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An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan

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Listed author(s):
  • Daniel M. Bernhofen
  • John C. Brown

Abstract

We provide an empirical assessment of the comparative advantage gains from trade argument. We use Japan's nineteenth-century opening up to world commerce as a natural experiment to answer the following counterfactual: "By how much would real income have had to increase in Japan during its final autarky years of 1851-1853 to afford the consumption bundle the economy could have obtained if it were engaged in international trade during that period?" Using detailed historical data on trade flows, autarky prices, and Japan's real GDP, we obtain upper bounds on the gains from trade of about 8 to 9 percent of Japan's GDP.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0002828053828491
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File URL: http://www.aeaweb.org/aer/data/mar05_data_bernhofen.zip
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 1 (March)
Pages: 208-225

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Handle: RePEc:aea:aecrev:v:95:y:2005:i:1:p:208-225
Note: DOI: 10.1257/0002828053828491
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  1. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394 Elsevier.
  2. Douglas A. Irwin, 2001. "The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807-1809," NBER Working Papers 8692, National Bureau of Economic Research, Inc.
  3. Huber, J Richard, 1971. "Effect on Prices of Japan's Entry into World Commerce after 1858," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 614-628, May-June.
  4. Donald R. Davis & David E. Weinstein, 2001. "The Factor Content of Trade," NBER Working Papers 8637, National Bureau of Economic Research, Inc.
  5. O Rourke, Kevin H. & Williamson, Jeffrey G., 2002. "When did globalisation begin?," European Review of Economic History, Cambridge University Press, vol. 6(01), pages 23-50, April.
  6. Daniel M. Bernhofen & John C. Brown, 2004. "A Direct Test of the Theory of Comparative Advantage: The Case of Japan," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 48-67, February.
  7. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics,in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier.
  8. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
  9. Crawcour, E S & Yamamura, Kozo, 1970. "The Tokugawa Monetary System: 1787-1868," Economic Development and Cultural Change, University of Chicago Press, vol. 18(4), pages 489-518, Part I Ju.
  10. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  11. Harley, C. Knick, 1982. "British Industrialization Before 1841: Evidence of Slower Growth During the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 42(02), pages 267-289, June.
  12. C. Knick Harley, 1998. "Cotton Textile Prices and the Industrial Revolution," Economic History Review, Economic History Society, vol. 51(1), pages 49-83, 02.
  13. Harrison, Glenn W & Rutherford, Thomas F & Tarr, David G, 1997. "Quantifying the Uruguay Round," Economic Journal, Royal Economic Society, vol. 107(444), pages 1405-1430, September.
  14. repec:rus:hseeco:122203 is not listed on IDEAS
  15. Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-957, October.
  16. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1.
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