British and American exports: a study suggested by the theory of comparative costs

  • Donald MacDougall


The work of Mr. Rostas2 and others on the productivity of British and American industries makes it possible to test some aspects of the theory of comparative costs. According to that theory, when based on a labour theory of value and assuming two countries, each will export those goods for which the ratio of its ouput per worker to that of the other exceeds the ratio of its money wage-rate to that of the other. Before the war, American weekly wages in manufacturing were roughly double the British,3 and we find that, where American output per worker was more than twice the British, the United States had in general the bulk of the export market, while for products where it was less than twice as high the bulk of the market was held by Britain. This is shown clearly in Table I, and more detailed figures are given in Table II. Out of twenty-five products taken, twenty (covering 97% of the sample by value) obey the general rule, and two of the remaining five would cease to be exceptions if a different measure of output per worker were chosen.4


Relative Price Relative Prex Double Logarithmic Scale Time Series Method Product Elasticity 
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  1. 34.
    G. H. Orcutt, ‘Measurement of Price Elasticities in International Trade’, Review of Economics and Statistics, May 1950.Google Scholar
  2. 37.
    Tse Chun Chang, ‘A Statistical Note on World Demand tor Exports’, Review of Economics and Statistics, May 1948.Google Scholar
  3. 38.
    Mr. Kubinski’s method (‘The Elasticity of Substitution between Sources of British Imports, 1921–38’, Yorkshire Bulletin of Economic and Social Research, January 1950) is based on an examination of 289 commodities imported into the U.K., but the number of observations in each correlation calculation is never more than eighteen (for each of the years 1921–38).Google Scholar
  4. Messrs. D. J. Morgan and W. J. Corlett (‘The Influence of Price in International Trade: A Study in Method’, Journal of the Royal Statistical Society, 1951) give the results of a few calculations with as many as forty-five observations (for the years 1870 to 1914), but the great majority of their calculations are based on less than twenty observations.Google Scholar

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© Sir Donald MacDougall 1975

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  • Donald MacDougall

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