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Growth Of Overseas Trade During The Industrial Revolution Notes

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Supervision 3: Growth of Overseas Trade during the Industrial Revolution British Economic History, Paper 5, Part I To what extent did the growth of overseas trade lead to Britain's Industrial Revolution?
Foreign trade is one of the ways which can support an economy developing from a preindustrial to an industrial state. Exporting goods which are abundant at home and importing goods which are scarce helps to widen the range of products and increases domestic output and therefore improves the living standard. The share of overseas trade in British GNP rose from 1012% in the mid 18 th century to 18% by 1800, but fell back to 14% by 1851.British exports consisted overwhelmingly of manufactured goods, with a share of 7590% over the period 17001851. At the start of the 18th century, woollen products were the major export manufacture, providing 69% of all manufacture exports at that time. In the course of the industrial revolution, the share of woollen was diminishing while cotton and iron products became more important, having a share of 51% and 12% in 1831 respectively. In imports however, raw materials and foodstuffs were dominant. Their share rose from 71% in 1700 to 95% in 1851.These imports were largely from British colonies and consisted of goods like sugar, tea, coffee, raw cotton and tobacco. Many of the tropical products were then reexported, mainly to Europe. The geographical distribution has also seen changes: While Europe was taking 84% of British manufacture exports in 1700, its share dropped to 29% in 1854. At the same time, the American proportion rose from 13% to 28% (with a peak of 49% in 1805) while the share of the rest of the world increased from 3% to 43%. We can observe a shift away from Europe to America in the 18th century and after that, a shift away from America to other parts of the world.

1 The Navigation Acts regulated the trade of Britain with the world. It required that goods from Asia, Africa and America could only be imported into Britain in British ships. Furthermore, goods like tobacco, tea and sugar from the colonies had to be shipped to a British port first, even if their final destination was elsewhere.The Acts restricted the colonies in their choice of production and required them to buy their needs from Britain. In some aspects, this mercantilist policy had only a small impact, because trading patterns would not have changed much without the Navigation Acts. This can be seen in the trade between the American colonies and Britain before and after the independence of the 13 colonies.On the other hand, the Navigation Acts partly created artificial ties of Britain with its colonies and promoted higher prices. The restriction on sugar imports, for instance, meant that British consumers had to pay higher prices, because sugar from the British West Indies was more expensive than French sugar from the same region. One major impact of overseas trade on British industrialization is increased demand for British products. Although the share of trade in British GNP was modest, it had an effect on industrialization because exports consisted largely of manufactured products. Trade widened the market for British producers. This enabled them to produce on a large scale by introducing mass production, which stimulated the build
up of factories and created industrial specialization. One of the leading industries in the industrial revolution, the cotton industry, depended heavily on trade. More than half of its production was sold abroad.As a growth industry, cotton manufacturing stimulated innovation and expansion. According to Lee, without trade, the cotton industry would have not existed, the iron industry would have been much smaller, the expansion of the woollen industry would have been curbed and agriculture would have developed more slowly.However, with worsening terms of trade in the first half of the 19th century due to lower world market prices, the impact of the export industries on national income was modest. Apart from increasing demand, trade also raises the supply of goods. According to Malthus (1836: 403), trade with foreign markets forms new tastes, which stimulate expansion. The increase in sugar production can be attributed to the new popularity 2

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