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Openness and Productivity Performance in Historical Perspective

Broadberry spent the spring term on secondment at the CSGR, when he did much of the basic research for the project. The project involved a quantitative economic evaluation of the links between openness and productivity performance in Britain in the period from the late nineteenth century to the present. The aim was to adjudicate between two views: (1) those who see British prosperity as founded on participation in the international economy, and (2), those who trace the roots of Britain's relative economic decline back to the continued adherence to liberal principles when other countries were abandoning them, and who see protectionism as a way of restructuring the economy onto a more favourable development path. The project makes use of a new data set on comparative levels of productivity in Britain, the United States and Germany over the period 1870-1990, with separate estimates for agriculture, industry and services, as well as the aggregate economy. This allowed an examination of the links between openness and productivity performance on a sectoral basis. This was important because the protectionist case has been based largely on a consideration of manufacturing industry, neglecting the roles of agriculture and services.

 

The key findings were:

 

(1) As a result of the openness of the British economy, agriculture was unusually small in 19th century Britain, allowing resources to be deployed in the higher value-added industrial and service sectors. This benefit of openness is rarely considered alongside the costs to British industry of retaining open markets when tariffs were being raised against British exports.

 

(2) Many writers criticise the cosmopolitan service sector for neglecting domestic industry. However, this ignores the importance of the outward orientation of services for service sector productivity, and the growing importance of services for productivity performance overall.

 

(3) The trend of British industrial performance was not improved by protection when it was applied in the 1930s, despite the claims of the tariff reformers. Furthermore, protective attempts to avoid de-industrialisation after World War II had an adverse effect on productivity performance in industry and in the aggregate economy.

 

 

Output:

 

 

This project has resulted in a paper, "Openness and Britain’s Productivity Performance, 1870-1990: A Sectoral Analysis", which was presented at a seminar in the CSGR in December 1999. Broadberry also made seminar/conference presentations on Britain’s productivity performance in international perspective to groups in Barcelona, Santiago de Compostela, Lund, Wassenaar, Toronto, Oxford and Glasgow.