Working Paper: NBER ID: w7638
Authors: Douglas A. Irwin
Abstract: The United States became a net exporter of manufactured goods around 1910 after a dramatic surge in iron and steel exports began in the mid-1890s. This paper argues that natural resource abundance fueled the expansion of iron and steel exports in part by enabling a sharp reduction in the price of U.S. exports relative to other competitors. The commercial exploitation of the Mesabi iron ore range, for example, reduced domestic ore prices by 60 percent in the mid-1890s and was equivalent to nearly 30 years of industry productivity growth in its effect on iron and steel export prices. The results are consistent with Wright's (1990) finding that U.S. manufactured exports were natural resource intensive at this time and have implications for recent work suggesting that resource abundance may be a curse rather than a blessing for economic development.
Keywords: No keywords provided
JEL Codes: F10; N71; Q32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Natural resource abundance (Q33) | Growth of US manufactured exports (F14) |
| Commercial exploitation of Mesabi iron ore range (L72) | Reduction in domestic ore prices by 60% (L72) |
| Reduction in domestic ore prices by 60% (L72) | Reduction in relative price of US iron and steel exports (F14) |
| Reduction in relative price of US iron and steel exports (F14) | Enhanced competitiveness on the world market (F69) |
| Natural resource abundance (Q33) | Improvement in competitive position of American iron and steel producers (L61) |
| Improvement in competitive position of American iron and steel producers (L61) | Increased elasticity of export supply (F14) |
| Increased elasticity of export supply (F14) | Larger US market share in response to global demand growth (F69) |