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

  • Michael Huberman (a1), Christopher M. Meissner (a2) and Kim Oosterlinck (a3)

Belle Époque Belgium recorded an unprecedented trade boom. Exploiting a new granular trade dataset, we find that the number of products delivered abroad and destinations serviced more than doubled in less than 40 years. To explain 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.

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We benefited from the comments of participants in conferences and seminars at the 2014 meetings of the Economic History Association, Universitat de Barcelona, University of California, Berkeley, University of California, Los Angeles, University of Cambridge, CREST/INSEE/Polytechnique, Université de Genève, Paris School of Economics, Université Paris-Dauphine, Université Paris-Sud, Northwestern University, Queen's University, Universidade de São Paulo, the Shanghai University of Finance and Economics, and the University of Southern Denmark, Odense. We also thank Concepción Betrán, Dan Liu, Jose de Sousa, and John Tang for their suggestions, and Walter Steingress for excellent research assistance. The usual disclaimer applies.

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