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Discussion Paper Details

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Title: Made in America? The New World, the Old, and the Industrial Revolution

Author(s): Gregory Clark, Kevin Hjortsh�j O'Rourke and Alan M. Taylor

Publication Date: June 2008

Keyword(s): British Industrial Revolution, colonies, Great Divergence, growth, specialisation and trade

Programme Area(s): International Trade and Regional Economics

Abstract: For two decades, the consensus explanation of the British Industrial Revolution has placed technological change and the supply side at center stage, affording little or no role for demand or overseas trade. Recently, alternative explanations have placed an emphasis on the importance of trade with New World colonies, and the expanded supply of raw cotton it provided. We test both hypotheses using calibrated general equilibrium models of the British economy and the rest of the world for 1760 and 1850. Neither claim is supported. Trade was vital for the progress of the industrial revolution; but it was trade with the rest of the world, not the American colonies, that allowed Britain to export its rapidly expanding textile output and achieve growth through extreme specialization in response to shifting comparative advantage.

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Bibliographic Reference

Clark, G, O'Rourke, K and Taylor, A. 2008. 'Made in America? The New World, the Old, and the Industrial Revolution'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6856