NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Growing Dependence of Britain on Trade during the Industrial Revolution

Gregory Clark, Kevin Hjortshøj O'Rourke, Alan M. Taylor

NBER Working Paper No. 19926
Issued in February 2014
NBER Program(s):   DAE   EFG   ITI

Many previous studies of the role of trade during the British Industrial Revolution have found little or no role for trade in explaining British living standards or growth rates. We construct a three-region model of the world in which Britain trades with North America and the rest of the world, and calibrate the model to data from the 1760s and 1850s. We find that while trade had only a small impact on British welfare in the 1760s, it had a very large impact in the 1850s. This contrast is robust to a large range of parameter perturbations. Biased technological change and population growth were key in explaining Britain’s growing dependence on trade during the Industrial Revolution.

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Document Object Identifier (DOI): 10.3386/w19926

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