Foreign Trade Was Not an Engine of Growth
Trade reshuffles. No wonder, then, that it doesn’t work as an engine of growth—not for explaining the scale of growth that overcame the West and then the Rest 1800 to the present. Yet many historians, such as Walt Rostow or Robert Allen or Joseph Inikori, have put foreign trade at the center of their accounts. Yet the Rest had been vigorously trading in the Indian Ocean long before the Europeans got there—indeed, that’s why the West wanted to get there. Trade certainly set the prices that British industrialists faced, such as the price of wheat or the interest rate. But new trade does not put people to work, unless they start unemployed. If they are, then any source of demand, such as the demand for domestic service, would be as important as the India trade. Foreign trade is not a net gain, but a way of producing importables at the sacrifice of exportables. The Harberger point implies that static gains from trade are small beside the 1500% of growth to be explained, or even the 100% in the first century in Britain. Trade is anyway too old and too widespread to explain a uniquely European—even British—event. One can appeal to “dynamic” effects, but these too can be shown to be small, even in the case of the gigantic British cotton textile industry. And if small causes lead to large consequences, the model is instable, and any old thing can cause it to tip. Ronald Findlay and Kevin O’Rourke favor foreign trade on the argument that power led to plenty. But domination is not the same thing as innovation. In short, the production possibility curve did not move out just a little, as could be explained by trade or investment or reshuffling. It exploded, and requires an economics of discovery, not an economics of routine exchanges of cotton textiles for tea.
|Date of creation:||07 Jul 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chalkley, M. & Malcomson, J.M., 2001.
"Cost Sharing in Health Service Provision: An Empirical Assessment of Cost Savings,"
Economics Series Working Papers
9969, University of Oxford, Department of Economics.
- Chalkley, Martin & Malcomson, James M., 2002. "Cost sharing in health service provision: an empirical assessment of cost savings," Journal of Public Economics, Elsevier, vol. 84(2), pages 219-249, May.
- Guillaume Daudin, 2008. "Domestic Trade and Market Size in Late Eighteenth-Century France," Economics Series Working Papers 69, University of Oxford, Department of Economics.
- N. F. R. Crafts & C. Knick Harley, 2002.
"Precocious British Industrialization: A General Equilibrium Perspective,"
UWO Department of Economics Working Papers
200213, University of Western Ontario, Department of Economics.
- Nicholas Crafts & C. Knick Harley, 2002. "Precocious British industrialization: a general equilibrium perspective," Economic History Working Papers 22368, London School of Economics and Political Science, Department of Economic History.
- Guillaume Daudin, 2005. "Commerce et prospérité : la France au XVIIIe siècle," Sciences Po publications 19, Sciences Po.
- Daudin, Guillaume, 2010.
"Domestic Trade and Market Size in Late-Eighteenth-Century France,"
The Journal of Economic History,
Cambridge University Press, vol. 70(03), pages 716-743, September.
- Guillaume Daudin, 2007. "Domestic trade and market size in late eighteenth century France," Working Papers hal-01065991, HAL.
- Guillaume Daudin, 2007. "Domestic trade and market size in late eighteenth century France," Sciences Po publications n°2007-35, Sciences Po.
- Guillaume Daudin, 2008. "Domestic Trade and Market Size in Late Eighteenth-Century France," Oxford University Economic and Social History Series _069, Economics Group, Nuffield College, University of Oxford.
- Guillaume Daudin, 2007. "Domestic Trade and Market Size in Late Eighteen Century France," Documents de Travail de l'OFCE 2007-35, Observatoire Francais des Conjonctures Economiques (OFCE).
- Ronald Findlay & Kevin H. O'Rourke, 2007.
"Power and Plenty: Trade, War and the World Economy in the Second Millennium (Preface),"
The Institute for International Integration Studies Discussion Paper Series
- 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.
- Temin, Peter, 1997. "Two Views of the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 57(01), pages 63-82, March.
- Philip Richardson, 1989. "The structure of capital during the industrial revolution revisited: two case studies from the cotton textile industry," Economic History Review, Economic History Society, vol. 42(4), pages 484-503, November.
- Maxine Berg & Pat Hudson, 1994. "Growth and change: a comment on the Crafts-Harley view of the industrial revolution," Economic History Review, Economic History Society, vol. 47(1), pages 147-149, 02.
- repec:oxf:wpaper:69.2 is not listed on IDEAS
- Williamson, Jeffrey G, 1987. "Did English Factor Markets Fail during the Industrial Revolution?," Oxford Economic Papers, Oxford University Press, vol. 39(4), pages 641-78, December.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:19723. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.