The Growing Dependence of Britain on Trade during the Industrial Revolution
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.
The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. O'Rourke would like to thank the European Research Council for its financial support, under its Advanced Investigator Grant scheme, contract number 249546.
Alan M. Taylor
Alan M. Taylor has served as an author, consultant or speaker for various policy making institutions and financial sector firms. He served as a Senior Advisor to Morgan Stanley in 2010-11.
Gregory Clark & Kevin HjortshÃ¸j O'Rourke & Alan M. Taylor, 2014. "The growing dependence of Britain on trade during the Industrial Revolution," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 62(2), pages 109-136, June. citation courtesy of