Trade and Poverty
When the Third World Fell Behind
320 pp., 6 x 9 in, 30 figures
- Published: January 11, 2013
- Publisher: The MIT Press
- Published: January 7, 2011
- Publisher: The MIT Press
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.
Trade and Poverty is undoubtedly an important and authoritative work, one that should take the current discourse on globalization and divergence to a new level.
Our leading economic historian has chosen just the right moment to distill his life's work. Other economists have been spreading awareness that history matters far more than we thought in today's development outcomes, but we are amateurs compared with Williamson. He carefully analyzes the seductive correlation between the first great globalization boom in the nineteenth century and the great divergence at the same time that played a huge role in giving us today's wealth and poverty of nations. Did this first wave of globalization benefit both rich and poor nations, but the former more than the latter? Or did it actually hurt the periphery? The answers could not be more relevant for today's globalization and development debates, and they are here for the taking in Williamson's magnum opus.
William Easterly, Professor of Economics, New York University, author of The Elusive Quest for Growth and The White Man's Burden
The definitive neoclassical account of the emergence of modern world inequality. Jeff Williamson throws down the gauntlet to the institutionalists and other doubters. Impossible to ignore.
James Robinson, David Florence Professor of Government, Harvard University
Williamson is the most distinguished historian of globalization. In this book he uses powerful theoretical arguments and massive quantitative evidence to argue that the divergence between rich countries in the core and poor countries in the periphery, as well as the large income gaps between rich and poor households in the developing world, were caused by the first wave of globalization. This is a fascinating book, which should appeal particularly to economic historians and scholars of globalization, political economy, and economic growth.
Elhanan Helpman, Galen L. Stone Professor of International Trade, Harvard University