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Globalization and the Industrial Revolution

  • Ferreira, Pedro Cavalcanti
  • Pessoa, Samuel de Abreu
  • Santos, Marcelo Rodrigues dos

This paper argues that trade specialization played an indispensable role in supporting the Industrial Revolution, allowing the economy to shift resources to the manufacture without facing food and raw materials shortage. In our arti cial economy, there are two sectors agriculture and manufacture and the economy is initially closed and under a Malthusian trap. In this economy the industrial revolution entails a transition towards a dynamic Heckscher-Ohlin economy. The model reproduces the main stylized facts of the transition to modern growth and globalization. We show that two-sectors closed-economy models cannot explain the fall in the value of land relative to wages observed in the 19th century and that the transition in this case is much longer than that observed allowing for trade.

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File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/7701/5/FerreiraRI2010.pdf
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Paper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 708.

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Date of creation: 21 Oct 2010
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Handle: RePEc:fgv:epgewp:708
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  1. 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.
  2. Allen, Robert C., 2000. "Economic structure and agricultural productivity in Europe, 1300 1800," European Review of Economic History, Cambridge University Press, vol. 4(01), pages 1-25, April.
  3. Gregory Clark, Kevin H. O'Rourke and Alan M. Taylor, 2008. "Made in America? The New World, the Old, and the Industrial Revolution," The Institute for International Integration Studies Discussion Paper Series iiisdp251, IIIS.
  4. Oded Galor, 2006. "The Demographic Transition," Working Papers 2006-24, Brown University, Department of Economics.
  5. Desmet, Klaus & Parente, Stephen, 2009. "The Evolution of Markets and the Revolution of Industry: A Quantitative Model of England's Development, 1300-2000," CEPR Discussion Papers 7290, C.E.P.R. Discussion Papers.
  6. 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.
  7. Jack A. Goldstone, 2007. "Jack Goldstone on Gregory Clark, A Farewell to Alms: A Brief Economic History of the World," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 8(3), pages 207-225, July.
  8. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters, in: A Farewell to Alms: A Brief Economic History of the World Princeton University Press.
  9. Kevin H. O'Rourke & Jeffrey G. Williamson, 2000. "When Did Globalization Begin?," NBER Working Papers 7632, National Bureau of Economic Research, Inc.
  10. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics.
  11. Liwa Rachel Ngai, 2000. "Barriers and the Transition to Modern Growth," Econometric Society World Congress 2000 Contributed Papers 1578, Econometric Society.
  12. 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(03), pages 819-841, September.
  13. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521687850, December.
  14. 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.
  15. Kevin O’rourke & Jeffrey Williamson, 2005. "From Malthus to Ohlin: Trade, Industrialisation and Distribution Since 1500," Journal of Economic Growth, Springer, vol. 10(1), pages 5-34, 01.
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