Trade and Empire, 1700-1870

leading European import from Asia, but the European textile industry was still
uncompetitive relative to Indian weavers. Around the same time, "colonial goods" such
as sugar and tobacco were becoming important New World exports, but these were w-
climate commodities that could not be easily grown in Western Europe. There was thus
an evolution in the nature of intercontinental trade during the early modern period,
towards bulkier commodities, but the period before 1800 did not, for the most part,
involve large scale intercontinental trade in basic, heavy commodities such as wheat
which could be easily grown both inside and outside Europe.

The new transport technologies of the 19th century meant that such basic,
"competing" commodities could indeed be shipped across the oceans of the world.
European prices for temperate climate agricultural commodities now started to reflect
American, Australian and Russian factor endowments rather than demand and supply in
Western Europe alone, implying that, in line with Heckscher-Ohlin logic, cheap overseas
food started to place European land rents under pressure (O'Rourke and Williamson
2005). This would only become important in the years after 1870, when these
Heckscher-Ohlin forces would have important political repercussions. However, the
seeds of that retreat from globalization were sown in the half century following Waterloo.

3. Trade, empire and growth

3.1. Introduction

Aggregate evidence suggests that trade was positively associated with growth in
Europe during the 17th and 18th centuries. Both the urbanisation rate and GDP grew
more rapidly in the "Atlantic" European economies (England, France, the Netherlands,
Portugal and Spain) than in the rest of Western Europe or Asia between 1500 and 1800
(Acemoglu et al 2005, Maddison 2003). Allen (2003) also finds a strong positive
relationship between trade and growth in Europe during this period, concluding that "the
intercontinental trade boom was a key development that propelled north-western Europe
forwards" (p. 432).

It is less clear what the mechanisms were linking trade with economic growth.
Different authors, discussing the impact of trade on various European countries, tend to
assume different mechanisms, while to make matters even more complicated the

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