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EC104 the world economy history and theory exam revision lecture notes
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EC104 Exam• Double space / format
• Never use “we”
• In text citation
• Historical evidence (figures)
• Don’t include initials in reference
• Don’t use naked this
THE ROLE OF DEMOGRAPHY IN INDUSTRIALISATION – FERTILITY/MORTALITY ETC
• Increase of labour supply and specialisation which helped with task division
therefore improving productivity
• Introduction of child labour allowed for a larger and cheaper labour force which
increased output of manufactured goods. Children were also able to do jobs that
were more difficult for adults making production more efficient.
• Countries with scarce labour face higher labour costs (w). for this reason, innovating
and industrialising is cost-effective, and so they will. On the other hand, in countries
with a vast amount of labour wages will be low, such that labour is cheap and
employers are not incentivised to use innovate and industrialise as this would be
more costly than just employing workers. This explains for example, why Britain
(scarce labour high wages) industrialised before France (a lot of labour low wages)
• Industrialisation was possible in UK as the ratio of labour to land was quite low. As
there wasn’t enough labour and so its price was high, the opportunity cost of
investing in capital and new technologies decreased, which therefore provided an
incentive to accumulate capital and invest into developing new technologies. For this
reason we couldn’t see early industrialisation in France, as it was abounded in labour
• The lack of people due to the black death led to more expensive labour costs in areas
like Western Europe, which encouraged people to find alternative to produce goods
such as textile. This motivated the development of capital which increase
productivity with less cost. – what did the shock do to the demographic system
• In the aftermath of the Black Death, north-western Europe experienced a notable
decline in mortality and fertility. Subsequently, wages increased which had the effect
of incentivising accumulation of capital by lowering its relative cost. Hence, the
changes in the demographic pattern arguably induced industrialisation.
• There are several theories on how the population growth resulting from the
agricultural revolution could have led to the industrial revolution. E.g. Kremer (1993)
suggests that a higher population means more ideas are created. Galor and Weil
(2000) suggest a higher population means you have a greater advantage with high
human capital, so people invest more in e.g. education.
• mortality begins to drop after 1820 (Fogel, 2004). This occurred at the time when
advancements in medicine were occurring e.g. smallpox vaccine of 1801.
• During the first IR, fertility in China was larger than in Europe. This led to higher
pressure on resources in China. Furthermore, higher wages in Europe resulting from
preventitve checks led to larger investment in capital and technology in Europe
compared to China.
, • Sudden population surge pre-1750 before industrialisation. Demographic Transititon
2/3 due to Fertility and 1/3 due to Mortality (Wrigley & Schofield, 1981, 1997). Rising
high fertility at young age due to low levels of never married women and younger
age of marriage. Life expectancy also rises from 34.2 to in the 50s in 1820s.
Nepolionic war had vaccination boosts which allowed higher life expectancy. Also big
work in public health shifts and by end of 18th c. better educated having learned of
problems of overcrowding and post-natal care. All of which leads to a boom in
population and labour supply.
•
THE ROLE OF TECH IN PRE-MODERN GROWTH – before 1750
• Pre-modern growth was often driven by a new technology, which in the short-term
increased GDPpc. Due to the malthusian trap, the higher GDPpc would be
evaporated by subsequent population growth, however. A good example of this was
the introduction of a new variety of rice in Song China
• Advancements in technology increased productivity and agricultural surplus, which
allowed workers to move into other industries, driving sustained economic growth
(Agricultural Revolution).
• Technology increased the production efficiency (Q=AK^alpha L^(1-alpha), so the
capital improvements increase the economic capacity of outputs. This also helped
the economy to break down the Malthusian economy because the advanced
technology was able to meet the needs for food and produce other outputs even
when the population is increasing and. Then the cycle of the Malthusian economy
that constrains between population and economic growth turned to the Solow
model to achieve constant economic growth. – need more for premodern growth
• Technology played an important role in explaining patterns of pre-modern growth.
For example, China had relatively advanced technology at the time during the Sung
peak. However, to a large extent, it was not a sufficient driving force to overcome
constraints imposed by demography (the Malthusian trap)
• Emergence of agriculture
• Mongolian expansion (military)
• Golden age of Islam
• Post black death
• Many pre-modern growth technologies were military-centrered and might indirectly
have boosted episodic growth in various states if it gave a military edge that resulted
in the bounty of conquest without necesserily improving SoL.
• The development of larger ships that could cross the atlantic allowed for the Iberian
powers (and then England and Holland) to discover Latin America and expand their
trade routes.
• In pre-modern times, technological knowledge was stored in humans- so less
distinction between human capital and technology. A negative population shock
would cause loss of this knowledge.
•
THE ROLE OF INSTITUTIONS IN ECON GROWTH SINCE 1500
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