Essay One:

The Dynamics of Market Integration in China, 1736-1911

Existing research on market integration suggests that the performance of markets in China and Western Europe on the eve of the Industrial Revolution was largely comparable. To the extent that markets play a crucial role in economic growth, this raises the huge puzzle of why Industrial Revolution occurred in Europe but not in China. Using monthly grain prices that span a much longer period and cover a substantially larger geographical area of China, I find that market development in China essentially followed a U-shaped trend in which market for grain trade became less integrated in China during the eighteenth and early nineteenth centuries after reaching a historic high in the early 1700s, before it recovered in the sec...[ Read more ]

Essay One:

The Dynamics of Market Integration in China, 1736-1911

Existing research on market integration suggests that the performance of markets in China and Western Europe on the eve of the Industrial Revolution was largely comparable. To the extent that markets play a crucial role in economic growth, this raises the huge puzzle of why Industrial Revolution occurred in Europe but not in China. Using monthly grain prices that span a much longer period and cover a substantially larger geographical area of China, I find that market development in China essentially followed a U-shaped trend in which market for grain trade became less integrated in China during the eighteenth and early nineteenth centuries after reaching a historic high in the early 1700s, before it recovered in the second half of the nineteenth century from its ebb. This implies that China’s grain market actually experienced a temporary setback while those in Europe accelerated.

Essay Two:

Population Growth and Market Integration in Late Imperial China, 1776-1910

Population dynamics has always occupied a central role in growth economics. Does population growth, by deepening the division of labor, set in motion a process of “Smithian” growth, or does it, by increasing grain consumption, reduce the volume of tradable grain and consequently market integration? To understand the intriguing role of population dynamics in market integration, I analyze a large panel dataset covering 17 provinces or 245 prefectures during 1776-1910, and find that population growth had an overall Malthusian effect on market integration during 1776-1910. The period also saw noticeable developments in transport technologies—notably steamboats and to a lesser extent railway, which facilitated the development of the grain market, whereas political disintegration—specifically the likin tax imposed on trade—reduced market integration.