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Globalization and the Industrial Revolution

Listed author(s):
  • 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 FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) with number 708.

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Date of creation: 21 Oct 2010
Handle: RePEc:fgv:epgewp:708
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  1. 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.
  2. Ngai, L. Rachel, 2004. "Barriers and the transition to modern growth," Journal of Monetary Economics, Elsevier, vol. 51(7), pages 1353-1383, October.
  3. Galor, Oded, 2006. "The Demographic Transition," MPRA Paper 76646, University Library of Munich, Germany.
  4. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 129-173.
  5. 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.
  6. 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.
  7. O Rourke, Kevin H. & Williamson, Jeffrey G., 2002. "When did globalisation begin?," European Review of Economic History, Cambridge University Press, vol. 6(01), pages 23-50, April.
  8. 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.
  9. 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.
  10. 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.
  11. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273.
  12. 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.
  13. 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.
  14. 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.
  15. 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.
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