Vive la différence. Disaggregation of the productivity convergence process

Editada en la Fundación Empresa PúblicaEste trabajo examina el proceso de convergencia en perspectiva histórica a nivel desagregado. Tomando en consideración la producción, la renta y el gasto este trabajo muestra una gran diversidad geográfica y temporal. Cada país se especializó según su ventaja comparativa y la convergencia se produjo tanto a través de cambios en su estructura productiva, como a niveles microeconómicos. Asimismo, variaciones en la proporción de las facturas condujo a una mejor convergencia de la renta sin necesidad de una mayor aproximación de los precios de los factores. El trabajo demuestra también que persistieron importantes diferencias en las preferencias de los consumidores. Así pues, el proceso de convergencia a nivel agregado no condujo necesariamente a la uniformidad de las economías. ¡Vive la differénce!This papaer examines the convergence process at a disaggregated level in a historical context. A trhee-way disaggregation of the national accounts by output, income and expenditure a wealth of diversity, both over time across countríes, i.e. history and geography tnatter. Countries can specialise according to comparative advantage, and convergence at the aggregate level can occur through changes in structure as well as through convergence at the micro level. Similarly, changes in factor proportions may lead to convergence of aggregate incomes without requiring convergence of all factor prices at the micro level. Also, differences in preferences may persist, so that individual components of expenditure do not need to converge in line with aggregate expenditure. Convergence at the aggregate level, then, does not necessarily lead to uniformity. Vive la différence!Publicad

Explaining Anglo-German productivity differences in services since 1870

Germany overtook Britain in comparative productivity levels for the whole economy primarily as a result of trends in services rather than trends in industry. Britain's productivity lead in services before World War II reflected external economies of scale in a highly urbanised economy with an international orientation. Low productivity in Germany reflected the underdevelopment of services in an economy that was slow to move out of agriculture. As German agricultural employment contracted sharply from the 1950s, catching-up occurred in services. This was aided by a sharp increase in human and physical capital accumulation, underpinned by the institutional framework of the postwar settlement

Recent Developments In The Theory Of Very Long Run Growth : A Historical Appraisal

This paper offers a historical appraisal of recent developments in the theory of very long run growth, focusing on three main areas: (1) linkages between wages, population and human capital (2) interactions between institutions, markets and technology and (3) sustaining the process of economic growth once it has started. Historians as well as economists have recently begun to break away from the traditional practice of using different methods to analyse the world before and after the industrial revolution. However, tensions remain between the theoretical and historical literatures, particularly over the unit of analysis (the world or particular countries) and the role of historical contingency

Is Anonymity the Missing Link Between Commercial and Industrial Revolution?

The Industrial Revolution is often characterized as the culmination of a process of commercialisation; however, the precise nature of such a link remains unclear. This paper models and analyses one such link: the impact of a higher degree of anonymity of market transactions on relative factor prices. Commercialisation raises wages as impersonal labour market transactions replace personalized customary relations. This leads, in equilibrium, to higher real wages to prevent shirking. To the extent that capital and labor are (imperfect) substitutes, the resulting shift in relative factor prices leads to the adoption of a more capital-intensive production technology which, in turn, results in a faster rate of technological progress via enhanced learning by doing. We provide evidence using European historical data consistent our results.Commercialisation; Industrial Revolution; Anonymity; Efficiency; Wages; Learning by Doing.

Recent developments in the theory of very long run growth: A historical appraisal

This paper offers a historical appraisal of recent developments in the theory of very long run growth, focusing on two main areas: (1) linkages between wages, population and human capital and (2) interactions between institutions, markets and technology. Historians as well as economists have recently begun to break away from the traditional practice of using different methods to analyse the world before and after the industrial revolution. However, tensions remain between the theoretical and historical literatures, particularly over the unit of analysis (the world or particular countries) and the role of historical contingency

Indian GDP, 1600 -1870: Some Preliminary Estimates Comparison with Britain

This paper provides estimates of Indian GDP constructed from the output side for the period 1600-1871, and combines them with population estimates to track changes in living standards. Indian per capita GDP declined steadily. As British living standards increased from the mid-seventeenth century, India fell increasingly behind. Whereas in 1650, Indian per capita GDP was more than 80 per cent of the British level, by 1871 it had fallen to less than 15 per cent. As well as placing the origins of the Great Divergence firmly in the early modern period, these estimates suggest a relatively prosperous India at the height of the Mughal Empire, with living standards well above bare bones subsistenceIndian GDP; Comparison; Britain

Resolving the Anglo-German industrial productivity puzzle, 1895-1935 : a response to Professor Ritschl

This paper offers a critical appraisal of the claim of Ritschl (2008) to have found a “possible resolution” to what he calls the “Anglo-German industrial productivity puzzle”. To understand the origins of this term, it is necessary to describe some recent developments in comparisons of industrial labour productivity between Britain and Germany. The Anglo-German industrial productivity puzzle really arose as the result of a new industrial production index produced by Ritschl (2004), which differed very substantially from the widely used index of Hoffmann (1965). Broadberry and Burhop (2007) pointed out that if the Ritschl (2004) index is combined with an index of German employment from Hoffmann (1965) and time series of UK output and employment from Feinstein (1972), it implies an implausibly high German labour productivity lead over Britain in 1907, when projected back from a widely accepted Germany/UK labour productivity benchmark for 1935/36

Comparative productivity in British and German manufacturing before World War II: reconciling direct benchmark estimates and time series projections

This article provides a new benchmark estimate of comparative Germany/U.K. labor productivity in manufacturing for circa 1907, and experiments with alternative German manufacturing production indices for time series projection from a circa 1935 benchmark. A consistent picture of broadly similar levels of manufacturing labor productivity in Britain and Germany throughout the period 1871–1938 is established. We also show that a substantial German productivity lead had already emerged in heavy industry by 1907, but was offset by a substantial British productivity lead in light industry. For the pre-1914 period, an additional check is provided using nominal income-based estimates

Technology, Organisation and Productivity Performance in Services: Lessons from Britain and the United States, 1870-1990

We document comparative productivity performance since 1870, showing the importance of services for US overtaking of Britain. The transition in market services from customised, low-volume, high-margin business organised on a network basis to standardised, high-volume, low-margin business with hierarchical management, is identified as a key factor. A model of the interaction between technology, organisation and economic performance is then provided, focusing on the transition from networks to hierarchies. We show that different technologies and organisational forms can co-exist efficiently and that technological change can cause difficulties of adjustment if it is not suited to the social capabilities of the society.productivity, services, technology, organisation, hierarchies, netwworks

Technology and productivity in historical perspective : introduction

This collection of articles is the result of a workshop organised to consider technology and productivity in historical perspective, drawing in particular on the evolutionary approach. The workshop was organised by the N.W. Posthumus Institute for Economic and Social History, the Netherlands Institute for Advanced Study in the Humanities and Social Sciences (NIAS) and the Groningen Growth and Development Centre. Economic historians with backgrounds in both evolutionary and neoclassical traditions came together in the pleasant surroundings of the NIAS at Wassenaar in May 1999, to re-examine technology and productivity experience in Europe since the Industrial Revolution. An important focus was provided by recent theoretical developments, which have seen the incorporation of many evolutionary ideas into mainstream economics. Until quite recently, there seemed to be little common ground between approaches to technology and growth based on Solow's (1956) neoclassical growth model and Nelson and Winter's (1982) evolutionary, neo-Schumpeterian model. Now, however, the evolutionary approach has entered the mainstream through the work of writers such as Grossman and Helpman (1991) and Aghion and Howitt (1998) on endogenous innovation, and David (1985) and Arthur (1994) on path dependence. This is a particularly welcome development from the perspective of the European Historical Economics Society, the sponsors of the European Review of Economic History, holding out the promise of a genuinely ‘historical economics’