Lecture notes
The IR notes
- Module
- EC104. World Economy (EC104)
- Institution
- The University Of Warwick (UoW)
Study notes for EC104: the industrial revolution
[Show more]
Content preview
The Industrial RevolutionWhat and when
● An industrial revolution is rapid significant technological change
○ Usually refers to technological innovations which substitute machines
for humans and bring about a modern economy
● A redeployment of resources from agriculture
Why was Britain first?
● Britain had a series of revolutions that paralleled the IR
○ High agricultural productivity allows the generation of surplus and
individuals to move to other sectors
○ Proto industrialisation
○ Good institutions - Glorious Revolution (1688), property rights
○ Labour characteristics - applied technical knowledge, high wages
○ Population - fertility, urbanisation
○ Policy - banking / finance, taxes, infrastructure
○ Geography - resources (coal), isolation
○ Speculative - war, religion
● Allen (2009a) - emphasis on factor prices
○ High labour costs meant inventions were only cost-effective in Britain
● Mokyr (2009) - institutions
○ British science was better and more connected
○ Physical and intellectual property rights
● Crafts (1977) - luck and macro invention
○ Random component matters
○ Geography - separated from Europe by the channel, availability of coal
○ Religion, monarchy
● Ogilvie (2007) - no main emphasis
○ No single factor that every other country lacked
○ Britain brought all possible factors together for the first time
Why was it a revolution?
● Structural change (agriculture to industry)
● Substitution of labour for machines
● Use of non-organic materials - fossil fuels, minerals, synthetics
● Increase in the scale of production
● Regional specialisation
○ Concentration of industry near inputs (Newcastle)
● Integration of markets due to transport / communication inventions
● Capital accumulation (high investment: GDP)
, ● Emergence of general-purpose tech (steam)
● Social and institutional change
○ Nature of work, increased inequality
● Rapid technological change and total factor productivity growth
Technological change
● Growth of output = residual (TFP) growth + growth of K + growth of L
○ Y = A K α L1−α
○ A - technological shock has dynamic effects
○ A affects output and labour through capital (SEE SLIDES)
Tech change was concentrated in:
● Steam
○ Savery pump (1698) to the Corliss Engine (1849)
○ Capacity of steam engines increased from 3 to 2060 (1760-1870)
● Textiles
○ Flying shuttle (1733) to the Power Loom (1785)
○ Mechanisation increased labour productivity
○ Real cost of cotton decreased from 7d/lb to 2.33d/lb (1760-1775)
○ Technological change was driven by the cotton industry
■ Trade prevented the price of cotton falling as it made demand
more elastic
■ Raw cotton was bought from Turkey, Brazil and the New World -
increased the slave trade
● Iron and steel
○ Derby coke smelting (1709) to the Bessemer process (1856)
○ More developed processes use higher temperatures, allowing the
production of steel which is higher quality than iron
● Supported by watchmaking (gears), transport and communications
● Modernised sectors increased British TFP growth by 0.34% per year between
1780-1860 (total increase was 55%)
What drove technological change in Britain?
Allen - it paid to invent in Britain (2009)
● Britain had high wages but cheap capital and energy
● “Macro inventions” were expensive and needed
R&D
● Britain was the only country with the right factor
prices / market size for macro inventions
● RoW focused on “micro inventions”
−w
● The slope of a country’s isocost curve is
r
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller bethwalton03. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53068 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now