Week 4: Growth of an economic superpower: Nineteenth Century USA

Question 1

What is geography fundamental for?

Answer 1

-Agriculture (pre 1700)
-Industry
-Disease Climate

Question 2

Can geography be overcome?

Answer 2

yes, irrigation , draining swamps etc.

Question 2

Does the implementation of the rail system explain industrial growth in the U.S?

Answer 2

-No, timing explains U.K industrial growth but not U.S

Question 2

What bigger implications does the transport revolution bring?

Answer 2

-transport for stuff, people and ideas
-In Britain reduces freight costs by 95% 1700-1800

Question 3

What does Fogel mention about Railroads and American Econ growth?

Answer 3

-Overall aggregate impact of railroads on the economy was small, used what if railroads did not exist and we used canals low diff
-‘Market Access’- cost of trade between places, reducing this ,some places grew

Question 4

What did improvements in transportation led to in America?

Answer 4

-Globalization
-1850-1914 60% of Europeans left the continent to go to U.S
-Labour was attracted to U.S because of high wages

Question 5

Abramitzky Boustan and Eriksson on migration to U.S?

Answer 5

-examining Norwegian immigration to U.S
-suggests negatively selected as inheritance law, older brother inherits

Question 6

Population growth and industrialization link U.S?

Answer 6

-no link
-U.S could have stayed agricultural even with influx of people/labour

Question 7

What was the reason for industrialization in the U.S?

Answer 7

-America had great raw material availability
But people are expensive
[Recall Allen’s theory of the British IR!]

-American manufacturing was therefore raw material and
energy intensive

• America also invented many iconic technologies

Question 8

What technology did America invent?

Answer 8

1. Interchangeable Parts
2. The Assembly Line 3. Modern Management

Question 9

Explain interchangeable parts?

Answer 9

-Eli Whitney for interchangeable parts in firearms greater specialization and efficiency
- as easier assembly , repair and less skill needed

Question 10

Example of Interchangeable parts

Answer 10

-Singer Sewing Machine

Question 11

Explain the Assembly line?

Answer 11

-Assembly line became dominant after Ford’s innovation

-Production shifted to a structured process where teams divided labor into specific segments to improve efficiency

Question 12

Example of Assembly line

Answer 12

-Henry Ford’s Highland Park Factory

Question 13

What did assembly line production lead to?

Answer 13

-fundamentally deskilling, therefore lowering wages

-increased productivity, lower prices and mass consumption

Question 14

What makes the US economy dominant in the 20th century?

Answer 14

-modern management (large firms, economies of scale, and professional management)

Question 15

What is modern management?

Answer 15

-shift to large hierarchal firms (economies of scale, lower costs per unit)

-rise of professional managers, mass distribution and advertising

Question 16

What does Alfred D Chandler describe the innovation in the U.S?

Answer 16

-‘Managerial and production revolution’

Question 17

How does path dependency link to big cities?

Answer 17

-Institutions are long-lived
Infrastructure is long-lived
Cities are SELF REINFORCING

Question 18

What places did not have path dependency and agglomeration economies in the 20th century?

Answer 18

-Argentina, Chile and Uruguay
-weak institutions, poor economic policies, failure to diversify industries meant that Argentina could not create a self-reinforcing cycle

Question 19

What are Marshallian economies?

Answer 19

-Marshallian economies - economies of scale
-when an industry gets bigger in a region costs go down due to clustering

-due to specialist suppliers

Question 20

Examples of Agglomeration Economies?

Answer 20

Marshallian economies
-Jacobs’ externalities

Question 21

Example of Marshallian economies?

Answer 21

-London and NY financial centres

Question 22

What are Jacobs externalities?

Answer 22

• Costs in each and every industry are lower, if there is more
  industry in that region

-due to knowledge spill overs , trained workers, local supply of general business support

Question 23

Examples of Jacobs externalities?

Answer 23

-any big city with a diverse economic base

Question 24

What does Abramitzky say about immigration for America?

Answer 24

-immigration flows contributed to the transformation of American manufacturing from small-scale artisanal shops to large factories engaged in mass production

-unskilled migrants complemented capital investments like new factories geared towards mass production

-facilitates specialization

Question 25

How did Ford establish mass production?

Answer 25

• 5 dollar day (high wage) , incentivized workers
  -Ford’s openness in his methods

Question 26

Engerman, Sokoloff and Acemoglu say about econ growth in U.S (factor endowments)?

Answer 26

-N.A had climates and soils more suitable for farms, producing gains, small-scale other way in S.A with sugar and mining

-Homestead act, easy land ownership in U.S for smallholders

-education

-broad access to loans and investment