Tom Raster
IBD Salle 21
AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille
Timothée Demont: timothee.demont[at]univ-amu.fr
Why does trade continue to lag so far behind predictions? An influential (but untested) theory attributes this underperformance to an insufficient number of ‘pioneer’ firms that create new trade links. This paper provides the first causal evidence of the effect of individual pioneers on aggregate trade and growth. I draw on 1.4 million sea captain voyages between Baltic Sea ports and the rest of the world from 1500 to the 1850s. For identification, I use the temporary obstruction of ports by sea ice, which forces captains to pioneer new ports. I find that the pioneering of an individual captain spills over to the total trade of a town, increasing it by 6 to 8%. These effects are even greater when sea ice forces captains to experiment with new ports, indicating that habits curb trade. I discuss mechanisms and highlight institutional factors and pioneer characteristics as determinants of pioneering success. Together, these findings demonstrate the effects of individuals (and their behavioral biases) on aggregate trade and growth. For policy, this suggests that even small inventions that promote pioneering can have large effects.