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GLOBALIZATION AND THE INDUSTRIAL REVOLUTION

Published online by Cambridge University Press:  15 December 2015

Pedro Cavalcanti Ferreira ,
Samuel Pessôa  and
Marcelo Rodrigues dos Santos
Pedro Cavalcanti Ferreira*
Affiliation:
FGV/EPGE—Escola Brasileira de Economia e Finanças
Samuel Pessôa
Affiliation:
Fundação Getulio Vargas
Marcelo Rodrigues dos Santos
Affiliation:
Insper
*
Address correspondence to: Pedro Cavalcanti Ferreira, FGV/EPGE—Escola Brasileira de Economia e Finanças, Praia de Botafogo 190, 1125, Rio de Janeiro, RJ 22253-900, Brazil; e-mail: [email protected].
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Abstract

This paper argues that trade specialization played an indispensable role in supporting the Industrial Revolution. We calibrate a two-good and two-sector overlapping generations model for England's historical development and investigate how much different England's development path would have been if it had not globalized in 1840. The open-economy model is able to match the data closely, but the closed-economy model cannot explain the fall in the value of land relative to wages observed in the nineteenth century. Without globalization, the transition period in the British economy would have been considerably longer than that observed in the data and key variables, such as the share of labor force in agriculture, would have converged to figures very distant from the actual ones.

Keywords

Industrial RevolutionInternational TradeMalthusian Trap
Type
Articles
Information
Macroeconomic Dynamics , Volume 20 , Issue 3 , April 2016 , pp. 643 - 666
Copyright
Copyright © Cambridge University Press 2015 

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