Trade and Poverty: When the Third World Fell Behind

by Jeffrey G. Williamson

How the rise of globalization over the past two centuries helps explain the income gap between rich and poor countries today. Today's wide economic gap between the postindustrial countries of the West and the poorer countries of the third world is not new. Fifty years ago, the world economic order—two hundred years in the making—was already characterized by a vast difference in per capita income between rich and poor countries and by the fact that poor countries exported commodities (agricultural or mineral products) while rich countries exported manufactured products. In Trade and Poverty , leading economic historian Jeffrey G. Williamson traces the great divergence between the third world and the West to this nexus of trade, commodity specialization, and poverty. Analyzing the role of specialization, de-industrialization, and commodity price volatility with econometrics and case studies of India, Ottoman Turkey, and Mexico, Williamson demonstrates why the close correlation between trade and poverty emerged. Globalization and the great divergence were causally related, and thus the rise of globalization over the past two centuries helps account for the income gap between rich and poor countries today.

Genres: Economics, History, Nonfiction, World History

320 pages, Hardcover

First published January 1, 2011

About the author

Jeffrey Gale Williamson is the Laird Bell Professor of Economics (Emeritus), Harvard University; an Honorary Fellow in the Department of Economics at the University of Wisconsin (Madison); Research Associate at the National Bureau of Economic Research; and Research Fellow for the Center for Economic and Policy Research. He also served (1994–1995) as the president of the Economic History Association. His research focus is and has been on comparative economic history and the history of the international economy and development.

Reviews

[Erik Olsson · Rating 2 out of 5]

The intention is good, but I'm not convinced. This book is a merging of past articles (polygraph), and I recommend reading the articles instead since they are more stringent. However Williamson doesn't give a satisfying explanation for why the terms of trade (and occasionally the wage-rent ratio, that led the capital intensive production) accounted for the privileged power position of the western world – rather than other way around. Furthermore there are many references to Maddison, whose studies are explicitly based on assumptions. Lastly there are problems with regression table 11.2 concerning the observations of the periphery.

[Abe · Rating 4 out of 5]

Makes sense as a proposal, a little more indirect than P-S (arguably the opposite) but shares the same concerns about third world deindustrialization. I don’t know… economic data always feels kind of fake to me. I just think of the kinds of granular debates people have in this country about why people vote certain ways and how well our metrics like GDP and others track living standards and so on and knowing, from Jerven and others, about how the sausage gets made in other countries as well it makes something like Maddison’s tables just feel ridiculous. Not anything the author can do about it I guess and there are some books that are creative or interesting with their empirics, this is just sort of standard though (which gets the job done).

[Tobi Lawson · Rating 4 out of 5]

The book's basic thesis (the relationship between trade and the Divergence in Economic growth experience Industrial Europe and the rest of the world) is sound to me and well argued. The empirical sections can feel boring and alienating to lay reader, but this overall a great contribution to explaining the historical origins of the differences in national prosperities we see today.

[Oliver Kim]

I was convinced. It's kind of funny in hindsight how naturally neoclassical trade theory gels with more radical conclusions like Prebisch-Singer.

[Diego · Rating 5 out of 5]

Trade and Poverty es un extraordinario trabajo de historia económica. Jeffrey Williamson emplea la teoría neoclásica y un modelo muy sencillo, el Hecksher-Ohlin-Samuelson (HOS) para explicar de forma muy sencilla e intuitiva una de las grandes transformaciones económicas que hemos visto, la gran divergencia.

El postulado básico de Williamson es que la desigualdad, la volatilidad de los precios de las materias primas y la desindustrialización pueden explicar una gran parte del porque desde el siglo XIX las economías en proceso de industrialización y que hoy son básicamente los países de la OCDE, comenzaron a separarse drásticamente en sus niveles de ingreso per cápita y estándares de vida respecto a la periferia.

Williamson muestra que no hace falta caer en explicaciones demasiado institucionalistas, como las de Acemoglu et al o las de Engerman y Sokoloff para encontrar las causas de la divergencia entre los países en un horizonte temporal de muy largo plazo. Es un libro que recomiendo ampliamente.