Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (review)

Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy. By Kevin H. O'Rourke and Jeffery G. Williamson (Cambridge, Mass., The MIT Press, 1999) 343 pp. $45.00.

In this detailed and systematic study of patterns of change in North Atlantic economies during the nineteenth century, and beyond, O'Rourke and Williamson deal with several major themes relevant to the economic growth of the nineteenth century. Both of these economists have published extensively on these and related topics in recent years. The references list nearly sixty books and articles, written either separately or jointly by these scholars, many of which have been influential in shaping views of the past and the present.

The basic questions include two themes of interest not only for economic historians but also for policymakers today, convergence and globalization. Convergence refers to the comparative growth rates of the richer versus the less rich nations, and to the process of the diffusion of growth from richer to poorer nations. It deals with the problems of economic leadership and whether continuity of leadership is to be expected, a problem of some interest to those concerned with the position of the American economy in recent decades.

The second issue--the emergence of globalization and its consequences--has a more current political interest. The authors study movements in labor (immigration and emigration), capital flows (both portfolio and direct), and trade in goods and services (imports and exports). The nature and magnitude of such flows have varied over time, in accordance with economic as well as political forces, and have had an impact not only on rates of economic growth, but, probably more important for today's debates, on the distribution of economic income and the overall environment in which economic change occurs. Although the concern with globalization has been treated as new, O'Rourke and Williamson note its long history, even so far back as during and after the Middle Ages, but this earlier expansion was of limited magnitude compared to development in the nineteenth century.

Since the authors are economists and economic historians, it is not surprising that the book is aimed primarily at economists, although much of the material is accessible and of considerable importance to historians and others. The basic approach is to interweave quantitative data and standard open-economy international trade models, within the Heckscher-Ohlin factor-endowment framework. The volume contains twenty-eight tables, forty-seven figures, and several supply and demand diagrams, and many of its key results derive from the computable general equilibrium model (described briefly in an appendix). More details are available in the numerous articles previously published by the authors. Much of the data come from the work of other scholars, but the authors also provide newly constructed series, such as the preparation of an international series of wages of unskilled laborers. In general, the series used are those most frequently employed by those studying these issues.

The examination of convergence is based on data for twenty nations, fifteen from western and southern Europe, plus Argentina, Australia, Brazil, Canada, and the United States, during the period from 1830 to 1913. The pattern of movement in real wages shows changes over time--divergence until the middle of the nineteenth century, followed by convergence until the start of World War I. Convergence did not pertain to all countries, only to those active in international trade and factor movements; it did not affect most countries of southern, central, and eastern Europe, nor those in Asia and the Middle East. Even among the previously converging nations, the period from 1914 to 1940, with a world war and a major depression, saw a cessation of any pronounced convergence of gdp as well as divergence of real wages. This return to divergence was reversed after World War II, when convergence within the developed world resumed. Thus, among the developed nations, the gaps...