Topic 1/2 - Why Britain?

    Cards (65)

    • Y = Af (L, K, H, N)
      Y = National income
      A = Technology
      f = production function
      L = labour
      K = Physical capital
      H = Human Capital
      N = natural resources
    • There are two types of Growth 
      1. Extensive (more inputs/factors of production) 
      2. Intensive (using the same inputs more efficiently i.e. improving productive efficiency)
      examples in intensive:
      • Division of labour 
      • Tech advancement 
      • Improvement in efficiency 
    • Smithian growth = Division of labour/specialisation
    • Malthusian trap = growth --> GDP per capita increase --> population increase --> GDP per capita decrease/reverts
    • Gregory Clark (week 1)
      • the origin of the Industrial Revolution stretched back centuries
      • claims efficiency gains started in the early 17th century - pre-glorious revolution
      • related England's industrial boom to its population boom instead of technology
      • Claimed the profit motive was a 'relatively weak' stimulus for innovation in England
    • The industrial revolution was more a result of TFI than TFP.
      TFI is total factor input.
      HOWEVER, it is suggested the 'origin' of the IR was the 'industrious revolution' that involved workers in Britain working increased hours. Capital deepening and the expansion of tech like steam were later developments and less of a 'cause' of the IR.
    • Evidence of the 'industrious revolution':
      • 1760 workers worked approx. 2829 per annum
      • 1830 workers worked approx. 3483 hours per annum
      • increase in working days - e.g. starting to work on Saint's days
    • Why did the Industrious revolution happen?
      increase in dependency ratio by 15% from 1756 - 1831. Therefore families had to work harder to support the growing number of children and old people.
      Increase in choice - people wanted to be able to afford the 'new' or 'luxury' goods
    • Determinants of the Great Divergence:
      • Biogeographical - climate, disease, sea access
      • Cultural
      • Contingent events - e.g. Black Death
    • Why was Europe (England) the first to experience modern growth?
      • tech development
      • secure property rights
      • modern institutions & constitutional government
      European advantages:
      • Access to the Atlantic
      • Labour Shortage --> capital investment
      • Culture - e.g. later marriage customs
      • factor endowments - e.g. Coal, Climate
    • Why England?
      • Science/tech? - NO, france was the world leader
      • Human capital? - NO, compulsory schooling only introduced in 1870's - Mokyr thinks the IR happened 'DESPITE' the English education system, not because of it.
      • Patent system? - NO Mokyr & Clark claim that there was actually little incentive to invent OR seek patents.
      • institutions - Maybe?
    • Why England? - Allen's theory
      1. Wool industry made London a key port city
      2. British Empire allowed for constant demand of British goods
      3. 1500-1700 London grew 10X
      4. London + other cities were able to keep growing because it was fuelled by cheap coal
      5. urbanisation --> high wages
      6. high wage economy stimulated agriculture --> better diets + amalgamation of farms (economies of scale)
      7. High wages and cheap energy facilitated induced innovation
    • Why England? - Kelly, Mokyr, O Grada

      • they argue that the IR stemmed from the Human Capital of English workers
      • critiques induced innovation theory of Allen - cheap coal had been around for millennia
      • argues English & French wages were not dissimilar
      • argues that health, height, and cognitive skills all stem from diet and nutrition
      • Britain being a high-wage nation was a result, rather than a cause of the industrious/industrial revolution.
    • In 1994 von Tunzelmann anaylsed that the new technology in Britain was hardly labor saving at all before 1830 
    • Why England? - Broadberry (week 2)

      • the Black Death benefitted Holland & Britain the most
      • argues the success of Northwestern Europe was because of Ottoman control of old trade routes - it necessitated making links with the New World
      • also emphasises the British & Dutch constitutions that enforced property rights
      • Says Holland's earlier gains were down to specialising in services whereas Britain's cheap fuel costs were specialised for manufacturing
    • Why England? - overall
      • Empire → increased resources + trade
      • Motivations to work (industrious revolution) 
      • Legal framework →patents + poor law (1/4 of men aged 21 had done an apprenticeship)
      • FINANCE - like the Bank of England (1694)
      • Factory system → productivity 
      • High wages → innovation + more spending on capital
      • Innovation → increased productivity 
      • Cheap coal 
      • Agricultural revolution → better food production + better wages + less workers needed to produce food 
      • Black Death
      • Geography (Britain had a good transport network compared to China or France)
    • Allen
      also claimed the IR remained British due to the technological advancement being tailored to the British condition (induced innovation)
    • From 1800-1870 Britain's energy consumption rose by 11 times - this was only possible because of Coal
    • By 1870 in England, coal produced the same amount of energy as 220 million tonnes of wood - England only had 10 million tonnes of wood
    • The Great Divergence was the Western European & American Divergence from the rest of the world in GDP per Capita, while still maintaining a growing population
    • 1563 Statute of Artificers - set up apprenticeship schemes in Tudor England
    • Goldstone rejects Kelly, O Grada, and Mokyr's reasoning for human capital causing the IR/ Great Divergence.
      Goldstone states there was: ‘a sharp decline [in calorie consumption] from 1750 to 1800’ and that ‘we do not see any improvements in height in any of the samples studied of the English population born before 1800.’
    • GDP per capita growth in Britain from 1650 to 1690 was at 0.84% growth, but only 0.1% growth from 1760 to 1790 - Goldstone
    • Galor and Mountford - the great divergence can be put down to population growth in Asia being used to facilitate trade growth. In Wester Europe, however, population growth was slower, so the profits of trade were divided among non-growing populations, thus creating GDP per capita rises
    • Pim de Zwart - ‘The divergence would not have taken place without globalisation, as Britain would not have benefited from the production of land-intensive goods in the New World, nor would it have felt the pressure to mechanise.’
    • 1650-1700 Britain had 73% industrial output growth BUT this was not sustained and 1700-1750 only had 8.6% annual growth - Goldstone
    • Acemoglu, Johnson, and Robinson (2005) - claimed that trade with America & Asia gave rise to a politically influential merchant class that obtained property rights that paved the way for growth
    • 'little if any real per capita growth can be discerned in Britain before 1830' - Mokyr (2004)
    • Between 1760 and 1830 the population of England rose from 6.1 million to 13.1 million
    • The British economy as a whole was changing much more slowly than its most dynamic parts such as cotton and machine tools, because growth was ‘diluted’ by slow-growing sectors (Pollard 1981: 39). It is hardly surprising that it took until 1830 or 1840 for the economy-wide effects of the industrial revolution to be felt. - Mokyr (2004)
    • Jan de Vries (1994) & Voth (2001) - the industrious revolution did happen and increased the total factor productivity of the British economy.
      Britain was also getting younger, so there were more able-bodied workers
    • Between 1760 and 1800, Crafts and Harley estimate, total factor productivity ‘explained’ about 10 per cent of total output growth; in the period 1801–31 this went up to about 18 per cent.
      If we look at output per worker, we observe that for the period 1760–1830 practically the entire growth of per capita income – such as it was – is explained by technological change. - Mokyr
    • Mokyr analyses how over the traditional IR period, both old and new industries innovated - e.g. pottery ovens, water power, stearic candles
    • McCloskey (1981: p. 118) put it, the Industrial Revolution was not the Age of Cotton, nor the Age of Steam; it was an age of improvement.
    • Pomeranz - the reason that the Industrial Revolution occurred in Europe but not in China was the access to coal and the ‘ghost acreage’ that Europe derived from its colonies
    • The increased use of coal for industry and improvements in agricultural productivity (in part owing to investment in land improvements and livestock rather than technological change) did lead to higher income per capita and the ability to sustain a larger population on a given resource base - (Wrigley 2000).
    • Roberts’s self-acting mule (1825) - was a spindle for weaving
    • Neilson’s Hot Blast (1829) - blast furnace for Iron
    • Mokyr (2004 pp. 15-16) - what made the Industrial Revolution into the Great Divergence was the persistence of invention/innovation
    • Why Britain? - Mokyr
      • Britain was able to stay out of military conflicts on its own soil
      • Had a political system that was capable of reinventing itself and introducing reforms without violence
      • had a capitalist, productive and progressive agricultural sector
      • had an institutional agility that allowed it to adapt to a changing environment
      • IMPORTANTLY - Human Capital + Apprenticeship system --> technical literacy
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