Download British exports in the 1950s: some institutional and geographic

British exports in the 1950s: some institutional and geographic considerations
Peter Howlett
Department of economic History
London School of economics
Houghton Street
London WC2A 2AE
UK
[email protected]
Paper prepared for the Sixth European Historical Economics Society Conference,
Istanbul, September 9-10, 2005
This is a draft paper – please do not quote.
British exports in the 1950s: some institutional and geographic considerations
Introduction
The relative decline of the UK economy in the decades following the Second World
War went hand in hand with the decline in its share of world exports and politically
went hand in hand with the decline of the Empire. The ‘jewel in the crown’, the
Indian sub-continent, had broken free form its imperial shackles in 1947 followed by
Ceylon (now Sri Lanka) and Burma (Myanmar) in 1948. Almost a decade passed
before the floodgates to independence swung open: among the larger colonies gaining
independence were the Gold Coast (Ghana) and Malaya (Malaysia) in 1957; Nigeria
in 1960; Jamaica, Trinidad and Tobago, and Uganda in 1962; Singapore and Kenya in
the following year; with what were Northern Rhodesia (Zambia) and Southern
Rhodesia (Zimbabwe) following suit in, respectively, 1964 and 1965. 1
From an
economic perspective it has been argued that the British Empire was counterproductive to the competitiveness of British exports because it offered ‘soft markets’
in which political protection from foreign competitors could be offered to British
exporters; at times this argument is extended to encompass the Sterling Area. 2 Allied
with weak competitive pressure in the domestic market in the 1950s, where imports
only accounted for 4.7 per cent of home demand in 1955, it could be argued that this
contributed significantly to poor productivity in the British product market
(Broadberry and Crafts, 1996: 77). Also many of these export markets were said to
be under-developed, to be growing slowly in the 1950s and 1960s, and were
1
Perhaps the classic economic history reference on the decline of British imperialism is Cain and
Hopkins (1993), although only the last chapter deals explicitly with the postwar period. Another useful
source concerned specifically with the tropical colonies is Havinden and Meredith (1993).
2
For an excellent account of the Sterling Area in the 1950s see Schenk (1994).
becoming increasingly protectionist. 3
This was a further hindrance to British
economic growth in a period of increasing trade liberalisation. Indeed, Booth has
claimed that postwar efforts to liberalise trade meant that ‘nothing was more
predictable than that Britain’s share of world trade in manufactures would plummet
after 1950.’ 4
As has been well documented by countless historians, success in the Second World
War did not deliver economic success to Britain (the USA was the real economic
winner) and the years immediately following the end of the war were tough and
austere. For example, the end of the war also brought with it a new burden in the
form of the dollar shortage. Economic controls that invaded every aspect of economic
life during the war, and had been accepted as a necessity by most of the population,
proved very reluctant to melt away. 5 The experience of the inflationary pressures
that were unleashed by the removal of controls at the end of the First World War
partly explain the slow steps to liberalization taken by the British state but do not tell
the whole story. For example, in 1947 exchange controls were lifted but this proved
to be a disastrous move prompting a run on sterling and after only six weeks exchange
controls were again imposed. Then in 1949 the government was forced to devalue
the pound: a 30% reduction saw it fall from $4.03 to $2.80. Pollard (1983: 239)
called the devaluation a ‘turning point [that] marked the failure of the Government’s
economic policy’ and a ‘flagrant violation [of] the Bretton Woods Agreement, in
spirit if not in letter.’ Bretton Woods was part of the wider institutional response to
3
A neat summary of this is provided by a quote from Foreman-Peck (1991: 146): ‘In each period the
UK producers lost potential exports by concentrating their efforts on countries that either had belowaverage growth rates or had adopted import-substitution policies.’
4
Booth (2003: 24).
5
See Dow (1964: 144-77) for a good detailed review of postwar controls, although the subjective
analysis is perhaps overly optimistic. Particularly helpful are tables 6.3-6.6, which provide percentages
the autarkic policies of the 1930s that it was hoped would deliver growth and
prosperity by encouraging international financial stability and international trade
(Eichengreen, 1996). However, the Bretton Woods system itself proceeded into the
international environment at a slow crawl: ‘the full movement towards [the Bretton
Woods regime] cannot be dated before 1954 when de facto free convertibility of the
pound into the US dollar was established’ (Tomlinson, 2004: 193). And it was 1958
before the external convertibility of sterling was officially adopted, a move followed
by the other major players, France and Germany.
Thus, the 1950s began with the loss of political control of the vital Indian subcontinent and the dramatic 30% devaluation of sterling and ended with the start of
second wave of decolonisation and the full awakening of the Bretton Woods system.
It is against this background that the performance of British exports will be examined.
After considering the broad performance of British exports in the 1950s the paper will
go on to examine whether a legacy of imperialism was that British exporters were
over-extended both in terms of the number of markets they were committed to and in
term of how distant those markets were. A gravity-type model is then utilised to try
and capture to what extent economic, geographic and institutional factors, specifically
the role of imperialism.
UK exports in context
Before considering the comparative aspects of British export trade it is useful to
consider what was happening to British exports in the longer term. Figure 1 shows
on the extent of consumer rationing, import controls, consumption and allocation of materials and
consumer price control annually for c.1946-8.
how the volume of British performed between 1913 and 1970. The first thing to note
is the obvious negative impact of both World Wars. Recovery after the First World
War was slow and was halted by the onset of the world depression in the 1930s with
the result that at no point in the interwar period did export volumes match their 1913
level. Recovery after Second World War was more rapid and the 1913 level was
reached in 1950, although this was followed by a short-lived dip before more
sustained growth set in after 1954.
Matthews et al (1982: 427-33) provides an analysis of UK exports that helps to further
contextualise figure1. They show, for example, that the average annual growth rate
for the volume of goods exports in the postwar period was higher than for previous
periods:
1856-73
1873-1913
1924-37
1951-73
3.4%
2.7%
- 1.1%
3.9%
Furthermore, they sub-divided the postwar era on the basis of economic cycles and
showed that in each successive cycle the average annual growth rate of the volume of
export of goods increased, thus:
1951-55
1955-60
1960-64
1964-8
1968-73
1.9%
2.6%
3.5%
4.9%
6.6%
Finally, they provide information on the ratio of exports of goods to GDP which
suggest that in the 1950s it was between 15 and 17 per cent: in constant prices it was
15.5 per cent in 1953 and 16.3 per cent in 1964 whereas the figures for those years in
current pries were, respectively, 17.4 per cent and 14.9 per cent.
Taken in isolation the material above would seem to suggest that British export
performance was good in the postwar period (a higher average annual growth rate
than previous periods and an accelerating average annual growth rate). However, the
crucial word in the sentence is ‘isolation’: the problem for British exporters, and for
the British economy, was that the rest of the world was not standing still, or even
merely treading relative water, in this period. Propelled by a plethora of forces (from
pent up wartime demand, to the drive for postwar reconstruction, to the move towards
trade liberalisation) the end of the Second World War led to world export growth
sprinting out of the blocks. For Britain this particular race was no mere short dash but
a marathon that had begun back in the mid-nineteenth century, a marathon in which
Britannia was initially the only serious runner but one in which the rest of the pack
was gradually reeling her in. Also the growth rate of exports shown by Matthews et al
for the 1950s was lower than either 1856-73 or 1873-1913.
The relative decline of British exports is most vividly captured in terms of its share of
world trade UK exports as share of world trade. Maddison (1995) provides estimates
of world merchandise exports for selected years and countries and table 1 uses some
of this data to illustrate the long run decline of the UK. The dominance of the UK in
the nineteenth century was undoubtedly linked to its status as the world’s first
industrial nation but its Imperial status also provided a ready market for British
exporters. In 1870 Britain accounted for almost a fifth of total world merchandise
exports and an even higher proportion of world manufactured exports. However,
even in 1870 British pre-eminence was crumbling as other economies flexed their
newly discovered industrial and imperial muscles. By 1913 the rapid expansion of
exports by Germany and the USA, and the associated relative decline of Britain,
meant that their share of world merchandise exports was on a par with that of Britain;
although it also worth noting the relative decline of France. The two World Wars and
the interwar depression wreaked havoc with German export performance but most
other economies saw their export shares more or less hold between 1929 and 1950.
Britain, whilst now having an export share about one-third less than that of the USA,
was well ahead of its other main rivals, although the fact that Germany in particular
had yet to recover fully from the ravages of war needs to be borne in mind. But this
was for British sensibilities the clam before the resumption of the storm: the table
rather suggests that Britain was the main beneficiary of the disruption, chaos and
autarky of the transwar years as the sharp relative decline experienced before 1913
was resumed after 1950.
Figure 2 provides a more detailed look at what was happening to the British share of
world exports in the postwar years. 6 It tells a familiar story of prolonged decline,
only alleviated by a short recovery at the end of the 1950s, which only came to a halt
in the mid-1970s. Furthermore, these numbers mask a much more pronounced decline
in terms of manufacturing exports. Indeed, most authors who discuss British decline
in export terms tend to cite numbers that suggest that the British share of world
manufacturing exports fell from about 25 per cent in 1950 to 15% in the early 1960s,
and to about 10 per cent by the beginning of the 1970s. 7 There is little evidence here
of exporters in the 1950s being protected from competitive forces by soft colonial or
Commonwealth markets.
6
Figure 2 is derived from the IMF, Direction of Trade Statistics (DOTS). As such it is complied on a
different basis to that used by Maddision in deriving the data shown in table 1. Thus, for example, in
1950 the DOTS data give the UK share of world export trade as 12.7 per cent compared to the figure in
table 1 of 10.3 per cent. However, the trend shown by each is similar – by 1973 according to the
DOTS data the UK share had fallen to 5.9 per cent.
Too many export markets, too far away?
The first question that will be addressed is about the spread of export markets. The
size and extent of the British Empire at its height is well known and this represented a
good opportunity for British exporters to spread their wares and penetrate markets
across the globe. However, it was not always the case that this expansion of British
trade was market driven, politics was often as important – sometimes a more
important consideration. Therefore it is possible that British exporters over-expanded,
that the reach of the Empire took them into markets, which economic forces alone
may not have led them. The question that arises therefore is was the UK unusual in
terms of the number of export markets it was committed to? Given the size of the
British Empire it might be thought that this led it to extend its export effort across far
more markets than other leading economies. If such a situation existed it might have
been fine when world markets were overly protective or when the political muscle of
the UK allowed it favourable conditions in such markets. However, as the empire
disintegrated and as the world economy slowly liberalised in the 1950s this may have
become a disadvantage.
To examine this the International Monetary Fund Direction of Trade Statistics
(DOTS) has been used as it provides a consistent database with which to examine this
issue and gives better individual country coverage than other sources. It still contains
some groupings of countries (i.e., ‘Africa not specified elsewhere’) but such
groupings summed together do not represent a significant size of the export market for
7
See, for example, Alford (1988: 15), Booth (2003:24), Broadberry (2004: 64), and Pollard (1983: 283,
352).
any of the economies examined in this period. 8 To set the performance of the UK in
context it has throughout this paper been compared to five other leading economies:
France, Germany, Italy, Japan and the USA. Table 2 gives a first impression of the
spread of export markets by providing information for 1950 and 1960 on the top
export market for the UK and the other five economies. It also provides information
on the number of export markets that, when ranked from largest to smallest export
market in terms of their share of the total exports of the particular economy,
accounted for 25 per cent, 50 per cent and 75 per cent of their total exports.9
In terms of the percentage of total export trade accounted for by the leading export
market the UK was at the lower end of the scale, but it was not unusual. Australia
was the leading British export market in 1950, accounting for one-eighth of world UK
exports, whilst its leading market in 1960 was the USA which accounted for a tenth of
world UK exports. In 1950 the leading export markets for Italy and France, which
were the UK and Algeria respectively, also accounted for about one-eighth of their
world exports whereas in 1960 Germany’s leading export market, the Netherlands,
only accounted for 9 per cent of its world exports. However, when we look at the
number of export markets that accounted for 25 per cent, 50 per cent and 75 per cent
of total exports we find that in both 1950 and 1960 in all categories the UK had to
reach into more export markets than its competitors. Thus, in 1950 to achieve be in
excess of a 25 per cent reach the UK had to operate in twice as many export markets
as Japan and the USA; to achieve a 75 per cent reach the UK had to operate in
8
More information about DOTS is provided below. As a check exports from each of the six
economies considered to the grouped data (such as ‘Africa not specified elsewhere’) for 1950 and 1960
was examined but UK did not look unusual in these terms.
9
Although 1950 and 1960 have been chosen simply because they are the obvious framing years for this
period, every year between 1948 and 1962 was examined in detail. From this it can be said that the
roughly 60 per cent more export markets than France, Germany or Japan. In 1960 the
situation at the 25 per cent reach level was not very different to 1950 but the gap at
the 75 per cent reach level between the UK the other economies had closed, although
the UK still had to operate in 25 different export markets to achieve this level whereas
Germany, Japan and the USA only had to operate in 19 different export markets.
Another way to look at this particular issue is to examine export concentration ratios
(CR), where CRx shows the percentage of total exports that are accounted for by the
top x export markets. Hence, in table 3 the CR3 figure for the UK in 1950 tells us that
the top three UK export markets accounted for 23.7% of total UK exports. The table
clearly shows that in both 1950 and 1960 for both CR3 and CR9 the UK had the
lowest export market concentration. For the CR3, the UK was the only economy to
have a figure of less than 25% in both years. In 1950 no other country had a figure of
less than 30% whilst in 1960 the gap between the UK and all other economies had
widened with the exception of Germany. For the CR9, the UK was the only economy
to have a figure of less than 50% in both years. Indeed in 1950 three of the other five
economies shown had a CR9 of more than 60% and in 1960 the lowest CR9 of the
other economies was 56.5 recorded by Japan.
Table four shows the top three export markets of the UK and the other five economies
of two interwar years, 1929 and 1937, and for each year from 1948 to 1960. 10 When
results shown in this table are fairly representative of the situation and how it developed over the
period.
10
Table four was derived from another research project and as such was derived from different sources
than used elsewhere in this paper. Most of the material was taken from: League of Nations,
International Trade Statistics (various years); League of Nations, Balance of Payments and Summary
Trade Tables (various years); United Nations, Yearbook of International Trade Statistics (various
years). This data was also compared to other national sources and as a result on occasion was adjusted or
its coverage enlarged. These sources were: INSEE (1990); Statistique Generale de la France (1941);
Annuario statistica Italiano, various years; Bank of Japan (1966); Japan Statistical Association (1998);
a new country enters the top three for an individual economy for the first time in the
table it is shown in bold. One characteristic of this table is the stability of the top
three markets.
Japan, perhaps not surprisingly given its economic and political
position, shows the most change but even its top three markets are only spread of
eleven economies in the years shown.
The most noticeable changes for France (the emergence of Algeria) and the USA (the
displacement of Germany by Japan) came in the early 1930s whilst the significant
postwar changes experienced by the UK (the decline of India) and Japan (the
displacement of China) reflected the economic policy changes introduced by new
political regimes in the destination economies. Indeed, several of these cases suggest
that regime changes associated with the decline of imperialism may have been more
important to changes in export patterns than, say, disruption caused by the Second World
War. Indeed, the main effect of the war would appear to have been the dominant
position that Canada gained as a market for American goods and the weakening of the
UK as a German export market. In the 1950s the top three export markets for France,
Germany and Italy tended to be their continental neighbours and the dominant economic
power of the period, the USA. The top export markets for the USA itself in this period
were its two neighbouring states, Canada and Mexico, plus Japan and the UK. The top
Japanese exports were primarily its Asian neighbours and, once again, the USA. The
UK is unusual in that in the 1950s none of its closest neighbours featured as a top export
destination. From 1950 to 1960 only four countries featured as a top three export market
for the UK: the USA (as it did for all the other economies), Australia, Canada and South
Africa. The latter three have two distinguishing characteristics: they were the former
U.S. Bureau of the Census (1975); Japan statistical yearbook (1949); Mitchell (1998); Mitchell
(2003b); Statistisches jahrbuch fur das Deutsche Reich, various years; ISTAT (1976); Board of Trade,
Dominions of the British Empire and the mainstays of the Commonwealth and,
particularly Australia and South Africa, they were very far away from Britain. In part
this reflected historical factors related to British imperialism, including the Ottawa
Agreement, and more contemporary concerns such as the need to conserve dollars and
the operation of the Sterling Area (see below). However, at a very basic level it did not
seem a sensible strategy for, for example, British car manufacturers to export cars 17,000
kilometres to the other side of the world when a burgeoning demand for their wares was
to be found just a few hundred kilometres away in the rapidly recovering European
markets.
Of course a competitive economy should be able to export to many different markets and
distance should not be a factor but there is hardly a burgeoning literature arguing that the
British economy in the immediate postwar decades was one with a strong international
competitive edge. For example, Crafts and Mills (2005) have recently shown that there
was a substantial markup of price over marginal cost in the UK in the 1950s and 1960s
suggesting that the British competitive edge was rather blunt. And, as Booth (2003:
25) has pointed out, it ‘is generally believed that British firms lost export markets
through inefficiency, producing a lagging growth rate.’ 11 Another issue that needs to
be considered can be broadly construed as the agglomeration effect. In the case of
Western Europe there is a long lineage in the literature that argues that geography and
liberalisation was an important factor in its postwar success: from Balassa (1966)
emphasising the importance of intra-industry trade in explaining the rapid growth of
the EEC to the revisionist account of postwar German export performance presented
various years.
Of course, Booth himself in this paper is offering a more revisionist view of British postwar decline.
For example, he argues that Britain’s declining share of world exports could be the result of ‘an
economy growing slowly from structural constraints’ (Booth, 2003: 25).
11
by Lindlar and Holtfererich (1997). 12 The fact that the top three export markets of the
other economies considered in table 4 tended to be geographically close (or the USA)
tends to suggest that there was some economic sense and benefit in this, although
admittedly throughout the period the top market for France possibly reflected political
rather than economic factors as it was one under its own imperial sway. However, no
attempt will be made here to try and quantify the possible negative impact on the UK
of having such large export markets so far away but the above does suggest this might
be an interesting future avenue for research.
A Gravity model
The issues that have been discussed have been mainly about geography and
institutions. These are also primary concerns of the new economic geography and of
the family of gravity models. Below a simple gravity-type model is estimated to try
and capture certain aspects of these two factors for British exports in the 1950s.
The concern here is with the British economy and therefore a standard gravity model,
which considers bilateral trade flows as the dependent variable and includes as
independent variables both the GDP of the exporting economy and the GDP of the
recipient economy, is not estimated.
Instead the following regression has been
estimated:
ln(Xi) = b0 + b1ln(GDPCi) + b2ln(DISTi) + b3ln(POPi) + Z + ui
where,
12
At a more general level it is also worth noting that a more recent strand of literature has emphasised
that intra-national trade remains more important then international trade. For example, Nitsch (2000)
has argued, using a gravity model with evidence for 1979-1990, that intra-national trade is about ten
times as high as international trade with an EU partner of similar size and distance.
X
is the export flow from the UK to economy i (in current million
dollars).
GDPPC
is the per capita GDP of country i (in current dollars).
DIST
is the distance between London and the capital city of economy i (in
kilometres).
POP
is the population of economy i (in millions).
Z
are dummy variables used to capture institutional factors, described
below.
Although it is possible to derive UK trade statistics from the national source 13 by
using international sources greater consistency could be achieved in terms of the other
variables. 14 Thus, export data were derived from the International Monetary Fund,
Direction of Trade Statistics (DOTS) which provide information on UK exports. All
export data in DOTS are usually free on board data and are converted from current
local currency units into current dollars in order to ensure international comparability.
Conversion into dollars is usually done using the period averages of market exchange
rates, or official rate if market rates are not available, which are taken from the
International Monetary Fund, International Financial Statistics (IFS), exchange rate
series rf. GDP in current local currency units and population data were also taken
from the IFS data set; the GDP data were then converted into dollars using the rf
exchange rate. In some instances data was supplemented by other sources. 15 The
13
Board of Trade. Annual statement of the trade of the United Kingdom with foreign countries and
British possessions.
14
The national UK data does provide information on UK exports to all markets (including, for
example, in 1950, when total exports were £2.2 billion, the £609 worth of exports to the Indian subcontinent to ‘States which have not acceded to India or Pakistan’) but since there is no available GDP
estimates for most of those markets not in the DOTS data set this is not useful for this exercise.
15
The other sources utilised were: Maddison (1995), Mitchell (1998; 2003a; 2003b), United Nations,
International Statistical Yearbook, Oxford Latin American Economic History Database. In a few cases
adjacent years information was used if data on the current year was not available.
availability of relevant GDP information was the main constraint on sample size.
Distance is measured as the Great Circle distance between London and the other
capital cities. The normal expectation is that per capita GDP and population should
have a positive influence on exports whilst distance should have a negative influence.
The argument for the per capita GDP coefficient is that countries with similar income
levels should have similar demand patterns, which in turn is a spur to intra-industry
trade.
The dummy variables were utilised in an attempt to capture British imperial influence
broadly defined and as such are expected to be positive and significant in explaining
British export performance in the 1950s, although possibly of declining importance as
the decade progressed. British influence could be captured in a number of different
ways and thus a variety of dummy variables were experimented with. In the Annual
statement of the trade of the United Kingdom 16 the export by country tables are
arranged under two main headings: Commonwealth countries and the Irish Republic
(including ‘Protectorates, Trust Territories, Mandated Territories and Territories
under Condominium’) and Foreign countries.
Even when countries gained their
independence from Britain they normally joined the Commonwealth and hence
retained at least some political and economic ties with their former ruler. Thus one
way to try and capture the influence of the British Empire, formal and informal, is to
use a dummy variable, EMP, which takes a value of 1 if an economy came under the
first heading and 0 if it was denoted as a foreign country in the annual trade
statement. 17 It would be very surprising if this dummy variable turned out to be either
16
Board of Trade (various years), Annual statement of the trade of the United Kingdom with foreign
countries and British possessions.
17
In the sample of countries used in the regression analysis the only change over the period for EMP
was that Sudan became a ‘foreign country’ in the 1960 sample.
negative or insignificant. An alternative formulation to this would be to try and
capture more direct imperial influence by only considering those economies that were
formally British colonies in the year concerned. The dummy variable COL therefore
takes a value of 1 if the economy was a colony and 0 otherwise. Another twist on this
story is provided by the Sterling Area, a group of economies whose economies were
pegged to sterling and who, at least initially given the dollar shortage, tried to restrict
the convertibility of sterling into dollars (Schenk, 1994: 8). 18 The Sterling Area was a
more formal arrangement than the pre-war Sterling Bloc but its membership was
similar: the British colonies, Australia, New Zealand, South Africa, India, Pakistan,
Ceylon, Burma, Ireland, Iceland, Iraq (which joined in 1952), Jordan, Libya, and the
Persian Gulf Territories. The dummy variable SA takes a value of 1 if an economy
was part of the Sterling Area and 0 otherwise; given the composition of the Sterling
Area it is very similar to EMP.
Some other dummies were considered but were statistically not very successful and
therefore results that incorporated them are not reported in table 5. Firstly, two
dummies were included to take account of the formation of the European Economic
Community: the first taking a value of 1 for members of the EEC whilst the second
expanded this notion to include also colonies and dependencies of EEC members.
However, although the coefficients on these two dummies were generally negative,
indicating British exports found it more difficult in those markets compared to others
in the sample, they were nearly always insignificant and added little or nothing to the
18
‘The post-war sterling area was defined by three characteristics. Members pegged their exchange
rates to sterling, maintained a common exchange control against the rest of the world while enjoying
free current and capital transactions with the UK and, thirdly, maintained national reserves in sterling
which required pooling foreign exchange earnings’ (Schenk, 1994: 8).
statistical explanation. 19 As it has been claimed that Britain was over-committed to
under-developed economies some experimentation was carried out with a variety of
dummies to capture this, for example a dummy that took a value of 1 if the per capita
GDP of an economy was less than on-third of the average per capita GDP of the
sample, but again without success.
Cross-section estimates were made for the years 1950, 1955 and 1960. Although the
choice of any individual year is to some extent arbitrary these dates do follow
significant events: the first coming after the 1949 devaluation, the second is after the
disruption of the Korean War and de facto sterling to dollar convertibility in 1954, and
the final date captures the onset of the Bretton Woods system after official
convertibility in 1958.
The results of the regressions are shown in table 5. The first thing to note is that the
inclusion of the dummy variables does make a noticeable contribution. In column 1,
where there are no dummy variables, the main problem is the insignificance of the
distance variable but also in 1950 and 1955 the regressions are explaining less than
half of the variation in exports, although this raises to almost two-thirds in 1960. The
inclusion of EMP and/or SA causes DIST to become significant, and generally leads
to a marked reduction in the standard errors.
Indeed, in these regressions all
coefficients have the correct sign and are always significant, generally at the 1 per
cent level. The inclusion of a dummy variable also leads to an improvement in the
amount of export variation that is explained: to just over 70 per cent in 1950, about
three-quarters in 1955 and almost 90 per cent in 1960. The GDPPC coefficient in
19
Of the two, the dummy that included the colonies and dependencies of EEC members on the whole
performed better.
regressions (2) to (4) in 1950 and 1955 range from .81 to .90, which suggests that
British exports had a less than proportionate response to income level – if the per
capita GDP of an economy was higher by 1 per cent British exports increased by
approximately .85 per cent. By 1960 the per capita elasticity was closer to unity. 20
As was mentioned before EMP and SA are very similar but overall the results suggest
that EMP performs slightly better than SA. Finally, table 5 also suggest that the EMP
effect, in terms of the size of the coefficient, fell during the 1950s although, according
to column 2, even in 1960 Britain exported about seven times as much to EMP
economies as it did to non-EMP economies of similar income levels and distance.
Conclusion
British export growth in the postwar period was good relative to British export growth
in previous periods but not so in the 1950s and in relative terms the British share of
world exports appeared to be in terminal decline. The 1950s was also a period when
the British economy faced new economic and political pressures, whose separate roots
were often difficult to disentangle. One of the most important of these pressures was
its attempts to come to terms with the end of the empire – perhaps most cruelly
exposed in the Suez debacle. It has been argued above that there is evidence that one
legacy of imperialism was that British exports were spread too thinly spread over too
many markets when compared to other leading industrial economies. Furthermore,
some of the most important of those markets were geographically very far from
London. In contrast in the 1950s France, Germany, Italy, the USA and Japan already
seemed to be orientating themselves to relatively well defined regional trading blocs
20
These results would seem to be in line with more standard gravity models (Anderson, 1979: 106).
to which they were geographically central, most obviously in the case of the European
economies. For Britain the Commonwealth countries, though perhaps not the British
colonies, retained a strong hold on British exporters.
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Table 1. Share of world merchandise exports (per cent of world exports)
UK
France
Germany
Japan
USA
1870
18.9
10.5
8.3
0.3
7.9
1913
13.9
7.2
13.3
1.7
12.9
1929
10.8
6.0
9.8
3.0
15.7
1950
10.3
5.0
3.2
1.3
16.8
1973
5.1
6.3
11.7
6.4
12.3
Source and notes: Maddison (1995: 234-5, 238). Values were measured in current prices in dollars at
exchange rates prevalent in year cited.
Table 2: Spread of export markets in 1950
No. 1 export market
- as % of total exports
> 25%
> 50 %
> 75 %
UK
AUS
11.9
FRA
ALG
12.8
GER
NED
14.0
ITA
UK
11.6
JAP
USA
23.1
Number of markets which account for x% of total exports
4
3
3
3
2
10
6
7
7
5
22
14
14
18
13
USA
CAN
19.8
2
8
18
Spread of export markets in 1960
No. 1 export market
- as % of total exports
UK
USA
10.2
FRA
ALG
15.9
Concentration
> 25%
> 50 %
> 75 %
4
10
25
2
6
17
GER
NED
8.8
ITA
GER
16.5
JAP
USA
28.3
Number of markets
3
2
1
8
6
7
19
18
19
USA
CAN
18.6
2
7
19
Notes: For sources see text. The ‘Number of markets which account for x% of total exports’ shows the
cumulative sum of export markets, when the export markets are ranked from the market that accounts
for the largest share of the exports of the chosen economy to the smallest, that account for x % of total
exports. AUS is Australia, ALG is Algeria, CAN is Canada, NED is the Netherlands.
Table 3: Concentration ratios for export markets in 1950 and 1960
CR3
1950
1960
UK
FRA
GER
ITA
JAP
USA
23.7
23.3
32.0
37.2
31.4
25.5
30.4
34.8
37.4
36.9
30.1
32.9
CR9
1950
63.8
63.4
57.4
65.4
54.9
49.4
1960
64.2
58.8
59.9
56.5
57.2
47.2
Notes: for sources see text. The figure in bold shows the lowest CR for that year.
Table 4. Top three export markets: 1929, 1937 and 1948-60
1929
France
2
1
3
UK BEL GER
1937 ALG
BEL UK
Germany
1
2
3
NED UK FRA
Italy
2
1
GER USA
NED
UK ITA
3
UK
Japan
2
1
3
USA CHI IND
UK
2
1
3
IND AUS USA
USA
2
3
1
CAN UK GER
ERI GER USA
CHI USA IND
SA IND AUS
UK CAN JAP
1948 ALG MOR UK
USA INO SK
AUS SA IND
CAN GER UK
BEL UK FRA
ARG USA UK
1949 ALG
UK MOR
FRA BEL UK
ARG UK GER
USA IND UK
AUS SA IND
CAN GER UK
1950 ALG
UK GER
NED FRA BEL
UK GER FRA
USA PAK HK
AUS CAN SA
CAN UK MEX
1951 ALG
UK SWZ
NED FRA USA
UK FRA GER
USA INO PAK
AUS SA CAN
CAN UK MEX
1952 ALG INC SWZ
NED FRA SWE
GER USA UK
USA PAK HK
AUS USA SA
CAN UK MEX
1953 ALG SWZ GER
NED FRA BEL
GER USA UK
USA SK INO
AUS USA SA
CAN JAP MEX
1954 ALG GER BEL
NED BEL SWE
GER UK USA
USA INO BRZ
AUS SA USA
CAN UK JAP
1955 ALG GER UK
NED FRA SWE
GER USA SWZ
USA HK IND
AUS USA SA
CAN UK MEX
1956 ALG GER BEL
NED FRA BEL
GER USA SWZ
USA HK IND
USA AUS CAN
CAN UK JAP
1957 ALG GER BEL
NED FRA USA
GER USA SWZ
USA HK IND
USA AUS CAN
CAN JAP UK
1958 ALG GER BEL
NED FRA USA
GER USA SWZ
USA UK HK
USA AUS CAN
CAN MEX JAP
1959 ALG GER USA
USA NED FRA
GER USA UK
USA HK CAN
USA AUS CAN
CAN JAP UK
1960 ALG GER BEL
NED FRA USA
GER USA FRA
USA HK PHI
USA AUS CAN
CAN UK JAP
Notes: for sources see text. The abbreviations in the table refer to the following countries: ALG Algeria, ARG Argentina, AUS Australia, BEL
Belgium, BRZ Brazil, CAN Canada, CHI Chile, ERI Eritrea, HK Hong Kong, INC Indochina, IND India, INO Indonesia, MEX Mexico, MOR
Morocco, NED Netherlands, PAK Pakistan, PHI Philippines, SA South Africa, SK South Korea, SWE Sweden, SWZ Switzerland.
Table 5. UK exports: geographical and institutional factors regression
Dependent variable is log UK exports to country i
1950 (n=54)
GDPPC
Population
Distance
(1)
(2)
(3)
(4)
.72***
(.23)
.58***
(.12)
-.28
(.19)
.83***
(.15)
.66***
(.08)
-.43***
(.11)
2.25***
(.26)
.90***
(.16)
.75***
(.09)
-.36***
(.13)
.86***
(.15)
.69***
(.10)
-.41***
(.11)
1.65***
(.39)
.68
(.44)
.73
EMP
SA
Adjusted-R2
1955 (n=59)
GDPPC
Population
Distance
.41
.73
.73***
(.21)
.63***
(.11)
-.23
(.19)
.81***
(.12)
.63***
(.07)
-.38***
(.11)
2.08***
(.24)
EMP
SA
Adjusted-R2
1960 (n=67)
GDPPC
Population
Distance
.47
.77
1.00***
(.14)
.65***
(.08)
-.13
(.14)
.90***
(.09)
.65***
(.05)
-.34***
(.09)
1.97***
(.19)
EMP
SA
Adjusted-R2
.64
.87
2.22***
(.31)
.70
.89***
(.13)
.72***
(.07)
-.30**
(.11)
2.01***
(.25)
.76
1.00***
(.08)
.71***
(.05)
-.25***
(.08)
1.89***
(.18)
.87
.85***
(.13)
.67***
(.06)
-.35***
(.10)
1.26**
(.49)
.93*
(.53)
.78
.95***
(.08)
.68***
(.05)
-.31***
(.08)
1.02***
(.33)
1.07***
(.31)
.89
Note: Estimated by Ordinary Least Squares. Standard errors in parentheses; where appropriate whiteadjusted standard errors have been used. See text for a discussion of the variables and sources. ***, **
and * denotes significance at a level of, respectively, 1%, 5% and 10%.
source:Maddison (1991: 318-9, 322-3).
19
69
19
67
19
65
19
63
19
61
19
59
19
57
19
55
19
53
19
51
19
49
19
47
19
45
19
43
19
41
19
39
19
37
19
35
19
33
19
31
19
29
19
27
19
25
19
23
19
21
19
19
19
17
19
15
19
13
Figure 1. Volume of UK exports (1913=100) in logs
5.5
5
4.5
4
3.5
3
2.5
source: IMF, Direction of trade statistics.
19
8
19
7
0
9
8
7
19
7
19
7
6
5
19
7
19
7
4
3
19
7
19
7
2
1
19
7
19
7
0
9
19
7
19
6
8
7
19
6
19
6
6
5
4
19
6
19
6
19
6
3
2
1
19
6
19
6
19
6
0
9
8
19
6
19
5
19
5
7
6
19
5
19
5
5
4
19
5
19
5
3
2
19
5
19
5
1
0
19
5
19
5
9
8
19
4
19
4
Figure 2. UK exports as a percentage of world exports
16
14
12
10
8
6
4