Jacks, David S. (David Steven), Meissner, Christopher M. (Christopher Michael) and Novy, Dennis (2007) Trade costs in the first wave of Globalization. Working Paper. Cambridge, Massachusetts: National Bureau of Economic Research. (Working paper series (National Bureau of Economic Research)).

PDF WRAP_Novy_firstwave.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (367Kb)

Abstract

What drives globalization today and in the past? We employ a new micro-founded measure of bilateral trade costs based on a standard model of trade in differentiated goods to address this question. These trade costs gauge the difference between observed bilateral trade and frictionless trade. They comprise tariffs, transportation costs and all other factors that impede international trade but which are inherently difficult to observe. Trade costs fell on average by ten to Þfteen percent between 1870 and 1913. We also use this measure to decompose the growth of global trade over that period and Þnd that roughly 44 percent of the global trade boom can be explained by reductions in trade costs; the remaining 56 percent is attributable to economic expansion.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Globalization -- Economic aspects, International trade -- Research, International trade -- Econometric models, International economic relations -- History -- 19th century, International economic relations -- History -- 20th century
Series Name:	Working paper series (National Bureau of Economic Research)
Publisher:	National Bureau of Economic Research
Place of Publication:	Cambridge, Massachusetts
Date:	8 August 2007
Number:	No.12602
Number of Pages:	34
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Working paper issued October 2006; revised 8 August 2007.
Funder:	Social Sciences and Humanities Research Council of Canada (SSHRC)
References:	Aldcroft, Derek H., The development of British industry and foreign competition, 1875-1914: Studies in industrial enterprise, London: George Allen and Unwin, 1968. Anderson, James E., “A Theoretical Foundation for the Gravity Equation,” American Economic Review, 1979, 69 (1), 106—116. and Eric van Wincoop, “Gravity with Gravitas: A Solution to the Border Puzzle,” American Economic Review, March 2003, 93 (1), 170—192. and , “Trade Costs,” Journal of Economic Literature, September 2004, 42, 691—751. Baier, Scott L. and Jeffrey H. Bergstrand, “The Growth of World Trade: Tariffs, Transport Costs, and Income Similarity,” Journal of International Economics, 2001, 53, 1—27. Board of Trade, Statistical Abstract for the United Kingdom, London: HMSO, various years. Broda, Christian M. and David E.Weinstein, “Globalization and the Gains from Variety,” Quarterly Journal of Economics, 2006, 121, 541—585. Clemens, Michael and Jeffrey G. Williamson, “Wealth Bias in the First Global Capital Market Boom,” Economic Journal, April 2004, 114, 304—337. Degrève, Daniel, Le Commerce Extérieur de la Belgique, 1830-1913-1939, Présentation Critique des Données Statistiques 1982. Direction générale des douanes, Tableau général du commerce de la France avec ses colonies et les puissances étrangères, Paris: Imprimerie Nationale, various years. Eaton, Jonathan and Samuel Kortum, “Technology, Geography and Trade,” Econometrica, 2002, 70 (5), 1741—1779. Estevadeordal, Antoni, Brian Frantz, and Alan M. Taylor, “The Rise and Fall of World Trade, 1870-1939,” Quarterly Journal of Economics, 2003, 118, 359—407. Evenett, Simon J. and Wolfgang Keller, “On Theories Explaining the Success of the Gravity Equation,” Journal of Political Economy, 2002, 110 (2), 281—316. Federico, Giovanni and Karl Gunnar Persson, “Market Integration and Convergence in the World Wheat Market, 1800-2000,” in Kevin H. O’Rourke Tim Hatton and Alan M. Taylor, eds., The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson, Cambridge, MA: MIT Press, 2007, pp. 87—114. Flandreau, Marc and Mathilde Maurel, “Monetary Union, Trade Integration and Business Fluctuations in 19th Century Europe: Just Do It,” Working Paper 3087, CEPR November 2001. Frieden, Jeffry A., Global Capitalism: Its Fall and Rise in the Twentieth Century, New York: W.W. Norton, 2006. Harley, C. Knick, “Ocean Freight Rates and Productivity, 1740-1913,” Journal of Economic History, 1988, 48, 851—876. Irwin, Douglas A., “Explaining America’s Surge in Manufactured Exports, 1880-1913,” Review of Economics and Statistics, May 2003, 82 (2), 364—376. Jacks, David S., “Intra- and International Commodity Market Integration in the Atlantic Economy, 1800-1913,” Explorations in Economic History, 2005, 42. , “What Drove Nineteenth Century Commodity Market Integration?,” Explorations in Economic History, 2006, 42 (3), 383—412. James, Harold, The End of Globalization, Cambridge: Cambridge University Press, 2001. Krugman, Paul, “Scale Economies, Product Differentiation and the Pattern of Trade,” American Economic review, 1980, 70, 950—959. López-Córdova, J. Ernesto and Christopher M. Meissner, “Exchange Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era,” American Economic Review, 2003, 93 (1), 344—353. Maddison, Angus, Monitoring the World Economy 1820-1992, Paris: Development Centre, OECD, 1995. Meissner, Christopher M., “A New World Order: Explaining the International Diffusion of the Gold Standard, 1870-1913,” Journal of International Economics, 2005, 66 (2), 385—406. Mitchell, Brian R., International Historical Statistics. Africa, Asia & Oceania 1750-1988, New York: Stockton Press, 2003a. , International Historical Statistics. Europe 1750-1988, New York: Stockton Press, 2003b. , International Historical Statistics. The Americas 1750-1988, New York: Stockton Press, 2003c. Mitchener, Kris J. and Marc Weidenmier, “Trade and Empire,” 2007. Mimeo, Santa Clara University. Novy, Dennis, “Is the Iceberg Melting Less Quickly? International Trade Costs After World War II,” Mimeo. University of Warwick, 2007. Obstfeld, Maurice and Alan M. Taylor, Global Capital Markets: Integration, Crisis and Growth, Cambridge: Cambridge University Press, 2004. and Kenneth Rogoff, “Exchange Rate Dynamics Redux,” Journal of Political Economy, 1995, 103, 624—606. and , “The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?,” in Ben S. Bernanke and Kenneth Rogoff, eds., NBER Macroeconomics Annual, Cambridge: MIT Press, 2000. Officer, Lawrence H. and Samuel H. Williamson, Purchasing Power of Money in the United States from 1774 to 2006, 2007. Downloaded from http://MeasuringWorth.com. O’Rourke, Kevin H. and Jeffrey G. Williamson, “Late Nineteenth-Century Anglo-American Factor-Price Convergence: Were Heckscher and Ohlin Right?,” Journal of Economic History, December 1994, 54 (4), 892—916. and , Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, Cambridge, Massachusetts and London: The MIT Press, 1999. and Ronald Findlay, “Commodity Market Integration, 1500-2000,” in Alan M. Taylor Michael D. Bordo and Jeffrey G. Williamson, eds., Globalization in Historical Perspective, Chicago: The University of Chicago Press, 2003, chapter 1, pp. 13—62. Ritzmann-Blickenstorfer, H., Statistique Historique de la Suisse, Zurich: Chronos, 1996. Samuelson, Paul, “The Transfer Problem and Transport Costs: Analysis of Effects of Trade Impediments,” Economic Journal, 1954, 64, 264—289. Saul, S.B., Studies in British Overseas Trade, 1870-1914, Liverpool: Liverpool University Press, 1967. Sessional Papers, Trade of the British Empire and foreign competition: despatch from Mr Chamberlain to the Governors of the Colonies and the High Commissioner of Cyprus and the replies thereto, Vol. lx of Parliamentary Papers, HMSO, 1897. Shah Mohammed, S. I. and Williamson, Jeffrey G., “Freight Rates and Productivity Gains in British Tramp Shipping, 1869-1950,” Explorations in Economic History, 2004, 41, 172—203. Stockman, Alan C. and Linda Tesar, “Tastes and Technology in a Two-Country Model of the Business Cycle: Explaining International Comovements,” American Economic Review, 1995, 85 (1), 168—185. United States Department of Commerce, Statistical abstract of the United States: The National Data Book, Washington: US Government Printing Office, various years. Whalley, John and Xian Xin, “Regionalization, Changes in Home Bias, and the Growth of World Trade,” Working Paper 13023, National Bureau of Economic Research April 2007. Williamson, Jeffrey G., “Explaining World Tariffs, 1870-1913: Stolper-Samuelson, Strategic Tariffs, and State Revenues,” in H. Lindgren R. Findlay, H. Henriksson and M. Lundhal, eds., Eli Heckscher, International Trade, and Economic History, Cambridge, MA: MIT Press, 2006, pp. 199—228.
URI:	http://wrap.warwick.ac.uk/id/eprint/3377

Request changes to a record

Actions (login required)

View Item