Assist. Prof. Claudia Steinwender, Ph.D.

ICT and Trade: Insights from the 19th Century

Claudia Steinwender empirically studies how the telegraph network affected international trade in the 19th century, thereby drawing lessons from the “Victorian Internet” for modern ICT and globalisation. The internet revolution in the 20th century coincided with increased globalisation and the fragmentation of global value chains. Did the internet cause this rise in global integration? There are reasons to believe this: ICT may reduce information and communication frictions that impede international trade, because firms need to communicate with foreign suppliers and buyers. However, other researchers have shown that the reverse causality might also be true: increased globalisation causes firms to upgrade their technology.

In a current project Claudia Steinwender and Reka Juhasz investigate this question and analyse whether improvements in the ability to communicate product specifications affect imports in the context of the 19th century cotton textile industry. In order to isolate exogenous variation in ICT, the researchers use variation in the ruggedness of the submarine terrain to predict when countries are connected to the global telegraph network. Using annual data on how information lags changed internationally across the 2nd half of the 19th century that was constructed from daily newspapers, data on annual bilateral product level trade, the global telegraph network as well as records on the communication of merchants, they find that communication time drops increase imports of products whose characteristics can be codified. An insight from this paper is that the effect of ICT on trade and fragmentation is technology-dependent, as different ICTs affect the codifiability of different product characteristics (e.g., telegram, telefax, email, 3D printers), which provides a way of understanding the timing of the rise of global value chains (GVCs) in the 20th century.

Ms Steinwender’s research interests are in international trade, economic history, innovation and productivity and applied micro-econometrics. Current work in progress studies the presence of treaty powers in early 20th century Shanghai, and the specialisation of cities into trading ports across the 20th century.

Claudia Steinwender is an Assistant Professor in Applied Economics at the MIT Sloan School of Management, and affiliated to the NBER and CEPR. She holds a PhD in Economics from the London School of Economics and Political Science. Her research has been published by NBER, the American Economic Review and the Review of Economics and Statistics, among others.