The next step in O'Brien's argument is to consider the significance of the colonial trade for Britain alone, which may be the real test in this whole debate, as the upturn in economic growth which Britain experienced in the 18th century coincided with a quickened pace of expansion in the foreign trade sector, with the *colonial trade pulling ahead*. Thus, if we look at the geography of England's trade, we find that, in 1700-01, 62% of English imports came from Europe and 82% of its exports went there. Yet, by the end of the century, 1797-98, those figures had dropped, respectively, to 29% and 21%. On the other hand, while in 1700 the North American colonies and the West Indies accounted for only 20% of English imports, and 11% of exports, by 1797 they acounted, respectively, for 32% and 57% (Thomas and McCloskey, 1981). Europe still accounted for most of England's re-exports throughout the 18th century (77% of its re-exports still went to Europe), but these were, afterall, re-exports of colonial produce, which England used to pay its European imports. Indeed, Deane (1965) has observed that the *volume* of English re-exports rose by 90% from 1700-1750, and that without re-exportting such products as sugar, tabacco, cotton, and indigo (with their income elastic demand) England would not have been able to buy critical raw materials like timber and bar iron from Europe. If we add the fact that, through the 18th century, England changed its position from an exporter of grains to a net importer (that in 1772 only 0.2% of imports were grains, and by 1800 they were 8.7%), as well as keeping in mind those Navigation Acts regulating the colonial trade to the benefit of England, what we have here is *as good a case as can be made of a core country accumulating its capital by exploiting, through foreign trade, the periphery*. Yet, according to O'Brien's tentative findings, England;s trade with the periphery, and the profits thereof, were still too small a percentage of its total economy to explain its expansion through the 18th century. Thus, by means of a counterfactual demonstration, he argues that, if Britain had not traded with the periphery, its gross annual investment expenditures would have decreased by no more than 7%. In constructing this counterfactual O'Brien makes the rather optimistic assumption that colonial profits were very high and that capitalists reinvested 30% of their profits.
