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The Integration of Western Hemisphere Grain Markets in the Eighteenth Century: Early Progress and Decline of Globalization

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Dobado González, Rafael and Guerrero, David (2009) The Integration of Western Hemisphere Grain Markets in the Eighteenth Century: Early Progress and Decline of Globalization. [ Working Papers ; nº 09, 2009, ]

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Official URL: http://eprints.ucm.es/9406




Abstract

In this work it is shown evidence supporting the idea that, if globalization is defined as the convergence of commodity prices between distant markets, the process started and advanced gradually in the eighteenth century instead of suddenly appearing after 1820, as claimed by the canonical version developed in a series of important works by O’Rourke and Williamson (1999, 2002, 2004). We use long time-series of grain prices for several markets in Western Europe and the Americas to explore the extent and dynamics of market integration across the Western Hemisphere throughout the eighteenth century. An innovative methodology, consisting in studying the standard deviations of the innovations in the ARMA model of pairwise relative prices between markets, is used. A general decrease in price dispersion is observed when the early eighteenth century is compared with the three decades preceding 1793. Neither Argentina nor Mexico participated in this general trend towards closer market integration across the Western Hemisphere. From 1793 to 1828 we observe a substantial increase in dispersion between markets. After this first backlash, globalization resumed at an unprecedented pace since it was favored by the transport revolution and other factors.

Resumen (otros idiomas)

En este trabajo se muestra que, si se acepta la definición de globalización como convergencia de los precios de mercancías de amplio consumo entre mercados distantes entre sí, el proceso comenzó y avanzó gradualmente in el siglo XVIII en vez de “explotar” después de 1820, como sostiene la versión canónica desarrollada en una serie de importantes trabajos de O’Rourke y Williamson (1999, 2002 y 2004). Usamos series históricas largas de precios de granos en varios mercados de Europa Occidental y América para determinar el alcance y la dinámica de la integración de mercados en el Hemisferio Occidental durante el siglo XVIII. Nuestra metodología es original, pues consiste en estudiar las desviaciones standard de las innovaciones en los modelos ARMA de las series de precios relativos entre pares de mercados. Un descenso general de la dispersión de precios se observa al comparar los inicios del siglo XVIII con las tres décadas que preceden a 1793. Ni Argentina ni México participan en esta tendencia general hacia una mayor integración de los mercados del Hemisferio Occidental. Entre 1793 y 1828 observamos un aumento sustancial de la dispersión entre mercados. Tras este primer retroceso, la globalización se relanzó a un ritmo antes desconocido gracias a la revolución de los transportes y otros factores.

Item Type:Working Paper or Technical Report
Uncontrolled Keywords:Market integration, Globalization.
Palabras clave (otros idiomas):Mercados de integración, Globalización.
Subjects:Social sciences > Economics > Economic history
Series Name:Working Papers
Volume:2009
Number:09
ID Code:9406
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Deposited On:07 Sep 2009 10:56
Last Modified:26 Apr 2016 10:32

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