Working Paper: CEPR ID: DP3125
Authors: Ronald Findlay; Kevin H. O'Rourke
Abstract: This Paper provides a summary of what is known about trends in international commodity market integration during the second half of the second millennium.The range of goods that have been traded between continents since the Voyages of Discovery has steadily increased over time, and there has been substantial commodity market integration over the period, driven by technology in the 19th century and politics in the late 20th century. This trend towards greater market integration was not, however, monotonic; it was periodically interrupted by shocks such as wars and world depressions, or by endogenous political responses to the distributional effects of globalization itself. In some periods politics has reinforced the effects of technology, while in other periods it has offset them. In several cases, severe shocks have had long-run effects on the international integration of commodity markets, as a result of politically induced hysteresis. Finally, we know remarkably little about international commodity market integration during the 20th century.
Keywords: History; Trade
JEL Codes: F10; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological advancements in the 19th century (O14) | Commodity market integration (Q02) |
| Political changes in the late 20th century (P16) | Commodity market integration (Q02) |
| Technological advancements (O33) | Reduction in transport costs (L91) |
| Reduction in transport costs (L91) | Price convergence across markets (D41) |
| Political responses to globalization (F68) | Barriers to integration (F15) |
| Wars and economic depressions (N44) | Interruptions in commodity market integration (F69) |
| Severe shocks (H84) | Long-term effects on international commodity markets (F69) |