Abstract
Did tariffs on imports hold back the Mediterranean’s real wage convergence on the New World? The question can be addressed through two streams of research. O’Rourke and Williamson found that the reduction in transatlantic transport costs, through its effects on commodity price convergence, drove Britain’s real wage convergence on the United States.1 In later work, the authors asked whether this finding could be generalized to the European periphery, but lacked the data to go beyond speculation.2 For the poor labor-abundant and land-scarce Mediterranean, this theory predicts rising real wages (price of labor) and falling rents (price of land). In this chapter, I pick up their baton and test the hypothesis that countries with less protection from international trade converged more rapidly on the New World than those with more protection.3
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Notes
Kevin O’Rourke and Jeffrey Williamson, “Late Nineteenth-Century Anglo-American Factor Price Convergence: Were Hecksher and ohlin Right?,” Journal of Economic History 54 (1994): 892–916.
Kevin O’Rourke and Jeffrey Williamson, “Around the European Periphery, 1870–1913: Globalization, Schooling and Growth,” European Review of Economic History 1 (1997): 153–90.
Heckscher and Ohlin were active over the early twentieth century. Their work is translated in H. Flam and M. J. Flanders, Heckscher-Ohlin Trade Theory (Cambridge, MA: MIT Press, 1991).
Timothy Hatton and Jeffrey Williamson, Global Migration and the World Economy: Two Centuries of Policy and Performance (Cambridge, MA: MIT Press, 2006).
For the best introduction to the debates, see Kevin O’Rourke and Jeffrey Williamson, Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (Cambridge, MA: MIT Press, 1999).
David Jacks, “What Drove 19th Century Commodity Market Integration?,” Explorations in Economic History 43 (2006): Fig. 3.
For contributions to the debate, see John Nye, “The Myth of Free Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century,” Journal of Economic History 51 (1991): 23–46;
Douglas Irwin, “Free Trade and Protection in Nineteenth Century Britain and France Revisited: A Comment on Nye,” Journal of Economic History 53 (1993): 146–52; O’Rourke and Williamson, “Around the European Periphery”;
Sibylle Lehmann and Kevin O’Rourke, “The Structure of Protection and Growth in the Late 19th Century,” Review of Economics and Statistics 93, no. 2 (2011): 606–16.
For a review of the empirical measures, see J. L. Anderson, “Trade Restrictiveness and Benchmarks,” Economic Journal 108 (1998): 1111–25.
For this approach, see Antonio Tena-Junguito, “Bairoch Revisited: Tariff Structure and Growth in the Late-Nineteenth Century,” European Review of Economic History 14 (2010): 111–43; and Lehmann and O’Rourke, “The Structure of Protection and Growth.”
This quick survey draws on Kevin O’Rourke, “Tariffs and Growth in the Late 19th Century,” Economic Journal 111 (2000): 456–83; and O’Rourke and Williamson, Globalization and History.
The standard reference is Paul Bairoch, “European Trade Policy, 1815–1914,” in Peter Mathias and Sidney Pollard, eds., The Industrial Economies: The Development of Economic and Social Policies–Cambridge Economic History of Europe, Vol. 3 (Cambridge: Cambridge University Press, 1989), pp. 1–60.
Kevin O’Rourke, “The European Grain Invasion, 1870–1913,” Journal of Economic History 57 (1997): 775–801.
Herman Lebovics, The Alliance of Iron and Wheat in the Third French Republic, 1860–1914: Origins of the New Conservatism (Baton Rouge: Louisiana State University Press, 1988).
Giovanni Federico and Antonio Tena, “Did Trade Policy Foster Italian Industrialization?,” European Review of Economic History 2 (1998): 73–97.
Figures are from World Trade Organization (WTO), Statistics–World Tariff Profiles 2013 (Geneva: WTO, 2013). The figure for Turkey is for 2011. There is no simple average tariff figure for serbia, and Algeria is not a WTO member.
Economic historians have agonized over the “how high is too high” question for a while. For an introduction, see Giovanni Federico and Antonio Tena, “Was Italy a Protectionist Country?,” European Review of Economic History 2, no. 1 (1998): 73–97.
Michael Clemens and Jeffrey Williamson, “Why Were Latin America’s Tariffs So Much Higher than Asia’s before 1950?,” Revista de Historia Económica / Journal of Iberian and Latin American Economic History 30, no. 1 (2012): 11–44. See for a discussion of the “British free trade doctrine,” Paul Sharp, “Malta and the Nineteenth Century Grain Trade: British Free Trade in a Microcosm of Empire?,” Journal of Maltese History 1 (2009): 20–33, discusses the particularity of Malta’s grain-import dependency.
Sevket Pamuk and Jeffrey Williamson, “Ottoman De-Industrialization 1800–1913: Assessing the Magnitude, Impact, and Response,” Economic History Review 64, no. S1 (2010): 159–84, provide evidence that this had some basis in actual data.
Charles Issawi, The Fertile Crescent, 1800–1914: A Documentary Economic History (Oxford: Oxford University Press, 1988), p. 127.
Robert Holland, Blue Water Empire: The British in the Mediterranean since 1800 (London: Penguin, 2012).
The French rates are also measured as customs revenues over imports and are from Nye, “Myth of Free Trade Britain and Fortress France,” p. 26, Table 1. The British rates are from Brian Mitchell, International Historical Statistics: Europe, 1750–2005 (New York: Palgrave Macmillan, 2007b).
For the literature on globalization, see David Jacks, Christopher Meissner, and Dennis Novy, “Trade Booms, Trade Busts, and Trade Costs,” Journal of International Economics 83 (2011): 185–201, which contains references to all the earlier work in the field. For the tariff-growth paradox work, see Bairoch, “European Trade Policy”;
Forrest Capie, Tariffs and Growth, Some illustrations from the World Economy 1850–1940 (Manchester: Manchester University Press, 1994); O’Rourke, “Tariffs and Growth in the Late 19th Century”;
Michael Clemens and Jeffrey Williamson, “Why Did the Tairff-Growth Correlation Change after 1950?,” Journal of Economic Growth 9 (2004): 5–46;
David Jacks, “New Results on the Tariff-Growth Paradox,” European Review of Economic History 10 (2006): 205–30.
Paul Bairoch, “Free Trade and European Economic Development in the Nineteenth Century,” European Economic Review 3, no. 3 (1972): 211–45.
Moritz Schularick and Solomos Solomou, “Tariffs and Economic Growth in the First era of Globalization,” Journal of Economic Growth 16 (2011): 33–70.
Douglas Irwin, “Interpreting the Tariff-Growth Correlation of the Late 19th Century,” American Economic Review 92 (2002): 165–9.
Kevin O’Rourke, “The Repeal of the Corn Laws and Irish Emigration,” Explorations in Economic History 31 (1994): 120–38, finds that agricultural employment in Europe’s western periphery, Ireland, would have been much higher had the Grain Invasion not taken place.
Giovanni Federico and Kevin O’Rourke, “Much Ado about Nothing? The Italian Trade Policy in the 19th Century,” in Sevket Pamuk and Jeffrey Williamson, eds., The Mediterranean Response to Globalization before 1950 (London: Routledge, 2000), p. 280.
Jeffrey Williamson, Globalization and the Poor Periphery before 1950 (Cambridge, MA: MIT Press, 2005), p. 33.
Jeffrey Williamson, “Real Wages and Factor Prices around the Mediterranean, 1500–1940,” in Sevket Pamuk and Jeffrey Williamson, eds., The Mediterranean Response to Globalization before 1950 (London: Routledge, 2000), pp. 45–75, provides land rents only for Egypt, France, and Spain.
Real wage data for these countries are from Jeffrey Williamson, “The Evolution of Global Labor Markets since 1830: Background Evidence and Hypotheses,” Explorations in Economic History 32, no. 2 (1995): 141–96.
Niall Ferguson, “British Imperialism Revisited: the Costs and Benefits of ‘Anglobalisation,’” Historically Speaking 4, no. 4 (2003): 21–7 is a leading proponent of this view,
but he has his critics: Pankaj Mishra, “Review: Civilisation: The West and the Rest,” London Review of Books 33 (2011): 10–2. To the best of my knowledge, no researcher has confronted the debate from a trade and real wage convergence angle.
Gabriel Tortella, “Patterns of Economic Retardation and Recovery in South-Western Europe in the Nineteenth and Twentieth Centuries,” Economic History Review 47 (1994): 1–21; Williamson, “Real Wages and Factor Prices.”
This figure is based on a Laspeyres quantity index of cotton production, based on data from the Malta Blue Books, where 1881=100 and 1866=144. Maltese historians have linked the decline to the removal of protectionist tariffs but put more emphasis on a lack of investment and a cultural distrust of industry. See, for example, Arthur Clare, “Features of an Island Economy,” in Victor Mallia-Milanes, ed., The British Colonial Experience, 1800–1964: The Impact on Maltese Society (Malta: Minerva, 1988), pp. 127–54,
or Carmel Cassar, “Features of an Island Economy,” in Victor Mallia-Milanes, ed., The British Colonial Experience, 1800–1964: The Impact on Maltese Society (Malta: Minerva, 1988), pp. 101–41.
Luis Angeles, “GDP per Capita or Real Wages? Making Sense of Conflicting Views on Pre-industrial Europe,” Explorations in Economic History 45 (2008): 147–63.
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© 2015 Paul Caruana Galizia
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Caruana Galizia, P. (2015). The Globalization of Trade and Labor Markets. In: Mediterranean Labor Markets in the First Age of Globalization. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137400840_5
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