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Made in America? The New World, the Old, and the Industrial Revolution

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  • Gregory Clark
  • Kevin H. O'Rourke
  • Alan M. Taylor

Abstract

For two decades, the consensus explanation of the British Industrial Revolution has placed technological change and the supply side at center stage, affording little or no role for demand or overseas trade. Recently, alternative explanations have placed an emphasis on the importance of trade with New World colonies, and the expanded supply of raw cotton it provided. We test both hypotheses using calibrated general equilibrium models of the British economy and the rest of the world for 1760 and 1850. Neither claim is supported. Trade was vital for the progress of the industrial revolution; but it was trade with the rest of the world, not the American colonies, that allowed Britain to export its rapidly expanding textile output and achieve growth through extreme specialization in response to shifting comparative advantage.
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Suggested Citation

  • Gregory Clark & Kevin H. O'Rourke & Alan M. Taylor, 2008. "Made in America? The New World, the Old, and the Industrial Revolution," American Economic Review, American Economic Association, vol. 98(2), pages 523-528, May.
    • Handle: RePEc:aea:aecrev:v:98:y:2008:i:2:p:523-28
    Note: DOI: 10.1257/aer.98.2.523
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    References listed on IDEAS

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    1. Gregory Clark, 2005. "The Condition of the Working Class in England, 1209-2004," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1307-1340, December.
    2. Ronald Findlay & Kevin H. O'Rourke, 2007. "Power and Plenty: Trade, War and the World Economy in the Second Millennium (Preface)," Trinity Economics Papers tep0107, Trinity College Dublin, Department of Economics.
    3. Ronald Findlay & Kevin H. O'Rourke, 2007. "Introduction to Power and Plenty: Trade, War, and the World Economy in the Second Millennium," Introductory Chapters, in: Power and Plenty: Trade, War, and the World Economy in the Second Millennium, Princeton University Press.
    4. Gregory Clark, 2005. "The Condition of the Working Class in England, 1209-2004," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1307-1340, December.
    5. Joel Mokyr, 2005. "The Intellectual Origins of Modern Economic Growth," Springer Books, in: Alberto Quadrio Curzio & Marco Fortis (ed.), Research and Technological Innovation, pages 17-80, Springer.
    6. Mokyr, Joel, 2005. "The Intellectual Origins of Modern Economic Growth," The Journal of Economic History, Cambridge University Press, vol. 65(2), pages 285-351, June.
    7. Clark, Gregory & Jacks, David, 2007. "Coal and the Industrial Revolution, 1700–1869," European Review of Economic History, Cambridge University Press, vol. 11(1), pages 39-72, April.
    8. Frank Geary & Tom Stark, 2004. "Trends in real wages during the industrial revolution: a view from across the Irish Sea," Economic History Review, Economic History Society, vol. 57(2), pages 362-395, May.
    9. Harley, C. Knick & Crafts, N.F.R., 2000. "Simulating the Two Views of the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 60(3), pages 819-841, September.
    10. Ronald Findlay & Kevin H. O'Rourke, 2007. "Preface to Power and Plenty: Trade, War, and the World Economy in the Second Millennium," Introductory Chapters, in: Power and Plenty: Trade, War, and the World Economy in the Second Millennium, Princeton University Press.
    11. Mokyr, Joel, 1977. "Demand vs. Supply in the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 37(4), pages 981-1008, December.
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    Cited by:

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    2. Jonathan Hersh & Joachim Voth, 2009. "Sweet diversity: Colonial goods and the rise of European living standards after 1492," Economics Working Papers 1163, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2011.
    3. Ricardo Arguello C.a, 2009. "Latin America and the international economic CRISIS: THE TRADE CHANNEL," Economía, Gestión y Desarrollo 9340, Universidad Javeriana - Cali.
    4. Ferreira, Pedro Cavalcanti & Pessôa, Samuel de Abreu & Santos, Marcelo Rodrigues dos, 2014. "Globalization and the Industrial Revolution (revised)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 762, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    5. Nuno Palma & André C. Silva, 2024. "Spending A Windfall," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 283-313, February.
    6. Meissner, Christopher M., 2014. "Growth from Globalization? A View from the Very Long Run," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 8, pages 1033-1069, Elsevier.
    7. David Harvey & Neil Kellard & Jakob Madsen & Mark Wohar, 2012. "Trends and Cycles in Real Commodity Prices: 1650-2010," CEH Discussion Papers 010, Centre for Economic History, Research School of Economics, Australian National University.

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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