The Periphery’s Terms of Trade in the Nineteenth Century: A Methodological Problem Revisited

Francis, Joseph A. (2014): The Periphery’s Terms of Trade in the Nineteenth Century: A Methodological Problem Revisited.

Abstract

There is a major downward bias in the trend of most existing estimates of the periphery’s nineteenth-century terms of trade. By using prices from the North Atlantic core as proxies for prices in the peripheral countries themselves, historians ignore the dramatic price convergence that took place during the nineteenth century. This has been reflected in Jeffrey Williamson’s recent work. Measured correctly, the periphery’s nineteenth-century terms-of-trade boom would appear considerably longer, greater, and more widespread than Williamson has suggested. His grand narrative about the relation between globalisation and the ‘great divergence’ would therefore be greatly reinforced. Many of the details of his narrative would, however, need to be revised. This is illustrated by the case of India.

• Item Type: MPRA Paper
• Language: English
• Keywords: terms of trade; periphery; nineteenth century; price convergence.
• Subjects: C - Mathematical and Quantitative Methods > C0 - General; F - International Economics > F6 - Economic Impacts of Globalization; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N10 - General, International, or Comparative

References

Baba, M., and M. Tatemoto, ‘Foreign Trade and Economic Growth in Japan: 1858-1937’, in L. Klein and K. Ohkawa, eds., Economic Growth: The Japanese Experience since the Meiji Era, Homewood, 1968, pp. 162-96.

Bairoch, P., The Economic Development of the Third World since 1900, London, (1977) 2006.

Baptista, A., Bases cuantitativas de la economía venezolana 1930-1995, 2nd ed., Caracas, 1997.

Blattman, C., J. Hwang, and J.G. Williamson, ‘The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change’, NBER Working Paper 10600, 2004.

Blattman, C., J. Hwang, and J.G. Williamson, ‘Winners and Losers in the Commodity Lottery: The Impact of Terms of Trade Growth and Volatility in the Periphery 1870-1939’, Journal of Development Economics, 82:1, 2007, pp. 156-79.

Braun, J., M. Braun, I. Briones, J. Díaz, R. Lüders, and G. Wagner, ‘Economía chilena 1810-1995: Estadísticas históricas’, Documento de Trabajo 187, Instituto de Economía, Pontificia Universidad Católica de Chile, 2000.

Chilosi, D., and G. Federico, ‘Asian Globalizations: Market Integration, Trade and Economic Growth, 1800-1938’, Economic History Working Paper 183, London School of Economics and Political Science, 2013.

Clavel, C., ‘Los términos de intercambio en el largo plazo, 1860-1900’, paper presented at the Encuentro Anual de Economistas de Chile, 1990.

Clemens, M.A., and J.G. Williamson, ‘Wealth Bias in the First Global Capital Market Boom, 1870-1913’, Economic Journal, 114:495, 2004, pp. 304-37.

Clingingsmith, D., and J.G. Williamson, ‘Deindustrialization in 18th and 19th Century India: Mughal Decline, Climate Shocks and British Industrial Ascent’, Explorations in Economic History, 45:3, 2008, pp. 209-34.

Crafts, N.F.R., ‘Book Review Feature: Trade and Poverty: When the Third World Fell Behind’, Economic Journal, 123, 2013, pp. F193-97.

Diakosavvas, D., and P.L. Scandizzo, ‘Trends in the Terms of Trade of Primary Commodities, 1900-1982: The Controversy and Its Origins’, Economic Development and Cultural Change, 39:2, 1991, pp. 231-64.

Di Tella, G., and M. Zymelman, Las etapas del desarrollo económico argentino, Buenos Aires, 1973.

Dobado González, R., A. Gómez Galvarriato, and J.G. Williamson, ‘Mexican Exceptionalism: Globalization and Deindustrialization, 1750-1877’, Journal of Economic History, 68:3, 2008, pp. 758-811.

Economic Commission for Latin America (ECLA), Economic Survey of Latin America 1949, New York, 1951.

Economist, ‘Commercial History’, supplement, various years.

Ellsworth, P.T., ‘The Terms of Trade Between Primary Producing and Industrial Countries’, Inter-American Economic Affairs, 10:1, 1956, pp. 47-65.

Federico, G., S. Natoli, G. Tattara, and M. Vasta, Il commercio estero italiano 1862-1950, Rome, 2011.

Federico, G., and M. Vasta, ‘Was Industrialization an Escape from the Commodity Lottery? Evidence from Italy, 1861-1940’, Dipartimento di Economia Politica Quaderno 573, Università degli Studi di Siena, 2009.

Ferreres, O.J., Dos siglos de economía argentina, 1810-2004: Historia argentina en cifras, Buenos Aires, 2005.

Ford, A.G., ‘Export Price Indices for the Argentine Republic, 1881-1914’, Inter-American Economic Affairs, 9:2, 1955, pp. 42-54.

Francis, J.A., ‘The Terms of Trade and the Rise of Argentina in the Long Nineteenth Century’, PhD diss., London School of Economics and Political Science, 2013.

Glazier, I.A., V.N. Bandera, and R.B. Berner, ‘Terms of Trade Between Italy and the United Kingdom 1815–1913’, Journal of European Economic History, 4:1, 1975, pp. 5-48.

Jacks, D., ‘Intra- and International Commodity Market Integration in the Atlantic Economy, 1800-1913’, Explorations in Economic History, 42:3, 2005, pp. 381-413.

Jacks, D., ‘What Drove 19th Century Commodity Market Integration?’, Explorations in Economic History, 43:3, 2006, pp. 383–412.

Jacks, D., C.M. Meissner, and D. Novyd, ‘Trade Costs in the First Wave of Globalization’, Explorations in Economic History, 47:2, 2010, pp. 127–41.

Korthals Altes, W.L., Changing Economy in Indonesia: A Selection of Statistical Source Material from the Early 19th Century up to 1940, XV, Prices (Non-Rice) 1814–1940, Amsterdam, 1994.

Habib, I., ‘Studying a Colonial Economy – Without Perceiving Colonialism’, Modern Asian Studies, 19:3, 1985, pp. 359-64.

Harley, C.K., ‘Ocean Freight Rates and Productivity, 1740-1913: The Primacy of Mechanical Invention Reaffirmed’, Journal of Economic History, 48:4, 1988, pp. 851-76.

Ho, F.L., Index Numbers of the Quantities and Prices of Imports and Exports and of the Barter Terms of Trade in China, 1867-1928, Tientsin, 1930.

Hou, C., Foreign Investment and Economic Development in China 1840-1937, Cambridge, MA, 1965.

Huff, W.G., ‘Boom-or-Bust Commodities and Industrialization in Pre-World War II Malaya’, Journal of Economic History, 62:4, 2002, pp. 1074-115.

Huff, G., and G. Caggiano, ‘Globalization and Labor Market Integration in Late Nineteenth- and Early Twentieth-Century Asia’, Research in Economic History, 25, 2008, pp. 285-347.

Issawi, C., The Fertile Crescent, 1800-1914: A Documentary Economic History, New York and Oxford, 1988.

Lains, P., ‘Exportações portuguesas, 1850-1913: A tese da dependência revisitada’, Análise Social, 22:91, 1986, pp. 381-419.

Leacy, F.H., Historical Statistics of Canada, 2nd ed., Ottawa, 1983.

League of Nations, Industrialization and Foreign Trade, Geneva, 1945.

Leff, N.H., Underdevelopment and Development in Brazil, I, London, 1982.

Llona, A., ‘On the Accuracy of Chilean Foreign Trade Statistics During the Nitrate Boom: 1870-1935’, paper presented at the Conference on Trade, Poverty and Growth in History, Fundación Ramón Areces, Madrid, 17-18 May 2012, pp. 10-11, online at http://www.uc3m.es/portal/page/portal/instituto_figuerola/home/research/poverty_growth2012/participants/A.LL.pdf (accessed 10 May 2013).

Miyamoto, M., Y. Sakudō, and Y. Yasuba, ‘Economic Development in Preindustrial Japan, 1859-1894’, Journal of Economic History, 25:4, 1965, pp. 541-64.

Mohammed, S.I.S., and J.G. Williamson, ‘Freight Rates and Productivity Gains in British Tramp Shipping 1869-1950’, Explorations in Economic History, 41:2, 2004, pp. 172-203.

Newland, C., ‘Puramente animal: Exportaciones y crecimiento en Argentina 1810-1870’, mimeo, 1990.

Newland, C., ‘Exports and Terms of Trade in Argentina, 1811-1870’, Bulletin of Latin American Research, 17:3, 1998, pp. 409-16.

North, D.C., ‘The Role of Transportation in the Economic Development of North America’, in Colloque International d’Histoire maritime, ed., Les grandes voies maritimes dans le monde, XVe-XIXe siècles, Paris, 1965, pp. 209-46.

Ocampo, J.A., and M.A. Parra, ‘The Continuing Relevance of the Terms of Trade and Industrialization Debates’, in E. Peréz Caldentey and M. Vernengo, eds., Ideas, Policies and Economic Development in the Americas, London, 2007, pp. 157-82.

Officer, L.H., ‘Dollar-Sterling Exchange Rates: 1791–1914’, in S.B. Carter, S.S. Gartner, M.R. Haines, A.L. Olmstead, R. Sutch, and G. Wright, eds., Historical Statistics of the United States: Earliest Times to the Present: Millennial Edition, New York, 2006, online at http://hsus.cambridge.org (accessed 19 November 2013).

O'Rourke, K.H., and J.G. Williamson, ‘When Did Globalisation Begin?’, European Review of Economic History, 6:1, 2002, pp. 23-50.

Palma, J.G., ‘Growth and Structure of Chilean Manufacturing Industry from 1930-1935: Origins and Development of a Process of Industrialization in an Export Economy’, PhD diss., Oxford University, 1979.

Pamuk, Ş., ‘Foreign Trade, Foreign Capital and the Peripheralization of the Ottoman Empire’, PhD diss., University of California, 1978.

Pamuk, Ş., The Ottoman Empire and European Capitalism, 1820-1913: Trade, Investment and Production, Cambridge, 1986.

Pamuk, Ş., and J.G. Williamson, ‘Ottoman De-Industrialization 1800-1913: Assessing the Magnitude, Im

Parthasarathi, P., ‘Historical Issues of Deindustrialization in Nineteenth-Century South India’, in G. Riello and T. Roy, eds., How India Clothed the World: The World of South Asian Textiles, 1500-1850, Leiden, 2009, pp. 415-35.

Prados de la Escosura, L., ‘El comercio hispano-británico en los siglos XVIII y XIX: I. Reconstrucción’, Revista de Historia Económica, 2:2, 1984, pp. 113-62.

Prados de la Escosura, L., ‘Las relaciones reales de intercambio entre España y Gran Bretaña durante los siglos XVIII y XIX’, in P.M. Aceña and L. Prados de la Escosura, eds., La nueva historia económica en España, Madrid, 1985, pp. 119-65.

Prebisch, R., ‘The Economic Development of Latin America and Its Principal Problems’, Economic Bulletin for Latin America, 7:1, (1950) 1962, pp. 1-22.

Roy, T., Rethinking Economic Change in India: Labour and Livelihood, London and New York, 2005.

Roy, T., ‘Review of Trade and Poverty: When the Third World Fell Behind’, EH.net, 2012, online at http://eh.net/book_reviews/trade-and-poverty-when-third-world-fell-behind (accessed 7 October 2012).

Salvucci, L.K., and R.J. Salvucci, ‘Cuba and the Latin American Terms of Trade: Old Theories, New Evidence’, Journal of Interdisciplinary History, 31:2, 2000, pp. 197-222.

Salvucci, R.J., ‘The Origins and Progress of U.S.-Mexican Trade, 1825-1884: “Hoc opus, hic labor est”’, Hispanic American Historical Review, 71:4, 1991, pp. 697-735.

Schlote, W., British Overseas Trade: From 1700 to the 1930s, Oxford, 1952.

Singer, H.W., ‘The Distribution of Gains Between Investing and Borrowing Countries’, American Economic Review, 40:2, 1950, pp. 473-85.

Spraos, J., Inequalising Trade? A Study of Traditional North/South Specialisation in the Context of Terms of Trade Concepts, New York, 1983.

Taylor, K.W., and H. Michel, Statistical Contributions to Canadian Economic History, II, Toronto, 1931.

United Nations, Relative Prices of Exports and Imports of Under-Developed Countries: A Study of Post-War Terms of Trade Between Under-Developed and Industrialized Countries, Lake Success, 1949.

Van Laanen, J.T.M., Changing Economy in Indonesia, VI, Money and Banking 1816-1940, The Hague, 1980.

Williamson, J.G., ‘Globalization and the Great Divergence: Terms of Trade Booms, Volatility and the Poor Periphery, 1782-1913’, European Review of Economic History, 12:3, 2008, pp. 355-91.

Williamson, J.G., Trade and Poverty: When the Third World Fell Behind, Cambridge, MA, 2011.

Yamazawa, I., and Y. Yamamoto, Estimates of Long-Term Economic Statistics of Japan since 1868, XIV, Foreign Trade and Balance of Payments, Tokyo, 1979.