DP15326 The Gravitational Constant?

Author(s): David S. Jacks, Kevin Hjortshøj O'Rourke, Alan M. Taylor
Publication Date: September 2020
Date Revised: October 2020
Keyword(s): distance, Empire, Gravity
JEL(s): F1, N7
Programme Areas: International Trade and Regional Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15326

We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect then attenuated and had almost vanished by 1800. Meanwhile the empire effect peaked sometime in the late 18th century before significantly declining in value. It was only after 1950 that distance would once again exert the same influence that it has today.