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To Roth or Not to Roth?   Society Is Dumbing Down
Jan 30 2008 2:16PM EST

Trade and Empires

In a new research to be published in the Economic Journal, NBER researchers try to quantify the importance of empire to trade in the late 18th-early 19th centuries.

Dubbed the age of High Imperialism, the era represented the last major effort by world powers to acquire territories:

Britain extending its holdings in Burma, Malaysia, and Africa, France consolidating its Indo-Chinese Empire and its foothold in Madagascar, and Germany carving out an empire in Africa. The Age of High Imperialism also included the United States, which had acquired the Philippines and Hawaii after its war with Spain.

The researchers, Kris Mitchener of Santa Clara University and Marc Weidenmier of Claremont McKenna College, find that belonging to an empire more than doubled trade flows thanks to the benefits of lower transaction costs, trading agreements, currency unions, and sharing a common language.

Other research that didn't look at the effect of empires has shown that currency unions can increase trade by 30 to 90 percent and two countries that were both on the gold standard could see their trade jump by 60 percent. This new finding suggests that the empire effect was the most influential driver of all.

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