Globalization and the spread of industrialization in Canada, 1871–1891

Abstract

The dramatic decrease in international trade costs in the second half of the nineteenth century led to a global trade boom. In this paper, we examine the consequences of greater openness to international trade for regional economic activity in a small, open economy during the first era of globalization. Specifically, we provide a quantitative assessment of the role that exposure to globalization played in industrialization in Canada between 1871 and 1891. Greater exposure to globalization leads to faster growth of manufacturing and the greater concentration of industry around entrepôts of trade between Canada and the rest of the world.