CEPII, Recherche et Expertise sur l'economie mondiale
Information in the First Globalization: News Agencies and Trade

Pierre Cotterlaz
Etienne Fize

 Highlights :
  • We document the effect on international trade of a reduction in information frictions.
  • We use the emergence of global news agencies in the XIXth century, that collected and sold news abroad.
  • Trade between two countries increases significantly when these two countries are covered by a news agency.

 Abstract :
This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. Exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30\% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.

 Keywords : Information | International Trade | Economic History | News Agency | First Globalization

 JEL : N70, F14, F15, F10
CEPII Working Paper
N°2021-02, February 2021

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 Fields of expertise

Trade & Globalization