20 June 2008

Lettera da Lhasa numero 100. An empirical test on the British Industrial Revolution

Lettera da Lhasa numero 100. An empirical test on the British Industrial Revolution
by Roberto Scaruffi

Clark, G., K. H. O'Rourke, and A. M. Taylor, Made in America? The New World, the Old, and the Industrial Revolution, Working Paper 14077, NBER, Cambridge, MA, USA, June 2008,
http://papers.nber.org/papers/W14077
(Clark, June 2008).
Gregory Clark,
Kevin H. O'Rourke,
Alan M. Taylor


There have been and there are continuous evaluations and analysis on the British Industrial Revolution, even about whether it really happened and when. There are sometime hypotheses on the New World and its supposedly key role for instance in moving the core of the Western world from the Mediterranean to England and surrounding areas. If new colonies may be, sometimes, decisive for key raw materials, they are rarely immediately precious as new markets for mass productions. Actually, according the “geopolitics of geographic maps”, also Spain and Portugal were in a “strategic position”. However they irreversibly declined. It is finally arduous, perhaps impossible, to find the ineluctable factor of development and of developmentalism. The creation of new empires and the declining of old ones obeys to laws are continuing to seem largely undecipherable. It is possible to identify factors, however there is not the single and decisive factor. The British Empire, despite the spit, or the apparent split, of its central North American area, has remained extraordinarily vital and powerful, although Great Britain be finally just a big island not greater than many other European States. London is continuing to be the centre of the world.

Looking for the key factor, or simply for finding audience inside stabilised academic milieus, new theories are proposed. The authors of the quantitative testing here reported deal with the importance, for the British Industrial Revolution, of trade with the New World and the expanded supply of raw cotton. For the testing, they use a computable general equilibrium model.

Their testing disproves their hypotheses: “(...) Had the Americas not existed, the Industrial Revolution would still have looked much as it did in practice. There were ready substitutes for the cotton, sugar, corn and timber of the New World in Eastern Europe, the Near East and South Asia.
“However, had all trade barriers been substantial—if, say, a victorious France had cut off Britain’s access to overseas trade—then British history would have been very different. British incomes per person, instead of rising by 45% between the 1760s and 1850s, would have risen by a mere 5%. The TFP growth rate, already a modest 0.4% per year, would have fallen to 0.22% per year.”

In fact, for the British Industrial Revolution and, consequently, for the British success, what was essential was the openness, it assured with its light and flexible but powerful armies, of the remaining world: “The highly specialized British economy was extremely dependent on foreign trade by the 1850s.”


Clark, G., K. H. O'Rourke, and A. M. Taylor, Made in America? The New World, the Old, and the Industrial Revolution, Working Paper 14077, NBER, Cambridge, MA, USA, June 2008,
http://papers.nber.org/papers/W14077