FOREIGN TRADE AND NINETEENTH CENTURY AMERICAN GROWTH

The American economy exhibited an impressive growth in the nineteenth century. There certainly are numerous factors at play in this extraordinary growth story. This paper presents a quantitative analysis which investigates the role of foreign trade in the nineteenth century American growth. To this purpose, the relationship between real exports, real imports and real GDP is questioned between the years 1820 and 1910. Since the American Civil War was an extremely important event in the American history we divided the period under examination into two, 1820-1860 and 1867-1910 periods. By examining causal relationship, we aim at investigating the existence of export led growth, growth led exports, import led growth and growth led imports hypotheses during the periods before and after the Civil War. While the results exhibit a strong evidence for growth-led imports in both samples, export led growth, growth led exports and import led growth hypotheses are supported only in the second period.