourke
  • Jeffrey G. Williamson

Abstract

There are two contrasting views of pre-19th century trade and globalization. First, there are the world history scholars like Andre Gunder Frank who attach globalization 'big bang' significance to the dates 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an end run around Africa and snatches monopoly rents away from the Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Second, there is the view that the world economy was fragmented and completely de- globalized before the 19th century. This paper offers a novel way to discriminate between these two competing views and we use it to show that there is no evidence that the Ages of Discovery and Commerce had the economic impact on the global economy that world historians assign to them, while there is plenty of evidence of a very big bang in the 19th century. The test involves a close look at the connections between factor prices, commodity prices and endowments world wide.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7411.

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Date of creation: Nov 1999
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Publication status: published as Findlay, R., L. Jonung and M. Lundahl (eds.) Bertil Ohlin: A Centennial Celebration 1899-1999. MIT Press, 2002.
Handle: RePEc:nbr:nberwo:7411

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  1. Maurice Obstfeld & Alan M. Taylor, 1997. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," NBER Working Papers 5960, National Bureau of Economic Research, Inc.
  2. Maurice Obstfeld, 1993. "International Capital Mobility in the 1990s," NBER Working Papers 4534, National Bureau of Economic Research, Inc.
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  4. Huber, J Richard, 1971. "Effect on Prices of Japan's Entry into World Commerce after 1858," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 79(3), pages 614-28, May-June.
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  9. O'Rourke, Kevin H & Taylor, Alan M & Williamson, Jeffrey G, 1996. "Factor Price Convergence in the Late Nineteenth Century," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 499-530, August.
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  17. repec:fth:coluec:491 is not listed on IDEAS
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Cited by:
  1. Varma, Sumati & Bagoria, Mukesh, 2012. "Diasporas and international entrepreneurship – evidence from the Indian IT industry," MPRA Paper 47207, University Library of Munich, Germany.
  2. Federico Mandelman & Andrei Zlate, 2010. "Immigration, remittances and business cycles," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 998, Board of Governors of the Federal Reserve System (U.S.).
  3. Ekeland, Ivar & Guesnerie, Roger, 2010. "The geometry of global production and factor price equalisation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 666-690, September.
  4. Rassekh, Farhad, 2010. "Is Stolper-Samuelson dangerous and FPE a failure?," International Review of Economics & Finance, Elsevier, Elsevier, vol. 19(4), pages 555-561, October.
  5. Jeffrey G. Williamson, 2000. "Land, Labor and Globalization in the Pre-Industrial Third World," NBER Working Papers 7784, National Bureau of Economic Research, Inc.
  6. repec:hal:wpaper:halshs-00589105 is not listed on IDEAS

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