The Wind of Change: Maritime Technology, Trade and Economic Development

The 1870-1913 period marked the birth of the Örst era of trade globalization. How did this tremendous increase in trade a§ect economic development? This work isolates a causality channel by exploiting the fact that the steamship produced an asymmetric change in trade distances among countries. Before the invention of the steamship, trade routes depended on wind patterns. The introduction of the steamship in the shipping industry reduced shipping costs and time in a disproportionate manner across countries and trade routes. Using this source of variation and a completely novel set of data on shipping times, trade, and development that spans the great majority of the world between 1850 and 1900, I Önd that 1) the adoption of the steamship was the major reason for the Örst wave of trade globalization, 2) only a small number of countries that were characterized by more inclusive institutions beneÖted from globalization, and 3) globalization exerted a negative effect on both urbanization rates and economic development in most other countries.


Issue Date:
Jun 25 2014
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/270234
Language:
English
Total Pages:
46
JEL Codes:
F01; F15; F43; O43
Series Statement:
WERP 1049




 Record created 2018-03-29, last modified 2018-03-29

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