British and American Exports: A Study Suggested by the Theory of Comparative Costs. Part II

Abstract

The work of Mr. Rostas2 and others on the productivity of British and American industries makes it possible to test some aspects of the theory of comparative costs. According to that theory, when based on a labour theory of value and assuming two countries, each will export those goods for which the ratio of its ouput per worker to that of the other exceeds the ratio of its money wage-rate to that of the other. Before the war, American weekly wages in manufacturing were roughly double the British,3 and we find that, where American output per worker was more than twice the British, the United States had in general the bulk of the export market, while for products where it was less than twice as high the bulk of the market was held by Britain. This is shown clearly in Table I, and more detailed figures are given in Table II. Out of twenty-five products taken, twenty (covering 97% of the sample by value) obey the general rule, and two of the remaining five would cease to be exceptions if a different measure of output per worker were chosen.4