̽��ֱ�� of Cambridge - trade

Cambridge experts on UK drought and climate change

lw355 — Tue, 16 Aug 2022 09:25:55 +0000

From pollinators to profits, food to fires, here's what Cambridge experts say about the impacts of water scarcity – and what it signals about our changing climate.

Investment in languages education could return double for UK economy

ta385 — Tue, 22 Feb 2022 09:45:00 +0000

A new study from the ̽��ֱ�� of Cambridge and the not-for-profit research institute RAND Europe shows that investing in languages education in the UK will return more than the investment cost, even under conservative assumptions.

By quantifying the wider economic benefits to the UK economy of extending languages education in schools, researchers found that the benefit-to-cost ratios for increasing Arabic, Mandarin, French or Spanish education are estimated to be at least 2:1, meaning that spending £1 could return about £2.

Researchers used a macroeconomic model to examine UK economic performance between now and 2050 if more pupils aged between 11 and 16 – Key Stage 3 (KS3) and Key Stage 4 (KS4) – learned to speak one of four different languages so they could later use it effectively in business. ̽��ֱ��modelling was based on the Government’s successful Mandarin Excellence Programme, in which extra hours are devoted to language learning without affecting other EBacc subjects, and lessons are fast-paced and engaging.

̽��ֱ��analysis showed that a ten percentage point increase in UK pupils learning Arabic in KS3/KS4 could cumulatively increase UK GDP by between £11.8bn and £12.6bn over 30 years, compared against a baseline scenario in which the current levels of language provision in schools do not change. This corresponds to about 0.5% of the UK’s GDP in 2019.

An increase in pupils learning Mandarin would increase GDP by between £11.5bn and £12.3bn. For French, the benefit is between £9.1bn and £9.5bn, and an increase in Spanish is estimated to be between £9.1bn and £9.7bn.

Wendy Ayres-Bennett, the study’s lead author and Professor of French Philology and Linguistics at Cambridge said: “Languages play a significant role in international trade, and having a common language can, all else being equal, reduce trade barriers and foster trade. This study provides a new economic estimate for some of the UK’s untapped language potential.”

“However, the UK has experienced a sharp decline overall in the uptake of languages since 2004. At a time when the UK Government seeks to reset its global economic relationships, such a decline in language skills could impact on the UK’s ability to compete on a global stage.”

Researchers calculated the benefit-to-cost ratio by applying a range of education cost estimates per pupil per year for each of the four languages under consideration: £600 to £800 for Arabic; £480 to £720 for Mandarin; and £240 to £600 each for French and Spanish.

̽��ֱ��resulting findings of a 2:1 benefit-to-cost ratio for each language demonstrated that there are identifiable returns for investing in languages education, not just in economic terms but also in producing workers with the language skills needed for the UK to compete internationally.

̽��ֱ��report notes that while the UK does have a comparative advantage because of the global nature of English as a lingua franca, English is not the sole driver in certain key trade sectors such as mining and energy and services – and other languages matter equally, if not more, in reducing trade barriers.

UK exports are predicted to rise if there is an increase in the number of languages shared with its trading partners. ̽��ֱ��report shows that the removal of language barriers with trading partners in Arabic-, Chinese-, French- and Spanish-speaking countries could increase UK exports annually by about £19bn.

Marco Hafner, report co-author and senior economist at RAND Europe, said: “ ̽��ֱ��analysis presented in this study demonstrates that investing in languages education could recoup its cost. But the idea behind the analysis was not in any way to substitute or diminish education in STEM or other EBacc subjects and replace them with languages. ̽��ֱ��intent is to demonstrate the value of improving the quality and quantity of languages education of secondary school pupils across the UK.”

Reference

W Ayres-Bennett et al., ' ̽��ֱ��economic value to the UK of speaking other languages', RAND Corporation (2022).

An increase in secondary school pupils learning Arabic, Mandarin, French or Spanish could boost the UK economy by billions of pounds over 30 years, according to new research. ̽��ֱ��study warns that the ongoing decline in language learning in UK schools is undermining the country's ability to compete internationally.

This study provides a new economic estimate for some of the UK’s untapped language potential

Wendy Ayres-Bennett

dendoktoor via Pixabay

A container ship

Funding

This study was funded through a research grant from the Arts and Humanities Research Council (grant AH/V004182) awarded to Professor Ayres-Bennett.

̽��ֱ��text in this work is licensed under a Creative Commons Attribution 4.0 International License. Images, including our videos, are Copyright © ̽��ֱ�� of Cambridge and licensors/contributors as identified. All rights reserved. We make our image and video content available in a number of ways – as here, on our main website under its Terms and conditions, and on a range of channels including social media that permit your use and sharing of our content under their respective Terms.

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History reveals the hazards of dismantling trade protection

amb206 — Tue, 31 Jan 2017 13:10:54 +0000

American farmers and food producers are said to be licking their lips at the trade opportunities opening up as Britain exits the single European market. But is the British public ready to consume chickens cleaned with chlorine, more genetically modified crops, fizzy drinks made with brominated vegetable oils (emulsifiers), or beef produced with growth-promoting hormones?

Practices such as these are currently prohibited in the EU, leading to a situation where health-related legislation, backed by scientific claims, acts as an effective trade barrier against US food products. Also citing scientifically verified health concerns, the USA has, in turn, banned EU-produced beef for decades after a series of BSE (or Mad Cow Disease) scares in the 1990s. While both continents will continue to use scientific claims to justify trade controls, where does the UK stand with its free trade aspirations?

Scientific claims surrounding the safety of food processing techniques are nothing new. Indeed, the use of new chemical food ingredients in 19th-century food provides one of the earliest examples of how governments and businesses appeal to science and scientists to help protect trade from foreign competition.

Aniline and azo dyes, produced for Europe’s booming 19th-century textile industry, were among the first commercial commodities, including drugs, perfumes and flavourings, which chemists began to synthesise. These chemicals were produced on an industrial-scale from coal-tar, a waste product of the gas industry.

̽��ֱ��new synthetic dyes, whose commercial potential was first recognised by Britain’s William Perkin in 1856, were greeted by the Victorian press as ‘wonders’ of science. Within a few years, they began to be used to colour a wide range of food products such as butter, margarine, milk, wines, noodles, jams and confectionery.

̽��ֱ��mid-19th century was a period when food adulteration was of considerable social concern. Growing public distrust surrounded the provenance of food and its growing industrialisation. Governments and municipal authorities in Britain, continental Europe and the USA appointed chemists to test for food adulteration, while food producers recruited chemists to improve their food processing techniques and to fend off accusations of food manipulation.

While general awareness of the use of textile dyes in food increased, and reports of their possible toxicity emerged, health activists, politicians and businessmen turned to chemists to find answers. Chemists, however, were unable to agree on accurate methods to detect these new chemical substances in food or to assess their toxicity.

Many chemists believed the new dyes were preferable to the toxic metals and minerals – such as lead, copper and arsenic – previously used to colour food. These chemists argued that the new synthetic dyes were a harmless and scientific way to colour and preserve food, helping to increase the range and variety of food available to the public. Other chemists, however, claimed that the safety of the new dyes was not established, and that they were being used illicitly to disguise the quality of food products and deceive the consumer.

A lack of scientific consensus, differing political ideologies and successful lobbying by specific business groups led to a geographically divergent regulatory response. Germany was one the first countries to introduce legislation.

By 1887 Germany was the world’s leading producer of chemical dyes, and its chemical industry was a key constituent of its growing industrial economy. It was certainly in the interest of Germany, and German chemists and industrialists, to maintain public confidence in the new chemical substances being produced by companies such as BASF, Bayer and Hoechst. To strengthen public trust in the new chemicals, Germany and several other European countries, chose to ban a limited number of specified aniline dyes considered to be toxic.

This form of regulation meant that hundreds of other aniline and azo dyes not named in the legislation could be marketed as ‘harmless’ and used in food production, despite the fact that the health effects of most of the legally allowed dyes had never been assessed. As a result, chemical food additives effectively became legitimised as a result of legislation aimed to protect the consumer.

̽��ֱ��USA, meanwhile, opted for a different and more precautionary approach. It was an approach that reinforced the use of the new textile dyes in food and proved beneficial for US businesses.

Instead of banning a few dyes known to be toxic, the US government recommended the use of just seven specified dyes for food colouring. All seven dyes had to be certified by the US government. This strategy, which effectively opened up a new legitimised and specialised market for food dyes, was eagerly embraced by US chemical companies as an opportunity to differentiate themselves from their bigger European competitors.

Meanwhile, Britain, in pursuing laissez faire, free-market trade policies, opted for no prescriptive legislation. ̽��ֱ��British government relied on general food law that prohibited the use of food ingredients capable of poisoning or being used to defraud the consumer, without specifying any particular substances.

As detecting the use of the new dyes in food was almost impossible, and because there was little scientific consensus as to which dyes were harmful, this form of legislation effectively resulted in chemical substances becoming increasingly used, but rarely disclosed, as food ingredients.

In the late 19th century, the use of chemical dyes in food lay at the heart of a negotiation between freedom of trade, consumer choice and the support of commercial practices versus consumer protection, public health and greater transparency.

Legislation, allegedly based on science, failed to resolve the controversies surrounding the risks and benefits of chemical food additives, which remain the focus of considerable debate 150 years later. Instead, regulations, designed to protect public health, acted as trade barriers used to protect domestic businesses.

Although the regulatory list of permitted and safe food ingredients used today in Europe, so-called E-numbers, is more like the original regulatory approach adopted by the US in 1906, there is still a significant difference in opinion between European and US regulators, businesses and scientists as to which chemicals can be safely used in food.

History shows that interested parties invoke science for different purposes, whether consumer groups trying to protect public health or business trying to stave off competition. For the country’s future physical and economic health, the British public and British businesses need to keep a watchful eye on future trade talks between President Trump and Prime Minister May as Britain exits the trade and regulatory regime of the EU.

Carolyn Cobbold took her PhD at Cambridge ̽��ֱ��'s Faculty of History.

As the UK prepares to leave the EU, trade regimes are being reconfigured. Research into 19th-century trade regulations by Carolyn Cobbold, historian of science, shows that scientific claims play a significant role in shaping international trade. She urges us to heed the lessons of the past.

Is the British public ready to consume chickens cleaned with chlorine, more genetically modified crops, or beef produced with growth-promoting hormones?

illuminating 9_11

GM sweetcorn

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Opinion: Forget Super Thursday, the Bank of England can only offer Mildly Useful Thursday

Anonymous — Wed, 03 Aug 2016 11:18:06 +0000

̽��ֱ��Bank of England is expected to announce on Thursday measures to stimulate the UK economy following signs that there will be a significant economic downturn following the vote for Brexit. ̽��ֱ��Bank may cut interest rates, inject another dose of quantitative easing or conjure up something new to give the economy a monetary boost.

Although some have dubbed this “Super Thursday”, it cannot hope to be anything of the sort. ̽��ֱ��Bank only has tools to help ameliorate the immediate damaging impact of the Brexit vote. It can do little to address the underlying structural problems of the UK economy; structural problems that are likely to deepen unless the government makes a U-turn and uses fiscal policy as a means to stimulate long-term economic growth.

̽��ֱ��impact of the Brexit vote will be revealed over many years. ̽��ֱ��immediate evidence is patchy but the initial signs are that the economy is slowing down. ̽��ֱ��Purchasing Managers’ Index, which is a lead indicator of GDP, shows that the UK economy suffered a significant deterioration following the Brexit vote.

Sterling totters. J D Mack/Flickr, CC BY-ND

Sterling has weakened and this was expected to stimulate manufacturing exports. But the immediate evidence suggests that even manufacturing activity is slowing down. ̽��ֱ��Bank is also expected to revise downwards its growth forecast for the UK economy – not simply because of its macroeconomic model but also, as the Financial Times has reported, because some of its economists have been talking to businesses and finding out the story from the horse’s mouth.

Stimulating

̽��ֱ��Bank, assuming the mantle of the “muscular” interventionist, is expected to introduce further monetary stimulus to help business confidence and encourage spending. This should help to reduce the depth of the emerging downturn and it will assuage markets that at least there has been some response to deal with the impact of the Brexit vote.

But there is little evidence that monetary stimulus alone will address the long-term weaknesses of the UK economy. There are two major limitations of excessive reliance on monetary policy to manage the economy.

First, it does little to expand the capacity of the economy by stimulating new investment. Second, it increases the inequality of wealth: the big gainers are those who own assets which are propped up by the monetary stimulus such as housing, bonds and shares. Very low interest rates have increased demand, but this demand has served to increase the prices of existing assets – such as the cost of housing. It has had little impact on the creation of new assets, such as house building and corporate investment and expansion.

̽��ֱ��Big Problem

One of the major long-term problems facing the UK economy is stagnant productivity, the prime determinant of future prosperity and income growth. There are a number of drivers of productivity including investment in capacity, investment in education and the creation of new ideas. Monetary stimulus can do little to stimulate these.

Low interest rates may stimulate private sector investment in normal times, but such investment is discouraged by economic and financial uncertainty. An active fiscal policy is required to address the productivity problem, including state investment in infrastructure, housing and education.

And the productivity problem is likely to get worse in the long-term as the UK wrestles with its post-Brexit legacy. First, the UK will find it more difficult to trade with both Europe and the rest of the world. This will lead to a widening of the UK’s trade deficit or a permanently lower exchange rate – or possibly a combination of both. Second, the level of foreign direct investment into the UK economy is likely to fall as foreign firms remain in, or move into countries within the EU single market.

Third, there will be serious disruptions to the UK’s innovation system. Universities are one of the strong aspects of the UK system, but their ability to attract funding and world-class researchers will be hindered when (or if) the UK leaves the single market. Furthermore, much business research and development in the UK is carried out by overseas firms, which may fall if such firms move or expand abroad.

A New Industrial Policy?

̽��ֱ��Brexit vote has led to a new government and a new opportunity to recast economic policy. ̽��ֱ��new Prime Minister has indicated her support for industrial policy and she has established a new Department for Business, Energy and Industrial Strategy. But we have been here before and the rhetoric and rebranding has often not been followed by action.

̽��ֱ��decisions of the Bank of England that will be announced on Thursday may be mildly useful, but they can’t hope to be much more than that. They can do little to alter the long-term direction of the economy. ̽��ֱ��key issue is whether the new government acknowledges the important role for the state in driving long-term growth and re-orientates fiscal policy towards increasing public investment in infrastructure, education and innovation.

Michael Kitson, ̽��ֱ�� Senior Lecturer in International Macroeconomics at Cambridge Judge Business School, ̽��ֱ�� of Cambridge

This article was originally published on ̽��ֱ��Conversation. Read the original article.

̽��ֱ��opinions expressed in this article are those of the individual author(s) and do not represent the views of the ̽��ֱ�� of Cambridge.

Michael Kitson (Cambridge Judge Business School) discusses how the Bank of England may try to give the economy a boost.

Captain Roger Fenton

̽��ֱ��Bank of England & ̽��ֱ��Duke of Wellington.

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Agricultural markets and the Great Depression: lessons from the past

amb206 — Wed, 07 May 2014 07:00:00 +0000

It took an estimated 2.3 billion metric tonnes of grain to feed the world in 2011 – that’s 6,300,000 tonnes per day. These staple foodstuffs, primarily wheat and corn, are traded on global commodities markets, and one sixth of this total is produced in the Midwest of the USA annually. Once harvested, the grain begins an often long journey, stopping first in one of the many elevators (silos) that soar above the Midwestern prairie landscape.

These vast storage facilities house the grain that keeps much of the world supplied with bread, pasta and other basics. In North America many of the tallest elevators are owned by Cargill, one of the world’s biggest private companies. Cargill traces its roots back to a single grain warehouse in 1865, and continues to dominate world markets for commodities such as wheat and cattle. Companies like Cargill are major traders in organised commodity markets in Chicago and elsewhere. On one exchange, the Chicago Board of Trade (CBOT), 349 billion bushels of corn, 115 billion bushels of wheat and 184 billion bushels of soya beans changed hands in 2010.

̽��ֱ��power of traders on the exchanges to set prices for basic foodstuffs was established by the late 1800s. In a novel called ̽��ֱ��Pit (published in 1903), Frank Norris wrote: “Think of it, the food of hundreds and hundreds of thousands of people just at the mercy of a few men down there on the Board of Trade. They make the price. They say just how much the peasant shall pay for his loaf of bread. If he can’t pay the price, he simply starves.”

Rasheed Saleuddin, a PhD candidate in the Faculty of History, is studying the economic context in which some of the world’s most powerful trading interests emerged. He explained: “My research looks at the interaction between grain trading pioneers and monopolists such as Cargill, clubby self-regulatory agencies such as the Chicago Board of Trade, well-funded academic investigators, and bureaucrats from a newly-interventionist US Federal Government during the rapid development of grain trading markets in Chicago and elsewhere in the US Midwest during the period between the First and Second Word Wars.”

With extensive experience in trading commodities and ‘derivatives’ (securities linked to the performance of commodities) as a hedge fund manager, Saleuddin’s most recent work revisits the ways in which some of the leading economists working in the latter half of the 20th century explained the causes of the Great Depression of the 1930s. By examining the intricacies of the markets for agricultural commodities, such as wheat and corn, he has been able to critique some important evidence for one view of the causes of the Great Depression.

“I’ve been able to apply academic evidence accumulated during the interaction between interest groups such as the newly-formed US regulatory agency, the Grain Futures Administration (1922) and the Stanford Food Research Institute, funded by later US President Herbert Hoover in the same year,” he said.

“An agriculture commodity future is a contract, traded on an organised market called an exchange, whereby a specific quantity of certain subset of grades and quality of a natural raw product (such as wheat or cotton) can be contracted for at a set price in advance of its delivery. For example, a wheat elevator operator storing wheat from the most recent harvest over the winter could enter into a futures contract to sell that wheat for delivery the following May. In May, the operator could deliver the wheat to the other side of the contract, who, crucially but perhaps confusingly, would not necessarily be the original counterparty. More likely, however, both parties would close their contract out before maturity in May, and the elevator operator would make a separate agreement at that time to sell the wheat to a cash buyer.”

̽��ֱ��exchange not only provides a place to do business but also sets the rules of engagement, one of which mandates the settlement of the profit or loss on these contracts at the end of each trading day, others of which allow for transferability and fungibility (whereby every contract is identical to every other contract) of any agreement made on the exchange.

Though of earlier origin, exchanges on which these futures could be traded became well established in the US Midwest and coastal cities by the middle of the 19th century. ̽��ֱ��earliest futures markets in the US traded agricultural products, such as wheat, cotton and maize corn. ̽��ֱ��wheat market was especially important, according to the accepted history: it allowed farmers and middlemen, who held grain stores over the winter when the trade routes were inaccessible, to set a price for their inventories in advance of their sale, reducing the risk to further drops in price.

By the interwar period, traders in these futures markets for goods such as wheat or cotton set the prices transacted between farmers and middlemen or middlemen and end-users (including flour millers) in the much larger “spot” or ”cash” markets of those commodities, where most of these agricultural products were traded for immediate delivery by truck or boatload.

Saleuddin and his academic supervisor D’Maris Coffman are revisiting and reinterpreting the models developed by Stanford agricultural economist and statistician Holbrook Working and his contemporaries during the 1920s and 1930s. “ ̽��ֱ��studies of futures markets carried out in the years between the World Wars could not be replicated in today’s markets due to the increased complexity of modern markets as well as the political difficulties in obtaining compliance from the regulated for the information required,” said Saleuddin.

However, much of the early work done by the USDA, the Federal Trade Commission, Penn, Stanford and others has been ignored by more modern economists, who are less focused on the intellectual history of the study of these markets, and less interested in the context of the data they have been analysing from the period.

When the Great Depression hit North America in late 1929, the consequences were disastrous for the farmers of the Midwest. After record harvests the previous year, and facing oversupply throughout most of the 1920s, demand all of a sudden dried up for most foodstuffs, while Europe imposed quotas and embargoes and Argentina and Australia swamped the markets with their exports. Another record grain crop in 1931 was harvested with little hope for its resale, domestically or as export. ̽��ֱ��price of Chicago wheat fell hard and fast from $1.40 per bushel in July 1929 to 49 cents – a fall in value of about two-thirds in just two years.

Immediately after this, a second disaster hit: what became known as the Dust Bowl was a severe drought across the USA that began in 1933 and severely affected the economic social and political landscape of the US, arguably to this day. Prices doubled from the depths of the original crash, rising above a dollar by mid-1934. By 1937, 21% of rural families were on emergency government relief. Almost one in ten farms changed hands in 1933, half of those voluntarily.This was the America of John Steinbeck and his epic 1939 novel ̽��ֱ��Grapes of Wrath. It was not until the advent of the Second World War, ten years after the initial stock market crash, that economic output in the US recovered its pre-1929 levels.

This devastating period of economic meltdown caused untold hardship to millions in the Western world. Explanations of its causes were hotly debated at the time and have continued as a focus for discussion among economists. ̽��ֱ��monetarists, a highly influential school of what has become orthodox economic thought, claim that the Great Depression could have largely been avoided if the US government had provided more money, usually measured as consisting of currency in circulation and bank deposits, into the financial system.

Saleuddin argues that the problem with this hypothesis is that the cost of money, as measured by the rental value of money, the interest rate, was quite low, indicating anything but a shortage. ̽��ֱ��response of most economists is to focus on the interest rate after adjusting for price changes in the economy, usually called the “real” rate of interest. Thus, the rate shown in the newspapers, usually called the “nominal” rate of interest is related to the real rate as follows: Real rate of interest = Nominal rate - inflation (or + deflation).

If deflation (a fall in the general price level) was expected in 1929-1932, then, even if the nominal rate of interest was near zero, the expected real rate of interest could have been quite high, thus providing evidence of a shortage of money during the early Depression years.

In 1987 and 1992, well-known economist James Hamilton noticed that the future price was almost always higher than the spot price during the early years of the Depression. Hamilton concluded that people expected inflation, not deflation, after the crash of 1929, and, therefore, a shortage of money is unlikely to be the sole cause, if it was a cause at all, of the Great Depression.

Saleuddin, however, suggests that Hamilton failed to understand Holbrook Working’s famous empirical observation, referred to in modern works as the “Working Curve”, that the futures price of wheat is always higher than the current price whenever there is a huge surplus of grain sitting in storage, as there was during the early years of the Great Depression. “That the spot price was below the futures price for most of the early years of the Depression tells us nothing about the expectations of economic agents during this period,” he said.

“Hamilton ignored the microstructure of the futures markets as well as the context of the times, and so reached erroneous conclusions.This has important policy implications today, especially as one the most prominent supporters of a non-monetarist explanation of the Great Depression, Ben Bernanke, until very recently sat in the most important position in the world for determining economic policy as chair of the US Federal Reserve. Additionally, Hamilton’s work was recently cited, for example, by Bank of Japan governor Haruhiko Kuroda in his defence of his current monetary policy. If Friedman and the monetarists were correct about the cause of the Great Depression, monetary policy would be the sole and prime focus of policy makers. If not, the world must turn to other solutions to close the output gap that has been caused by this most recent global financial crisis.”

̽��ֱ��interwar period in the USA was characterised by a globalisation of agricultural commodity markets and severe dislocations, including the return to free markets after the First World War and, of course, the Great Depression of 1929-1939. ̽��ֱ��nature of the most severe crisis in over 100 years as well as an understanding of the politics and economics of contemporary (and arguably current) financial markets can only be understood though a detailed examination of archives relating to this period.

Saleuddin’s research draws on his exploration of a wide range of primary sources – political, business, media, theoretical and empirical – which together will enable him to present a better understanding of markets in general, but especially financial market and US government behaviour during the Great Depression. He said: “In this way, it may just be possible for this history to force a rethink of government policy in the regulation of financial markets as well as management of the economy in general.”

Inset images: Chicago Board of Trade traders, room in old Chicago Board of Trade building, dust bowl in Dallas (all Wikimedia Commons), ̽��ֱ��Grapes of Wrath, John Steinbeck (Flickr Creative Commons).

Seventy five years ago, the publication of John Steinbeck's novel ̽��ֱ��Grapes of Wrath shocked the world with its description of starvation in the midst of plenty. PhD candidate Rasheed Saleuddin is re-evaluating established views of the causes of the Great Depression and argues that there are lessons to be learned today.

Think of it, the food of hundreds and hundreds of thousands of people just at the mercy of a few men down there on the Board of Trade. They make the price. They say just how much the peasant shall pay for his loaf of bread. If he can’t pay the price, he simply starves.

Frank Norris writing in ̽��ֱ��Pit (published 1903)

Wikimedia Commons

Ship loading at the Cargill Elevator

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Lessons from history: how Europe did (and didn’t) grow rich

amb206 — Sun, 24 Mar 2013 08:00:00 +0000

In the modern world, we take for granted the fact that our economies become richer and more sophisticated decade-on-decade – and that our grandchildren will live a better life than our own, just as we live a better life than our grandparents. However, for the greatest part of human history, the standard of living was low and subject to little improvement.

One of the most important questions that economists seek to answer is how we made the shift from stagnation to continued growth, a shift commonly thought to have occurred with the Industrial Revolution in late 18th-century Britain. ̽��ֱ��stakes are clearly high: being able to answer this significant question would give us the potential to unlock millions of people from poverty across the world today.

̽��ֱ��most popular answer to the question of who or what created lasting growth can be found on the reverse side of the British £20 note, which bears the face of Adam Smith, champion of the free market. Following Smith’s Wealth of Nations, published in 1776, liberalisation and free trade have become familiar to us all, and the state and the market are commonly seen in opposition, with the release of the market requiring reining in the state through privatisation and deregulation.

In the tradition of Smith, modern day economists argue that the reason why economies were poor in the past was that absolutist monarchs undermined property rights (reneging on debt and forcibly extracting wealth from minority groups), and that the state too heavily regulated the economy, including granting monopoly privileges to guilds and international trading companies, all of which limited the incentives and ability of people to buy and sell goods freely. ̽��ֱ��result was that people lacked the incentive to produce, invest and invent – economic growth was thereby hampered.

Only with the onset of the Glorious Revolution in Britain in 1688, which transferred power from the monarch to an elected parliament, were markets supposedly set free, culminating in the Industrial Revolution a century later. In the century which followed, the collapse of the Communist regime in Russia and the success of market liberalisation in China, seemed to add credence to this free-market led view of growth. By 2003, following decades of market liberalisation across the globe, the President of the American Economic Association stood up and publicly announced that the future was bright for the global economy. Instead, what happened was the very opposite: we now stand in the middle of the greatest global economic crisis since the Great Depression.

So, with the economic crisis in mind, what evidence is there to support the claim that markets really do deliver in the long term? As my recent book Markets and Growth in Early Modern Europe has uncovered, very little historical evidence exists to support this claim, despite its power and influence on policy-making over the last two centuries.

Looking at evidence from as far back as ancient Babylonia and through to medieval, early-modern and modern Europe, my research has built a picture of the evolution of markets across the long span of human history using one particularly abundant historical data source – the prices of goods. ̽��ֱ��prices originate from sources as wide as the clay tablets of ancient Babylonia to the account books of Oxbridge Colleges, and include those for a number of commonly consumed goods (such as candles, soap and linen), with the most abundant being for cereals (which provided around 80 per cent of calorie intake in pre-modern Europe).

Where markets became more developed, one should find that in response to trade flows, prices became less volatile and, for the same good, converged across different locations. By applying statistical techniques to measure price behaviour, I have been able to measure market development in a consistent and comparable way across different parts of Europe and across many hundreds of years.

If the free-market view were correct, the picture revealed should have been very simple: poorly-developed markets throughout history until the 17th and 18th centuries, at which point new previously unseen levels of market development were achieved (particularly in Britain), culminating in the Industrial Revolution and the birth of modern economic growth. Instead, the picture I found was very different indeed: markets were certainly not a ‘modern invention’.

Indeed, the presence of markets in Europe as far back as Roman times would not surprise any visitor to museums, many of which have on display a great abundance of coins indicative of market-exchange, together with artifacts such as vases which had been traded across hundreds of miles to the point at which they were unearthed in an archaeological dig. Such markets were supported by the vast state infrastructure for which the Romans are famous – a stable coinage system, a taxation system that funded transport and utilities, and a common legal system to uphold contracts.

Once the Roman state began to crumble, so did the markets it supported, leaving Europe in what was once called the ‘Dark Ages’, falling behind Byzantium and the Orient. Indeed, it was only with the development of institutions in medieval Europe which substituted for the state (such as the Church, guilds and city-states) that markets began to recover – a process which took many centuries.

My research shows that, by the end of the medieval period, markets were around two or three times as developed as in the early ancient period and were highly active throughout Europe. At this time, Venice was the leading long-distance trader on the continent, sourcing exotic silks and spices that had travelled along the ‘silk road’ from the Orient and Middle East all the way to Constantinople. In an effort to sell their goods to European customers, the Italians carved out and linked themselves into trade routes across Europe, exchanging the exotic goods from the East together with the produce of the Mediterranean (oil, soap and wine) for the woolen cloth of north-western Europe (where 45 per cent of the residents of Bruges worked manufacturing cloth in the early 14th century), and the grain, metals, amber and furs of central and eastern Europe.

̽��ֱ��customs records of Southampton reveal a constant battle between the English authorities and the Italians, with one official refusing in 1423 to disembark an Italian ship on which customs duties were owed, only for the captain stubbornly to set sail, with the official eventually having to give in and disembark on the Isle of Wight.

Not only were markets for goods advancing in the medieval period, but so were those for finance, as along with the medieval trading boom came a demand for credit. It was in medieval Italy that Europe’s financial markets first began to develop, benefiting from the mathematical techniques which flowed from the East alongside the spices and silks. For this reason, many modern day banking terms have their origins in the Italian language, including the old symbols for the British currency (L, s and d), and, more generally, why the ‘intellectual fizz’ that was the Renaissance originated in the part of Europe most closely tied with the East.

Looking in envy at the wealth created by the Italian cities through trade with the East, other parts of Europe soon started to take advantage of developments in trading technology (such as sturdier ships, navigation and maps) to search for their own route to the Middle East and Orient. In the late 15th century, Christopher Columbus sailed across the Atlantic to find a ‘back door’, stumbling on the Americas along the way (some say that he took some convincing that he was not on Chinese soil). ̽��ֱ��result was the birth of the Atlantic economy, and the first major globalisation of the world economy: as calculated by O’Rourke and Williamson, world trade in the first half of the 16th century grew at a rate of 2.4 per cent a year, a figure not far off that in the twentieth century.

̽��ֱ��level of market development achieved by the end of the medieval period was already so advanced that, as my book argues, it was barely surpassed by the time of the Industrial Revolution three centuries later, only after which did markets witness a second phase of significant improvement. This is evident in the reduction in the disparity of wheat prices across Europe in the course of the 19th century, when the average price-gap fell from 45 per cent to only 4 per cent, indicating significantly more connected markets. This second major phase of improvement was an outgrowth of the Industrial Revolution itself, based on the application of the steam engine to ships and rail, which drastically cut transport costs, making the world ‘smaller and flatter’.

With these greater flows of goods came significant flows of people – around 30 million people emigrated from Europe to the USA in the century after 1820. This was a process of globalisation that worked on all levels: goods, people and money, and it was not surpassed until towards the end of the 20th century. As with that most recent round of globalisation, it was economic growth itself (or the technologies it brings) that enables markets to reach a new level of development.

In sum, what my research has shown is that the two most significant phases of market development occurred either side of the period traditionally emphasised - and that they took place well before the Industrial Revolution, and then subsequent to it, as opposed to during the 17th and 18th centuries. ̽��ֱ��idea that markets are at the root of the modern age of sustained economic growth is therefore seriously in doubt when we look at the historical evidence. Instead, it makes much more sense to argue that markets, while necessary, are both insufficient for growth and are as much a consequence as a cause.

If we want to understand why the Industrial Revolution occurred and so how Europe and the West grew rich, we need to continue to pursue this long-span historical approach; looking back at economies throughout the past to work out in which ways they were similar and, more importantly, in which ways they truly were different to those of the modern age.

For economists immersing themselves in theory and models, economic history provides a wealth of evidence that is yet to be fully exploited – and which has the potential for revolutionising economic policy and, with it, the lives of many people in the present and future. Until the lessons of history are learned and we realise that more than markets were required to light the fire of continued growth, we may find it difficult to escape the current economic crisis and return to the sustained growth we had begun to take for granted.

Dr Victoria Bateman is Fellow and College Lecturer in Economics at Gonville and Caius College, Cambridge. She is author of Markets and Growth in Early Modern Europe (Pickering and Chatto, 2012) and contributor to RJ Van der Spek, Jan Luiten van Zanden and ES van Leeuwen (eds), A History of Market Performance: From Ancient Babylonia to the Modern World (Routledge, forthcoming).

̽��ֱ��Industrial Revolution is seen as the spark that lit Europe’s economic prosperity. In her analysis of markets over many hundreds of years, economist Dr Victoria Bateman presents a compelling argument for a broader global perspective.

My research has built a picture of the evolution of markets across the long span of history using one particularly abundant data source – the prices of goods.

Dr Victoria Bateman

Bernardo Bellotto (Canaletto) A View at the Entrance of the Grand Canal, Venice, c.1741 Oil on canvas, 59.3 cm x 94.9 cm (detail)

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̽��ֱ��dark side of the art world

amb206 — Tue, 20 Mar 2012 08:00:14 +0000

As countries with the some of the world's richest archaeological heritage sink further into financial crisis, theft of antiquities from museums and ancient sites is predicted to rise sharply. Few people in the UK are as aware of this criminal activity – or as determined to do their utmost to quash the squandering of our common past - as Christos Tsirogiannis, a researcher at Cambridge ̽��ֱ�� with a mission for revealing the truth about the trade in illicit antiquities.

“ ̽��ֱ��illicit trade in antiquities is vast and crosses all borders. It stretches right from the peasant who finds a marble head while ploughing his fields up to the world’s greatest museums who acquire objects to add to their collections. In between is a complex network of middlemen – each one playing a part and all covering their tracks,” said Tsirogiannis.

A forensic archaeologist, Greek-born Tsirogiannis is taking a PhD at Cambridge’s Department of Archaeology to deepen his knowledge of the dark side of the international art market. His supervisors are Dr Christopher Chippindale (Cambridge) and Professor David Gill ( ̽��ֱ�� Campus Suffolk), two of the world’s leading authorities on the trade in antiquities without documented collecting histories.

Tsirogiannis is passionate about our common cultural heritage – and he is determined to draw public attention to the irreparable damage done by looters and those who collude with them further up the chain. He said: “To loot and trade in stolen goods is not only a crime in that it’s against the law, it’s also a crime against humanity. Our culture is something that we all own, it’s not something to be stolen and sold for quick gain. When looters steal objects they rip them from the environment in which they have been for hundreds or thousands of years. ̽��ֱ��object may turn up again but its context, where it lay in the ground, and the information of what surrounded it, is lost for ever. This is the major catastrophe that looting causes: the irreparable loss of knowledge about our past.”

For several years Tsirogiannis was the only archaeologist working for the Greek Police Art Squad in his native Athens – and he remains actively involved in tracing stolen antiquities. Roughly three times a year he will spot an object, perhaps a vase or a sculpture , that has come on to the art market with something about its provenance (collecting history) to make him suspicious.

Once alerted to the possibility that an illegally traded item may be about to change hands, he will use his experience to investigate auction houses and galleries, museums and private collections around the world. He will make a series of comparisons between evidence included in confiscated archives by police and judicial authorities. If, at that point, he reveals a trail that suggests the illicit origin of an antiquity, he will contact the relevant authorities of the robbed country.

Tsirogiannis, who took his first degree in Archaeology and History of Art at the ̽��ֱ�� of Athens, began his career as an archaeologist working for the Greek Ministry of Culture. Then one morning in August 2004 his world changed. He explained: “I got a phone call from the headquarters of the Athens police asking me to accompany them on a raid of a monastery where antiquities without any collecting history had been found. ̽��ֱ��Greek judicial system found the monks innocent – but it was a clearly problematic case.”

From that day forward Tsirogiannis worked daily for the police as an unpaid volunteer, escorting the police on raids throughout Greece and identifying looted antiquities, while keeping his day job at the Ministry of Culture. When his work with the police grew, he was offered a post with the Ministry of Justice.

As an expert trusted by the authorities, he was directly involved in a series of high-profile investigations by specialist teams from the Greek and Italian police, researching archives of looted objects that had made their way along a clandestine network of looters, middlemen, famous auction houses and high-profile dealers working closely with top collectors. ̽��ֱ��most notorious of these raids was that on the Robin Symes-Christos Michaelides summer residence in the Cyclades, where the authorities found an archive of professional photographs that recorded numerous looted and smuggled antiquities from nearly all the world’s ancient civilisations.

This photographic archive – and others – is immensely valuable in terms of information about looted objects that have travelled often thousands of miles from the sites where they were stolen, giving vital clues about their legal origin. However, it represents just the tip of the iceberg.

̽��ֱ��1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property is an umbrella agreement signed by 120 countries. Under its terms, antiquities for sale must have a legal and documented collecting history that dates back to 1970 or earlier. Items found to have been looted can be repatriated to their countries of origin if their illegal recent travel can be proved without doubt. Over the past few years, some 130 masterpieces have been repatriated from collections worldwide including those of top museums, among them the Getty Museum, the Metropolitan Museum of New York, Boston Museum and Minneapolis Institute of Arts.

“These repatriations have been communicated to the general public as magnanimous acts whereby museums are giving items back to the nations where they originated - but in fact they happened as the result of pressure behind the scenes. No collector wants to give away an object that is not only a key part of a collection but has also cost a lot of money. However, no museum wants its reputation tarnished by news that it owns things that are in effect stolen goods,” said Tsirogiannis.

“ ̽��ֱ��1970 convention was a real turning point. But the illicit trade has continued and dealers have devised ever more devious ploys to creating a seemingly authentic profile for objects they are dealing in. This includes selling pieces through top auction houses and buying the same objects back to add both to the price and trading history. We need to tell people about this to make them aware of what’s truly going on.”

̽��ֱ��complexity of the wheeler-dealer style transactions that characterise the murky trade in precious objects is best illustrated by the notorious case of British antique dealer Robin Symes and his Greek ship-owning partner Christos Michaelides – a tale of staggering duplicity on the part of Symes who, on the death of Michaelides and subsequent discussions about inheritance, lied about the stock of antiquities he co-owned with Michaelides.

“Looters and dealers in looted goods are motivated by money – the sums to be made get greater the higher up the supply chain you go. Some of the leading auction houses ask shockingly few questions about the objects that appear in their glossy catalogues. Again the motivation is mainly money. ̽��ֱ��motivations of collectors and museums are more complicated – it’s all about the status that goes with ownership, some times for investment, too. But they too are far too reluctant to ask searching questions about collecting history or provenance,” said Tsirogiannis.

“ ̽��ֱ��public needs to know that the apparent glamour of the international art world hides a dark side – and to be aware of the scale of illicit operations. When Symes was up in court, it was revealed that he had goods (chiefly antiquities) stored in at least 33 warehouses across the world. He is just one of many whose operations have destroyed – and continue to destroy – precious aspects of mankind’s archaeological heritage and knowledge.”

Tsirogiannis was invited by the eminent archaeologist Lord Renfrew to come to Cambridge to take a PhD. In 2009 Tsirogiannis continued his in-depth research into the international illicit antiquities network in order to learn much more about the true nature of the international art market. He said: “Working at Cambridge has been a high quality choice and allowed me to develop my ideas in an environment that is ready to support active solutions, not only theoretical approaches in already known material.”

When his phone rang in 2004 and the police asked for his help, Tsirogiannis had no inkling that his life was to change. “It’s curious but I found what I really wanted to do – working as a forensic archaeologist demands attention to the detail of an art work, a passion for uncovering the truth in a crime scene, and a desire to bring to public attention knowledge that has been deliberately destroyed and would otherwise be lost. I never forget that what I am protecting is the long term future of our knowledge of the past. It suits me perfectly.”

̽��ֱ��research being undertaken by Tsirogiannis will be part of the presentation “Illicit antiquities, immoral antiquities: what they are and why they matter” given by his supervisor Dr Christopher Chippindale at the Museum of Archaeology and Anthropology, 6-7pm Thursday, 22 March. Tsirogiannis himself will be in Italy playing the part of Ajax in a ̽��ֱ�� of Cambridge production organised by Professor Emeritus Patrick Boyde of Sophocles’ “Ajax”. “It’s a great honour to take this role as, after all, the Homeric hero Ajax always fought for truth and justice,” said Tsirogiannis.

* Please note this talk is presently fully booked

Looting of antiquities from archaeological sites is a serious crime. A fully-booked talk at Cambridge Science Festival on Thursday will unearth some of the dirty secrets of the illicit trade in precious objects and ask tricky questions about the relationships between looters, dealers and museums.

̽��ֱ��illicit trade in antiquities is vast and crosses all borders. It stretches right from the peasant who finds a marble head while ploughing his fields up to the world’s greatest museums who acquire objects to add to their collections.

Christos Tsirogiannis

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Global politics on the agenda at Hay

bjb42 — Sun, 22 May 2011 12:40:28 +0000

How can global organisations be more representative of rising powers? It's one of the big issues of our times as we witness enormous shifts in the world's power dynamics, but it's not a new one.

Amrita Narlikar heads a new centre at Cambridge which uniquely attempts to look at the impact of rising global powers by placing it in a historical as well as political and economic context. She will talk about one aspect of this work – world trade – at the forthcoming Hay Festival [26 May to 5 June], where she joins 17 others ̽��ֱ�� speakers as part of the Cambridge series.

Dr Narlikar's talk will centre on the World Trade Organisation, but will broach wider questions of multilateral reform. “ ̽��ֱ��WTO is a fantastic example of attempts to accommodate the new powers like Brazil, China and India – the opportunities this presents and the unanticipated problems,” she says.

She adds that the WTO is quite distinctive as it has responded fairly well to the rise of new powers compared to other global institutions, such as the UN Security Council. It has given the new powers a major role in high table negotiations and decision-making. “It is one of the few organisations that has responded. You would expect this to make the balance of power fairer, but lots of unanticipated challenges have resulted,” she argues.

One of the positives is a greater diversity of players, but this has slowed down decision-making. Increasing the number of players coming to the table with different viewpoints has created a situation of recurrent deadlock. Trade rounds are taking longer to finish and, as a result, people are becoming more disengaged from the discussions, says Dr Narlikar.

Another problem is that, although there has been a broadening of the decision-makers at the WTO, the actual process of decision-making has not been reformed. It still relies on reaching a consensus on the issues being discussed. “That worked when the GATT talks were a rich man's club, a small group of countries which agreed with each other. It's very different when there is a diversity of countries at the core, with allies in the developing world. Consensus-based decision-making breaks down,” says Dr Narlikar.

Her talk will argue the need for the decision-making process to adapt to a more pluralistic system. “ ̽��ֱ��current system greatly delays the benefits of increasing diversification and creates a very polarised system which is not good if we value stability,” she says.

̽��ֱ��Centre for Rising Powers, which had its inaugural lecture on 12 May, is different from the other new country-specific research centres which has sprung up in response to the rise of the BRICs, says Dr Narlikar. ̽��ֱ��CRP looks at the rise and fall of powers theoretically and historically and how they negotiate and bargain for a place at the power table. “People are behaving as if this transition period has never happened before, but it is a deep-rooted phenomenon and there is always the risk of systemic upheaval,” says Dr Narlikar. “Further, as power transitions seldom happen in a vacuum, the Centre is just as interested in the established powers and other members of the international system that have to deal with, manage, or withstand the rise of new powers.”

̽��ֱ��CRP is very interdisciplinary – its steering committee includes academics with a background in economics, history and political science as well as practitioners. Dr Narlikar highlights that the Centre is committed to cutting-edge research, but with a view to informing and engaging with policy. Other events planned for the future include a panel discussion with former British ambassadors to Brazil, India and China.

Dr Narlikar's talk is just one of a range of sessions being given by Cambridge academics at the Hay Festival. They cover everything from Renaissance costume to liberal ideas about toleration to the history of astronomy. For full details, click here.

Ahead of her talk at the Hay Festival, Dr Amrita Narlikar, Director of the ̽��ֱ�� of Cambridge's new Centre for Rising Powers, discusses how countries like Brazil and China are changing the shape of global politics.

Consensus-based decision-making worked when trade talks were a rich man's club. It's very different with a diversity of countries at the core. 

Dr Amrita Narlikar

scazon

Flag of the United Nations.

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