Market Potential and the Rise of US Productivity Leadership

No 18819, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The US advantage in per capita output, apparent from the late 19th century, is frequently attributed to its relatively large domestic market. We construct market potential measures for the US and 26 other countries between 1880 and 1913 based on a general equilibrium model of production and trade. When compared to other leading economies in 1900, the year around which the US overtakes Britain in productivity leadership, the US does not have the overwhelming lead in market potential that it has in GDP per capita. Still, market potential is positively related to the cross-country distribution of income per capita, but the impact of market potential is likely to be very heterogeneous. We illustrate this in a quantitative calculation of the welfare gains from removing international borders in 1900 within a parsimonious general equilibrium trade model. While there are gains from trade for all nations, the largest European countries do not close their per capita income gaps with the US after this hypothetical rise in market potential. On the other hand, many small countries could have done so.

JEL-codes: F12 F15 N10 N21 (search for similar items in EconPapers)
Date: 2013-02
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Journal of International Economics Volume 96, Issue 1, May 2015, Pages 72–87 Cover image Market potential and the rise of US productivity leadership Dan Liua, b, , Christopher M. Meissnerc, d, ,

Downloads: (external link)
http://www.nber.org/papers/w18819.pdf (application/pdf)

Related works:
Journal Article: Market potential and the rise of US productivity leadership (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18819

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18819

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().