Global Economy 8: 'The Industrial Revolution - What and When Technological Change'

Question 1

Describe what is meant by an ‘Industrial Revolution’

Answer 1

• An industrial revolution is any rapid significant
  technological change. An industrial revolution usually refers to that complex of technological innovations, which by substituting machines instead of human skills and inanimate power for human force brings about a modern economy. (Landes,
  1969)
• An industrial revolution is a fundamental redeployment of
  resources away from agriculture (Mathias, 1969)
• The Industrial Revolution was mainly a story about research
  and development (Allen, 2011)

Question 2

Why was Britain first in the Industrial Revolution?

Answer 2

• The literature suggests:
  1. High Agricultural Productivity → “Agricultural revolution”
  2. Proto-Industrialisation → early start on industrialisation?
  3. Good Institutions → GR 1688, property rights (physical and
  intellectual), legal, informal
  4. Characteristics of labour → strong applied technical
  knowledge, high wages
  5. Characteristics of population → fertility patterns, urbanisation
  6. Good policy → banking and finance, taxes, infrastructure
  7. Geography → resources, isolation
  8. Speculative → war, religions, empire, stochastic (luck)
  9. Britain experienced a series of revolutions that paralleled the
  Industrial Revolution

Question 3

What does Allen say about why Britain was first in the Industrial Revolution and not Italy, Netherlands or France?

Answer 3

• Allen (2009) ⇒ Emphasis is on factor prices
• Britain is where it paid to invent
• New inventions could only be made cost effectively in Britain

Question 4

What does Mokyr say about why Britain was first in the Industrial Revolution and not Italy, Netherlands or France?

Answer 4

• Mokyr (2009) ⇒ Emphasis on institutions
• British science was more applied and better connected with
  business
• Physical and intellectual property rights matter → 1688

Question 5

What does Crafts say about why Britain was first in the Industrial Revolution and not Italy, Netherlands or France?

Answer 5

• Crafts (1977) ⇒ Emphasis is on luck and macro invention
• Stochastic approach → Random component matters
• The English Channel, Religion, Monarchy, etc.
• “It may be, but need not be, that England was superior to
  France”

Question 6

What does Ogilvie say about why Britain was first in the Industrial Revolution and not Italy, Netherlands or France?

Answer 6

• Ogilvie (2007) ⇒ No main emphasis → institutions, policy,
  markets, luck:
• No single factor that Britain had that every other European or
  Asian country lacked
• Britain brought all possible factors together for the first time

Question 7

What made the Industrial Revolution a ‘revolution’?

Answer 7

Characteristics of the Industrial Revolution:
* Rapid shift from agriculture to industry → structural change
* Use of machines in production → substitution of labour
* Use of fossil fuels, minerals and synthetics → non-organic
materials
* Shift in the scale of production → small scale to large scale
* Concentration of industry near inputs → regional specialisation
* Integration of markets → inventions in transport and
communications
* High rates of investment to GDP → K accumulation
* Emergence of General Purpose Technologies → Steam
* Social and Institutional Change → inequality, nature of work
etc.
* Rapid technological change → TFP growth

Question 8

Why is technological change so important?

Answer 8

• Sustained technological change is what separates pre-modern
  and modern growth
  • Sustained growth in efficiency has been achieved through
  sustained technological change

Question 9

How can we prove the importance of technological change on sustained growth?

Answer 9

• Using a Solow Model it is possible to show that sustained
  growth comes from sustained technological change
• The growth rate in output per worker (and output per capita)
  is determined by the growth rate of technology
• This can be proved (but not here) using a production function
  that we saw in an earlier lecture

Question 10

Analyse the empirical evidence of technological change in the IR

Answer 10

Economic historians have attempted to estimate the level of
technological change in the IR using Growth Accounting
* Crafts (1985) estimated that technological change was slower
during the IR than was previously thought → we will look at
this later
* However, Craft’s estimates assume that TFP growth was
approximately 0.2% during the 18C and 0.35% during the 19C
- We know however that TFP growth was really fast during the
IR in key areas → these areas started off as only small sectors
of the economy but grew into large important sectors
* What were these exceptional areas?

Question 11

Describe what kind of technological change occurred during the IR

Include description of the development of steam, iron & steel and textil

Answer 11

• Inventions
• Technological change around IR was concentrated in several
  key areas:
  1. Steam: Savery Pump (1698) -> Newcomen Engine (1712) -> Watt Engine (1769) -> Corliss Engine (1849)
  2. Textiles: Flying Shuttle (1733) -> Spinning Jenny (1764) -> Water Frame (1769) -> Power Loom (1785)
  3. Iron and steel: Darby Coke Smelting (1709) -> Cort Puddling Furnace (1784) -> Bessemer Process (1856)
  Evidence that these were the key sectors: A table titled ‘Sectoral Contributions to British TFP Growth, 1780-1860 (% per year)’ highlights a .34% increase in total, taking into account: cotton, woollens & worsteds, iron, canals & railways and shipping
• Several related sectors were also important:
  1. Watchmaking - gears
  2. Transport
  3. Communications
• Many of these inventions are interconnected - it is all about
  the process of invention
• Story of IR really a story of tech change in textiles, iron and steam. Steam was particularly significant if we consider its role as a general purpose technology