Hostname: page-component-7479d7b7d-8zxtt Total loading time: 0 Render date: 2024-07-12T16:31:32.576Z Has data issue: false hasContentIssue false
  • English
  • Français

Globalization, de-industrialization and underdevelopment in the third world before the modern era*

Published online by Cambridge University Press:  13 January 2010

Jeffrey G. Williamson
Jeffrey G. Williamson
Affiliation:
Harvard Universitya
Get access Rights & Permissions [Opens in a new window]

Abstract

Between 1810 and 1940, a large GDP per capita gap appeared between the industrial core and the poor periphery, the latter producing, increasingly, primary products. Over the same period, the terms of trade facing the periphery underwent a secular boom then bust, peaking in the 1870s or 1890s. These terms of trade trends appear to have been exogenous to the periphery. Additionally, the terms of trade facing the periphery exhibited relatively high volatility. Are these correlations spurious, or are they causal? This Figuerola Lecture, to be given at Carlos III University (Madrid), argues that they are causal, that secular growth and volatility in the terms of trade had asymmetric effects on core and periphery. On the upswing, the secular rise in its terms of trade had powerful de-industrialization effects in the periphery. Over the full cycle 1810–1940, terms of trade volatility suppressed accumulation and growth in the periphery as well.

Type
Articles/Artículos
Information
Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 24 , Issue 1 , Primavera 2006 , pp. 9 - 36
Copyright
Copyright © Instituto Figuerola de Historia y Ciencias Sociales, Universidad Carlos III de Madrid 2006

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abramovitz, M., and David, P. A. (1973): «Economic Growth in America: Historical Parables and Realit_Iies». De Economist 121, 3: 251–272.Google Scholar
Baland, J. M., and Francois, P. (2000): «Rent-Seeking and Resource Booms». Journal of Development Economics 61 (2), pp. 527–542.CrossRefGoogle Scholar
Blattman, C.; Hwang, J., and Williamson, J. G. (2004): «The Impact of the Terms of Trade on Economic Development in the Periphery, 1870–1939: Volatility and Secular Change». NBER Working Paper 10600, Cambridge, Mass.: National Bureau of Economic Research (June).Google Scholar
Bleaney, M., and Greenway, D. (1993): «Long-Run Trends in the Relative Price of Primary Commodities and in the Terms of Trade of Developing Countries». Oxford Economic Papers 45, pp. 349–363.CrossRefGoogle Scholar
Bleaney, M., and Greenway, D. (2001): «The Impact of Terms of Trade and Real Exchange Rate Volatility on Investment and Growth in Sub-Saharan Africa». Journal of Development Economics 65, pp. 491–500.CrossRefGoogle Scholar
Boskin, M. J.; Dulberger, E. R.; Gordon, R. J.; Griliches, Z., and Jorgensen, D. W. (1998): «Consumer Prices, the Consumer Price Index, and the Cost of Living». Journal of Economic Perspectives 12, 1 (Winter): 3–26.CrossRefGoogle Scholar
Catão, L., and Kapur, S. (2004): «Missing Link: Volatility and the Debt Intolerance Paradox». Washington, DC: International Monetary Fund, unpublished (January).Google Scholar
Clingingsmith, D., and Williamson, J. G. (2004): «India's De-Industrialization Under British Rule: New Ideas, New Evidence». NBER Working Paper 10586, Cambridge, Mass.: National Bureau of Economic Research (June).Google Scholar
Coatsworth, J. H., and Williamson, J. G. (2004a): «The Roots of Latin American Protectionism: Looking Before the Great Depression», in Estevadeordal, A.; Rodrik, D.; Taylor, A., and Velasco, A. (eds.), FTAA and Beyond: Prospects for Integration in the Americas. Cambridge, Mass.: Harvard University Press.Google Scholar
Coatsworth, J. H., and Williamson, J. G. (2004b): «Always Protectionist? Latin American Tariffs from Independence to Great Depression». Journal of Latin American Studies 36 (May): pp. 205–232.CrossRefGoogle Scholar
Corden, W. M. (1981): «The Exchange Rate, Monetary Policy and North Sea Oil: The Economic Theory of the Squeeze of Tradables». Oxford Economic Papers 33 (Supplement), pp. 23–46.CrossRefGoogle Scholar
Corden, W. M. (1984): «Booming Sector and Dutch Disease Economics: Survey and Consolidation». Oxford Economic Papers 36 (3), pp. 359–80.CrossRefGoogle Scholar
Corden, W. M., and Neary, J. P. (1982): «Booming Sector and De-Industrialization in a Small Open Economy». Economic Journal 92 (December), pp. 825–848.CrossRefGoogle Scholar
Deaton, A., and Miller, R. I. (1996): «International Commodity Prices, Macroeconomic Performance and Politics in Sub-Saharan Africa». Journal of African Economics 5, pp. 99–191, Supplement.Google Scholar
Dercon, S. (2004): Insurance Against Poverty. Oxford: Oxford University Press.CrossRefGoogle Scholar
Díaz-Alejandro, C. (1984): «Latin America in the 1930s», in Thorp, R. (ed.), Latin America in the 1930s. New York: Macmillan, pp. 17–49.CrossRefGoogle Scholar
Fafchamps, F. (2004): Rural Poverty, Risk and Development. Chattenham: Edward Elgar.Google Scholar
Frankenberg, E.; Beegle, K.; Sikoki, B., and Thomas, D. (1999): «Health, Family Planning and Well-being in Indonesia during an Economic Crisis: Early results from the Indonesian Family Life Survey». RAND Labor and Population Program Working Paper Series 99–06, Santa Monica, CA: Rand Corporation.Google Scholar
Gordon, R. J. (1990): The Measurement of Durable Goods Prices. Chicago: University of Chicago Press.CrossRefGoogle Scholar
Gordon, R. J. (1993): «American Economic Growth: One Big Wave?». Economics Department, Northwestern University.Google Scholar
Gordon, R. J. (2000): «Does the “New Economy” Measure Up to the Great Inventions of the Past?». NBER WP 7833, Cambridge, Mass.: National Bureau of Economic Research.Google Scholar
Gregory, R. (1976): «Some Implications of the Growth of the Mineral Sector». Australian Journal of Agricultural Economics 20 (2), pp. 71–91.CrossRefGoogle Scholar
Grilli, E. R., and Yang, M. C. (1988): «Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows». World Bank Economic Review 2, pp. 1–48.CrossRefGoogle Scholar
Hadass, Y., and Williamson, J. G. (2003): «Terms of Trade Shocks and Economic Performance 1870–1940: Prebisch and Singer Revisited». Economic Development and Cultural Change 51 (April), pp. 629–656.CrossRefGoogle Scholar
Hanson, J. R. (1980): Trade in Transition: Exports from the Third World 1840–1900. New York: Academic Press.Google Scholar
Issawi, C. (1988): The Fertile Crescent 1800–1914: A Documentary Economic History. New York: Oxford University Press.Google Scholar
Jacoby, H. G., and Skoufias, E. (1997): «Risk, Financial Markets, and Human Capital in a Developing Country». Review of Economic Studies 64 (July), pp. 311–335.CrossRefGoogle Scholar
Jensen, R. (2000): «Agricultural Volatility and Investments in Children». American Economic Review 90 (May), pp. 399–404.CrossRefGoogle Scholar
Kose, M. A., and Reizman, R. (2001): «Trade Shocks and Macroeconomic Fluctuations in Africa». Journal of Development Economics 65 (1), pp. 55–80.CrossRefGoogle Scholar
Kravis, I. B., and Lipsey, R. E. (1971): Price Competitiveness in World Trade. New York: National Bureau of Economic Research.Google Scholar
Kravis, I. B., and Lipsey, R. E. (1992): «Sources of Competitiveness of the United States and of its Multinational Firms». Review of Economics and Statistics LXIV, 2 (May), pp. 193–201.CrossRefGoogle Scholar
Krueger, A. O. (1974): «The Political Economy of the Rent-Seeking Society». American Economic Review 64 (June), pp. 291–323.Google Scholar
Lewis, W. A. (1954): «Economic Development with Unlimited Supplies of Labour». Manchester School of Economic and Social Studies 22 (May), pp. 139–191.CrossRefGoogle Scholar
Lewis, W. A. (1978): The Evolution of the International Economic Order. Princeton, NJ: Princeton University Press.Google Scholar
Lindert, P. H., and Williamson, J. G. (2003): «Does Globalization Make the World More Unequal?», in Bordo, M.; Taylor, A. M., and Williamson, J. G. (eds.), Globalization in Historical Perspective. Chicago: University of Chicago Press, pp. 227–271.CrossRefGoogle Scholar
Lipsey, R. E. (1994): «Quality Change and Other Influences on Measures of Export Prices of Manufactured Goods and the Terms of Trade between Primary Products and Manufactures». NBER Working Paper 4671, Cambridge, Mass.: National Bureau of Economic Research.Google Scholar
Lipsey, R. E.; Molinari, L., and Kravis, I. B. (1991): «Measures of Prices and Price Competitiveness in International Trade in Manufactured Goods», in Hooper, P., and Richardson, J. David (eds.), International Economic Transactions: Issues in Measurement and Empirical Research. Chicago: University of Chicago Press.Google Scholar
Martin, W. (2003): «Developing Countries’ Changing Participation in World Trade». World Bank Research Observer 18 (20), pp. 187–203.CrossRefGoogle Scholar
Mendoza, E. (1997): «Terms of Trade Uncertainty and Economic Growth». Journal of Development Economics 54, pp. 323–356.CrossRefGoogle Scholar
Mitchell, B. R., and Deane, P. (1962): Abstract of British Historical Statistics. Cambridge: Cambridge University Press.Google Scholar
Mohammed, S. S., and Williamson, J. G. (2004): «Freight Rates and Productivity Gains in British Tramp Shipping 1869–1950». Explorations in Economic History 41 (April), pp. 172–203.CrossRefGoogle Scholar
Murphy, K.; Vishny, R., and Shleifer, A. (1989): «Industrialization and the Big Push». Journal of Political Economy 97, pp. 1003–1026.CrossRefGoogle Scholar
O’Rourke, K. H., and Williamson, J. G. (1999): Globalization and History. Cambridge, Mass.: Cambridge University Press.CrossRefGoogle Scholar
Prebisch, R. (1950): The Economic Development of Latin America and Its Principal Problems. New York: United Nations Economic Commission for Latin America.Google Scholar
Pritchett, L. (1997): «Divergence, Big Time». Journal of Economic Perspectives 11 (3), pp. 3–17.CrossRefGoogle Scholar
Ramey, G., and Ramey, V. A. (1995): «Cross-country Evidence on the Link between Volatility and Growth». NBER Working Paper 4959, Cambridge, Mass.: National Bureau of Economic Research.Google Scholar
Rosenweig, M. R., and Wolpin, K. I. (1993): «Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low Income Countries: Investments in Bullocks in India». Journal of Political Economy 101 (2), pp. 223–244.CrossRefGoogle Scholar
Sachs, J., and Warner, A. (2001): «The Curse of Natural Resources». European Economic Review 45 (May), pp. 827–838.CrossRefGoogle Scholar
Spraos, J. (1980): «The Statistical Debate on the Net Barter Terms of Trade between Primary Commodities and Manufactures». Economic Journal 90, pp. 107–128.CrossRefGoogle Scholar
Singer, H. W. (1950): «The Distribution of Gains between Investing and Borrowing Countries». American Economic Review 40, pp. 473–485.Google Scholar
Thomas, D.; Beegle, K.; Frankenberg, E.; Sikoki, B.; Strauss, J., and Teruel, G. (2004): «Education in a Crisis». Journal of Development Economics 74 (June), pp. 53–85.CrossRefGoogle Scholar
Tornell, A., and Lane, P. R. (1999): «The Voracity Effect». American Economic Review 89 (1), pp. 22–46.CrossRefGoogle Scholar
Tornell, A., and Velasco, A. (1992): «The Tragedy of the Commons and Economic Growth: Why Does Capital Flow from Poor to Rich Countries?». Journal of Political Economy 100, pp. 1208–1231.CrossRefGoogle Scholar
Williamson, J. G. (2002): «Land, Labor and Globalization in the Third World 1870–1940». Journal of Economic History 62 (1), pp. 55–85.Google Scholar
Williamson, J. G. (2005a): Globalization and the Poor Periphery before the Modern Era: The Ohlin Lectures. Cambridge, Mass.: MIT Press.Google Scholar
Williamson, J. G. (2005b): «Explaining World Tariffs 1870–1938». Stolper-Samuelson, Strategic Tariffs and State Revenues», in Findlay, R.; Henriksson, R.; Lindgren, H., and Lundahl, M. (eds.), Eli Heckscher, 1879–1952: A Celebratory Symposium. Cambridge, Mass.: MIT Press.Google Scholar