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Globalization and the Industrial Revolution

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  • Pedro Cavalcanti Ferreira
  • Samuel Pessôa
  • Marcelo Rodrigues dos Santos

Abstract

This paper argues that trade specialization played an indispensable role in supporting the Industrial Revolution. We calibrate a two-good and two-sector overlapping generations model to Englandís historical development and investigate how much different Englandís development path would have been if it had not globalized in 1840. We show that the two-sectors closed economy model cannot explain the fall in the value of land relative to wages observed in the 19th century and that, absent globalization, the British economy would never have escaped its Malthusian trap.

Suggested Citation

  • Pedro Cavalcanti Ferreira & Samuel Pessôa & Marcelo Rodrigues dos Santos, 2011. "Globalization and the Industrial Revolution," Business and Economics Working Papers 146, Unidade de Negocios e Economia, Insper.
    • Handle: RePEc:aap:wpaper:146
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    References listed on IDEAS

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    1. Klaus Desmet & Stephen Parente, 2012. "The evolution of markets and the revolution of industry: a unified theory of growth," Journal of Economic Growth, Springer, vol. 17(3), pages 205-234, September.
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