Factor Endowments, Trade Direction, and Growth Performances of the Americas and East Asia in the Nineteenth and Twentieth Centuries

Factor-endowment based trade with the leading economy helps to explain the differing development performances of the Americas and East Asia in the past two centuries. Between 1830 and 1945, labor-abundant Britain, the most advanced country, traded heavily with land-abundant countries in the Americas, the U.S. in particular. The latter were able to grow faster than was most of East Asia. After WWII, however, with Britain’s decline and the rise of the land-abundant U.S., labor-abundant East Asia traded more heavily with the U.S. and thus engineered faster growth than did land-abundant Latin America. Factor-endowment based trade and economic ties with the secondary advanced economy (first the U.S. and then Japan) played important roles in the pre-WWII growth of Japan, Southeast Asia's growth in the 1970s and the 1980s, and its economic crisis in the mid-1990s.