Free Trade in Asia

When you get the chance, check out this working paper on market integration and Asia during the 19th and early 20th centuries by David Chilosi and Giovanni Federico. The abstract:

This paper contributes to the debate on globalization and the great divergence with a comprehensive analysis of trends, causes and effects of the integration of Asia in the world market from 1800 to the eve of World War Two, based on a newly compiled data-set. The analysis finds that: most price convergence occurred before 1870, with only little disintegration in the inter-war years; market integration was determined to a large extent by the fall of Western trading monopolies; it implied significant static welfare gains and emerges as a major cause of substantial improvements in the terms of trade.

Again. the whole paper is worth reading. I think I might be more interested in it because of my own work on Dutch colonialism in southeast Asia and the collapse of the Dutch East Indies Company (a state-sponsored monopoly). With that being said, the paper is one of those “big picture” reads that folks of all disciplines ought to be interested in.

One of the most interesting aspects I found in the paper had to do with foreign trade. It has become popular nowadays to focus on institutions within a society for explanations on why some nations are rich and others are poor. This paper suggests that while institutions may be important, it is just not institutions that are careful to include domestic factions that are important for prosperity. The institutions that are created to deal with foreign affairs (mostly trade and diplomacy) also play an important role in the health and wealth of societies. (h/t goes to co-blogger Claudio Shikida)

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