Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade

Abstract

Belle Époque Belgium recorded an unprecedented trade boom. Exploiting a this remarkable achievement, we study the relationship between trade costs and the intensive and extensive margins of trade. The establishment of a foreign diplomatic network that lowered beachhead costs and enabled the entry of new products was an essential fact of the trade boom. Interestingly, the expansion in trade in certain sectors did not translate into faster productivity growth. We offer some explanations.

The Effect of War Risk on Managerial and Investor Behavior: Evidence from the Brussels Stock Exchange in the Pre-1914 Era

“…In fact, Belgium signed its own trade agreements with France (1861), Britain (1862), the Netherlands (1863), and Prussia (1865) (Huberman 2008). Between 1900 and 1914, Belgium's international exposure increased at 1.50 percent per year (Huberman, Meissner, and Oosterlinck 2017). In 1913, trade accounted for more than 80 percent of Belgian GNP compared to 39 percent for France, 40 percent for Germany, and 48 percent for the United Kingdom, preceding the Netherlands (Estevadeordal 1997).…”

“…Belgium's commitment to openness was relatively stable in this period. It was mostly trading agricultural and manufacturing products such as textiles and clothing (Huberman, Meissner, and Oosterlinck 2017) and tram-and railways (Annaert, Buelens, and Cuyvers 2018;Annaert, Buelens, and De Ceuster 2012). 8 The dependence of trade and cross-border investments made the Belgian economy and the BSE much more vulnerable to war abroad.…”

“…Every issue, I run a textual analysis to count the number of articles that discuss a potential military conflict (Threat) or the onset of a war (Act). To be considered, each article must mention at least two predetermined search terms and one nation that was both a key trade partner for Belgium and had a sizeable number of stock listings on the BSE-that is, Belgium, France, Germany, Italy, Russia, Spain, the Netherlands, and the United Kingdom (Huberman, Meissner, and Oosterlinck 2017;Estevadeordal 1997). Subsequently, I perform a human reading on all articles from the textual analysis and a randomly selected subset of other articles with the key words.…”

Stages of diversification: France, 1836–1938

“…Indeed, the share of France in world exports increased from 9% in 1847 to 16% in 1865 but this figure quickly fell thereafter attaining 7% in 1913. Compared to other European countries, the French "decline" appears to be unique (Lewis, 1981;Federico and Wolf, 2011;Dedinger, 2012;Huberman et al, 2015). Crouzet (2003) blames the apparent slow growth of French exports after 1860 on a rise in wages induced by a 'shortage of labor'.…”

International competition in the first wave of globalization: new evidence on the margins of trade

“…S1, the difference in volume between 1900 and 1910 never exceeded more than 10%. For Belgian trade, see Huberman, Meissner, and Oosterlinck, ‘Technology and geography’.…”