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Information costs and trade: Evidence from international electric telegraphy during the "golden age" of globalisation

Author

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  • Sean Bottomley
  • Brian D. Varian

Abstract

The development of the international telegraph network coincided with the nineteenth-century "golden age" of globalisation, but whether the former contributed to the latter is a question that has, hitherto, received only limited attention from economic historians. Fundamentally, it is a question that concerns the relationship between information-cost-reducing technology and trade. This paper introduces and utilises what is, we believe, the most comprehensive dataset of the years of international telegraphic linkages ever to have been compiled. Empirically, we analyse the effect of these telegraphic linkages on polity-specific British exports from 1849-90. Aside from intra-Empire trade flows, we find no statistically significant effect of the telegraph on British exports. Furthermore, we argue that previous estimates of the effect of the telegraph network on trade are implausibly high.

Suggested Citation

  • Sean Bottomley & Brian D. Varian, 2024. "Information costs and trade: Evidence from international electric telegraphy during the "golden age" of globalisation," CEH Discussion Papers 09, Centre for Economic History, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:hpaper:125
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    File URL: https://cbe.anu.edu.au/researchpapers/CEH/WP202409.pdf
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    References listed on IDEAS

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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