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The Wind of Change: Maritime Technology, Trade and Economic Development

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  • Luigi Pascali

Abstract

The 1870-1913 period marked the birth of the first era of trade globalization. How did this tremendous increase in trade affect economic development? This work isolates a causality channel by exploiting the fact that the steamship produced an asymmetric change in trade distances among countries. Before the invention of the steamship, trade routes depended on wind patterns. The introduction of the steamship in the shipping industry reduced shipping costs and time in a disproportionate manner across countries and trade routes. Using this source of variation and a completely novel set of data on shipping times, trade, and development that spans the great majority of the world between 1850 and 1900, I find that 1) the adoption of the steamship was the major reason for the first wave of trade globalization, 2) only a small number of countries that were characterized by more inclusive institutions benefited from globalization, and 3) globalization exerted a negative effect on both urbanization rates and economic development in most other countries.

Suggested Citation

  • Luigi Pascali, 2014. "The Wind of Change: Maritime Technology, Trade and Economic Development," Working Papers 764, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:764
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    Cited by:

    1. Michel Fouquin & Jules Hugot, 2016. "Back to the Future: International Trade Costs and the Two Globalizations," VNIVERSITAS ECONÓMICA 015130, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    2. Gupta, Bishnupriya, 2018. "Falling Behind and Catching up: India’s Transition from a Colonial Economy," CAGE Online Working Paper Series 355, Competitive Advantage in the Global Economy (CAGE).
    3. Christian K. Darko & Giovanni Occhiali & Enrico Vanino, 2018. "The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa," Working Papers 2018.14, Fondazione Eni Enrico Mattei.
    4. Gino Gancia, 2014. "Globalization and Political Structure," 2014 Meeting Papers 644, Society for Economic Dynamics.
    5. Réka Juhász & Claudia Steinwender, 2018. "Spinning the Web: The Impact of ICT on Trade in Intermediates and Technology Diffusion," NBER Working Papers 24590, National Bureau of Economic Research, Inc.
    6. L. De Benedictis & V. Licio & AM. Pinna, 2018. "The long-term effects of the historical Roman road network: trade costs of Italian provinces," Working Paper CRENoS 201801, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    7. Biermann, Marcus, 2016. "Trade and the Size Distribution of Firms: Evidence from the German Empire," Annual Conference 2016 (Augsburg): Demographic Change 145879, Verein für Socialpolitik / German Economic Association.
    8. Filipe Campante & David Yanagizawa-Drott, 2016. "Long-Range Growth: Economic Development in the Global Network of Air Links," NBER Working Papers 22653, National Bureau of Economic Research, Inc.
    9. Francisco Buera, 2014. "The Global Diffusion of Ideas," 2014 Meeting Papers 1099, Society for Economic Dynamics.
    10. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
    11. Charles Angelucci & Simone Meraglia & Nico Voigtländer, 2017. "The Medieval Roots of Inclusive Institutions: From the Norman Conquest of England to the Great Reform Act," NBER Working Papers 23606, National Bureau of Economic Research, Inc.
    12. A.Kerem Cosar & Banu Demir, 2017. "Shipping inside the Box: Containerization and Trade," Working Papers DP-2016-37, Economic Research Institute for ASEAN and East Asia (ERIA).
    13. Marcus Biermann, 2016. "Trade and the Size Distribution of Firms: Evidence from the German Empire," CEP Discussion Papers dp1450, Centre for Economic Performance, LSE.
    14. Buera, Francisco J. & Oberfield, Ezra, 2015. "The Global Diffusion of Ideas," Working Paper Series WP-2016-13, Federal Reserve Bank of Chicago.
    15. Gupta, Bishnupriya, 2018. "Falling Behind and Catching up : India’s Transition from a Colonial Economy," The Warwick Economics Research Paper Series (TWERPS) 1147, University of Warwick, Department of Economics.
    16. Guido, Friebel & Miriam, Manchin & Mariapia, Mendola & Giovanni, Prarolo, 2017. "Human Smuggling and Intentions to Migrate: Global Evidence from a Supply Shock along Africa-to-Europe Migration Routes," Working Papers 375, University of Milano-Bicocca, Department of Economics, revised 06 Dec 2017.
    17. Michel Fouquin & Jules Hugot, 2016. "Two Centuries of Bilateral Trade and Gravity data: 1827-2014," VNIVERSITAS ECONÓMICA 015129, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    18. Fenske, James & Kala, Namrata, 2017. "Linguistic Distance and Market Integration in India," CAGE Online Working Paper Series 331, Competitive Advantage in the Global Economy (CAGE).
    19. Salamat Ali & Richard Kneller & Chris Milner, 2017. "Market-specific trade costs and firm dynamics in Pakistan: Evaluating the US integrated cargo containers control programme," Discussion Papers 2017-02, University of Nottingham, GEP.
    20. Biermann, Marcus, 2016. "Trade and the size distribution of firms: evidence fromthe German Empire," LSE Research Online Documents on Economics 69018, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    steamship; gravity; globalization;

    JEL classification:

    • F1 - International Economics - - Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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