Search

Several scholars argue that high agricultural productivity can retard industrial development because it draws resources toward the comparative advantage sector, agriculture. However, agricultural productivity growth can increase savings and the supply of capital, generating an expansion of the capital-intensive sector, manufacturing. We highlight this mechanism in a simple model and test its predictions in the context of a large and exogenous increase in agricultural productivity due to the adoption of genetically engineered soy in Brazil. We find that agricultural productivity growth generated an increase in savings, but these were not reinvested locally. Instead, there were capital outflows from rural areas. Capital reallocated toward urban regions, where it was invested in the industrial and service sectors. The degree of financial integration affected the speed of structural transformation. Regions that were more financially integrated with soy-producing areas through bank branch networks experienced faster growth in nonagricultural lending. Within these regions, firms with preexisting relationships with banks receiving funds from the soy area experienced faster growth in borrowing and employment. [ABSTRACT FROM AUTHOR]

This article develops an idea flows theory of trade and growth with heterogeneous firms. Entrants learn from incumbent firms, and the diffusion technology is such that learning depends not on the frontier technology, but on the entire distribution of productivity. By shifting the productivity distribution upward, selection causes technology diffusion, and in equilibrium this dynamic selection process leads to endogenous growth without scale effects. On the balanced growth path, the productivity distribution is a traveling wave with a lower bound that increases over time. The free entry condition implies trade liberalization must increase the dynamic selection rate to offset the profits from new export opportunities. Consequently, trade integration raises long-run growth. Dynamic selection is a new source of gains from trade not found when firms are homogeneous. Calibrating the model implies dynamic selection approximately triples the gains from trade compared to heterogeneous firm economies with static steady states. [ABSTRACT FROM AUTHOR]

While human capital is a strong predictor of economic development today, its importance for the Industrial Revolution has typically been assessed as minor. To resolve this puzzling contrast, we differentiate average human capital (literacy) from upper-tail knowledge. As a proxy for the historical presence of knowledge elites, we use city-level subscriptions to the famous Encyclopédie in mid-18th century France. We show that subscriber density is a strong predictor of city growth after the onset of French industrialization. Alternative measures of development such as soldier height, disposable income, and industrial activity confirm this pattern. Initial literacy levels, on the other hand, are associated with development in the cross-section, but they do not predict growth. Finally, by joining data on British patents with a large French firm survey from the 1840s, we shed light on the mechanism: upper-tail knowledge raised productivity in innovative industrial technology. [ABSTRACT FROM AUTHOR]

Unlike economies as a whole, manufacturing industries exhibit strong unconditional convergence in labor productivity. The article documents this at various levels of disaggregation for a large sample covering more than 100 countries over recent decades. The result is highly robust to changes in the sample and specification. The coefficient of unconditional convergence is estimated quite precisely and is large, at between 2–3% in most specifications and 2.9% a year in the baseline specification covering 118 countries. The article also finds substantial sigma convergence at the two-digit level for a smaller sample of countries. Despite strong convergence within manufacturing, aggregate convergence fails due to the small share of manufacturing employment in low-income countries and the slow pace of industrialization. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing. JEL Codes: O40, O14 [ABSTRACT FROM PUBLISHER]

Many cities in North America formed at obstacles to water navigation, where continued transport required overland hauling or portage. Portage sites attracted commerce and supporting services, and places where the falls provided water power attracted manufacturing during early industrialization. We examine portage sites in the U.S. South, Mid-Atlantic, and Midwest, including those on the fall line, a geomorphological feature in the southeastern United States marking the final rapids on rivers before the ocean. Although their original advantages have long since become obsolete, we document the continuing importance of historical portage sites. We interpret these results as path dependence and contrast explanations based on sunk costs interacting with decreasing versus increasing returns to scale. [ABSTRACT FROM AUTHOR]

This paper investigates private-interest, public-interest, and political-institutional theories of regulatory change to analyze state-level deregulation of bank branching restrictions. Using a hazard model, we find that interest group factors related to the relative strength of potential winners (large banks and small, bank-dependent firms) and losers (small banks and the rival insurance firms) can explain the timing of branching deregulation across states during the last quarter century. The same factors also explain congressional voting on interstate branching deregulation. While we find some support for each theory, the private interest approach provides the most compelling overall explanation of our results. [ABSTRACT FROM AUTHOR]

The present paper extends the complementarity hypothesis to the case where a credit-constrained firm uses noncapital asset balances (cash, bank deposits, and inflation hedges) as working capital, and where the firm's credit constraint is loosened by increased deposit holdings. In the model developed in Section I, the firm produces output using variable inputs ("operating costs") and physical capital, and its operating costs are subject to a cash-in-advance constraint. Physical capital is assumed to be totally illiquid, so that operating costs must be financed by converting the noncapital assets into a medium of payment, and these conversions entail transaction costs that are deducted from the firm's profits. The firm's profit-maximizing choice between physical capital and operating costs is thus partly determined by the yields and transaction costs associated with the noncapital asset balances used to finance variable input purchases. Aside from the possible use of cash and deposit balances by credit-constrained firms to finance purchases of variable inputs, the assumption of pure "self-finance" seems at least somewhat inconsistent with arguments in which financial liberalization increases the supply of credit, as higher deposit holdings augment the loanable funds channeled through financial intermediaries.

This paper asks whether adjustment processes over real time help to "select" the long-run outcome in a model of industrialization, where multiple stationary states exist because of increasing returns in the manufacturing sector. "History" alone cannot in general determine where the economy will end up Self-fulfilling expectations often make the escape from the state of preindustrialization (the takeoff) possible. The global bifurcation technique is used to determine when an underdevelopment trap exists and when a takeoff path exists. The role of government policy and agricultural productivity in industrialization are then considered.

When world trade is costly, a country can profitably industrialize only if its domestic markets are large enough. In such a country, for increasing returns technologies to break even, sales must be high enough to cover fixed setup costs. We suggest two conditions conducive to industrialization. First, a leading sector, such as agriculture or exports, must grow and provide the source of autonomous demand for manufactures. Second, income generated by this leading sector must be broadly enough distributed that it materializes as demand for a broad range of domestic manufactures. These conditions have been important in several historical growth episodes. [ABSTRACT FROM AUTHOR]

A two-sector model is used to explore the role of the agricultural sector in the process of industrialization. Our hypothesis is that areas industrialize earlier where the wages for females and children relative to those for adult males are initially low. Furthermore, the lower this relative productivity of females and children in the pre-industrial economy, the proportionately more will their relative wages increase, and the higher will be the ratio of manufactured to agricultural goods. The model is used to interpret the conditions that fostered the rapid industrialization of the American Northeast, but not the South, from 1820 to 1850. [ABSTRACT FROM AUTHOR]

Technological change and product life cycle concepts can be used to explain the concentration of cotton textile production in Southeastern New England during the industry's period of rapid innovation in machinery and machine tool design. Boston was the center for an agglomeration of high technology industries that were attracted by each other and the local resource pool of skilled mechanics and entrepreneurs. The movement of the textile industry to the Southeast, which took place after 1880, is linked to technological change in the product cycle that substituted unskilled labor for skilled labor and high technology inputs. [ABSTRACT FROM AUTHOR]

This article presents a comparative economic history of China and India and their response to economic challenge. Together, the population of the two countries comprises one-third of the world population. Today the two countries are economically in an underdeveloped stage, with low per capita income but with several impressive scientific and technological achievements. Many of the facts and issues about these two countries are gigantic, that is, population, size, history, and even the problems and complexities. But China and India did not respond to the forces of the industrial revolution that in Europe transformed nations from poor peasant societies to modern developed ones. During the course of a century and a half they failed to exploit the epochal innovations of modern economic growth. These two then-advanced nations failed to meet the challenge of modern economic growth. At the same time, both Governments did not have a wide consensus supporting them, and hence, even in the raising of resources to meet administrative expenses, coercion had to be exercised. By 1950, these factors led to a major transfer of power in the two countries. For different reasons, but with the same result, the contact of China and India with the West remains a tragic case of missed opportunity.

This article concentrates on one aspect of Alexander Gerschenkron's relative backwardness hypothesis, namely, the relationship between industrial structure and relative backwardness. Gerschenkron views the development of a heavy industry biased industrial structure as one of the important substitutions that relatively backward countries must make in order to generate the sought-after spurt of industrial growth. This structural substitution occurs in the following manner: The state, upon realizing its relative economic backwardness, becomes quite interested in promoting industrialization. One of the most important obstacles hindering this industrialization is the poverty of the country. The majority of the labor force is engaged in agriculture using primitive cultivation methods that yield low agricultural incomes. Aggregate demand is insufficient to support rapid industrial growth, and the low per capita income generates a demand pattern favoring low-income elasticity branches. According to Gerschenkron, the state may substitute its own demand for deficient private demand in this situation, and the state's pattern of demand will tend to favor heavy industrial branches. In addition, the state will pursue other policies to promote heavy industry. The net result of this state activity will be an industrial structure biased in favor of heavy industry. In this manner, the slow and time-consuming process of waiting for the industrial structure to evolve towards a heavy industry orientation with the growth of per capita income and import substitution can be avoided, and the industrialization process speeded up.

The article discusses the accelerated investment as a force in economic development. A comment by the author which states that an increase in investment characterizes all economic development and that aside from the rise of income per capita, it is probably the most central phenomenon . The author also provides an introduction, the demographic argument, the role of the propensity to consume and savings, the importance of external economies, overtones for policy of the doctrine of accelerated rates of investment and a conclusion.

The article presents a debate among economists on the Factory Acts in 19th century Great Britain. The author asserts that there is a need for a reconsideration of the economists' viewpoints. He suggests that the classical economist generally favored regulation of child labor while disapproving of legislation for adults. The author discusses the phases of the debate, history of factory legislation in Great Britain, the Ten Hours Bill of 1847 and an evaluation of the classical analysis that British historians of the Industrial Revolution held the opinion that early factory reform was achieved in the face of strong hostility from the economic experts of the day.

This article focuses on matters related to labor force and industrial development in Soviet Germany. There are a number of reasons why developments in the so called Germanic Republic are of considerable interest. Of all the satellite empire, only Soviet Germany and Czechoslovakia have been advanced industrialised areas of the world. Communist development has met in these areas the conditions envisaged by Karl Marx which, one might bate supposed, would enable it to show particularly impressive results. However, communism has been imposed from outside and not from inside as envisaged by Marxist theory. The German Democratic Republic adjoins the German Federal Republic and citizens on both sides of the Iron Curtain which divides the truncated postwar Germany and its former capital, Berlin, are still very much part of one country. On each side they have an intense interest in the developments of the other; they have preserved not only personal contacts through family relations, etc., but also a considerable personal mobility, which is expressed by a rather one-sided movement from east to west.

The article discusses the interrelationships during 1900-1950 between population characteristics and industrial development in a group of twenty contiguous counties in the Upper East Tennessee Valley, including some counties which have enjoyed substantial industrial-urban growth since 1900 and others which have remained largely rural and agricultural. In 1947, per capita value added for the twenty-county study area stood at 62 per cent of the national average, as compared with 27 per cent in 1929 and 15 per cent in 1899. During 1900-1950, manufacturing employment as a percentage of the total gainfully employed in the study area increased from about 6 to 23 per cent, while relative agricultural employment was declining from 84 to 30 percent. In 1950, manufacturing supplied jobs for 44,594 persons (24 per cent female) in our twenty-county study area. Chemical industries accounted for 29 per cent of total manufacturing employment, followed by textiles and apparel. Furthermore, while the geographic concentration of manufacturing was still very high in 1950, there had been since 1940 a tendency for the area's manufacturing to become somewhat more dispersed into some of the less well-developed counties.

The article discusses the factors responsible for the economic development of developing countries with special reference to metalworking industry in Soviet Union. Observation of the process of Soviet industrialization has doubtless had an important influence in causing a demand for a capital-intensive form of development. The sharp increases in national product achieved by the Soviet Union are viewed as a major historical illustration of what can be accomplished through the transplantation of foreign technology and industrial organization. The Soviet Union's experience is often accepted as proof that there cannot be very much net "waste" involved in the use by an underdeveloped nation of the production methods of countries with quite different proportions of factor resources. The production organization is inseparably linked with composition of equipment and with the types of technology employed. The sharp increases in national product achieved by the Soviet Union are viewed as a major historical illustration of what can be accomplished through the transplantation of foreign technology and industrial organization.

The article discusses economic historian Earl J. Hamilton's views on inflation in industrializing underdeveloped countries. Hamilton was of the opinion that inflation was a powerful promoter of industrial growth during the Price Revolution. During long periods of inflation, compensating wage adjustments were negated by rising prices. This resulted in profit inflation, a widened spread between labor costs and industrial receipts. According to Hamilton, this boon to industrialists and merchants was the chief boon from inflation during the Price Revolution and in many subsequent inflationary eras. In these periods profit inflation facilitated a much more rapid rate of industrial growth to occur than would have achieved under stable prices. In such a situation, profit inflation signified a relationship between industrialists as a whole--broadly defined to include merchants, on the reasonable perception that the two groups are closely interrelated in the early phases of industrialization--and labor.

This article presents reasons for the long delay in the adoption of marginal utility analysis by British political economy. Professor Emil Kauder claims that the hegemony of the labor cost theory in British thought in the seventeenth and eighteenth centuries was due to the power and prestige of Calvinist religious theory. He said that the members of the Italian-French subjective value school were Catholics and the defenders of the cost theory of value were Protestants. Secondly, he believes that early nineteenth century formulations of utility were hindered by the strong foundations of Ricardian labor theory in academic circles where utility advocates were unable to exert sufficient influence to gain acceptance for their ideas. Britain was the first country to face the problems of transition from a "natural" economy to one in which exchange and the division of labor were dominant. In the process of industrial development, a theory of production and the search for an objective theory of value were necessary preliminaries to the solution of problems which called for policy recommendations.

This article focuses on the changes in the industrial sector in Japan during the period from 1930 to 1951. Japanese industry has undergone major structural changes during the period from 1930 to 1951. These changes are mainly due to the Second World War, and the shifts in the whole world economy during this period. The article focuses primarily on the machinery, chemical, and textile industries. These industries employ over half the workers in Japanese manufacturing industries. The prewar period of industrial development in Japan was marked by growth of the chemical and machinery industries at the expense of the lighter industries. Fabricated basic materials declined from 36 to 27 percent of all Japanese exports during the period from 1930 to 1936, while manufactured products increased from 47 to 58 percent. The output of machinery and chemicals continued to increase, although textile production was reduced to decrease nonmilitary imports. The difficulty of importing raw materials and the diversion of the chemical industry from fertilizers to explosives resulted in a 50 percent decrease in chemical output.

The article discuses the concepts of left wing opposition spokesman Evgeni Preobrazhenski regarding industrialization of Soviet Union. Referring to the famous "goods famine" of 1925, Preobrazhenski says that it was an accentuated expression of deep-seated maladjustments in the structure of the Soviet economy. In his view, the shortages of the present were, to a large extent, the results of the enforced prodigality of the past. to reveal themselves. While the possibility of securing output increases by more intensive utilization of available equipment was diminishing as capacity limits were approached, the deterioration of equipment was progressing. The situation as Preobrazhenski saw it, however, called for something much more far-reaching. This was due in part to the fact that such a complete renewal of equipment provided the best opportunity for a wide-scale application of the technological improvements which had accumulated in previous years and which he viewed as uniformly capital-using.

The article examines market structures in undeveloped economies. Such an analysis, necessarily couched in very general terms, seems to be needed on three grounds. First, there appears to be little knowledge of what the actual market structure in the backward regions is. Factual statements are confined to brief descriptions of marketing practices, incidental to a discussion of agricultural production. Theoretical statements are confined to a trotting out of the ancient precepts of locational theory which prove that markets are local, rather than national, when transportation is bad. Neither deals with market structure. A second objective is to throw some light on the generally held assumption that increasing industrialization necessarily involves a growth of the monopolistic and imperfectly competitive elements in the economy, while less advanced economies characterized by smaller production units approach more closely the classical norms of perfect competition.

The article focuses on the industrial development in the Middle East. Near East industry has developed economically, such production existed previously was carried on in small workshops by artisans and craftsmen, whose working personnel consisted primarily of the members of their own families. Its trend throughout the world in most of the inter-war period was toward economic self-sufficiency, tariff barriers, and building up home industries, and this tendency was strengthened in the crisis of the 1930's. The development of the world economic crisis and its difference in prices on the world market between raw materials and industrial products has been widened, to the disadvantage of those countries exporting raw materials.

This article talks about the early use of the term industrial revolution. W.E. Rappard, a professor, pointed out in 1914 that although the term was used by German philosopher Karl Marx in "Das Kapital" in 1867 and by British philosopher John Stuart Mill in the first edition of "Principles" in 1848, German political philosopher Friedrich Engels was the accredited user of the term. Rappard noted that 1845 was the date of the term's first printed form. However, a reprinted article, entitled "Grande Révolution Industrielle," from the "Journal des Artistes," appeared in the August 17, 1827 issue of "Le Moniteur Universel." According to the author, writers use the term revolution to describe any marked change in the conduct of an industry.

The article examines the international tariff relations that are affected by World War I. According to the author, some factors for domestic determination are the need of the government for revenue and its level of industrial development. He claims that tariff discriminations and tariff duties are international concerns. He notes that tariff discriminations may either be removed or may not be removed by bargaining nations. He adds that the unconditional form of bargaining and interpretation of the most-favored-nation clause may be adopted by the U.S.

The article evaluates the work of the wages board based on the impact of the mode of wage regulation on the prosperity and welfare of the people in Australia. It is not possible to show by means of statistics what effect the determinations of wages boards have had upon wages. The most serious charge brought against the method of regulating wages by wages boards is that it leads to unemployment to minimum wage earners. A mode of wage regulation would have important consequences in industrial development. For many trades the wages board is the beginning of organization. The final test of the success of any legislative experiment made by self-governing people is the degree of satisfaction which these laws afford to those who are responsible for their enactment and enforcement.

Focuses on the problems encountered by the wool industry in the U.S. Analysis of industrial development; Volume of wool consumption; Commercial link between wool dealing and wool manufacturing.

Focuses on the growth of iron industry in the U.S. as of February 1900. Factors on which the growth of the iron industry depends; Rate of growth of the iron industry from 1870-1900; Several iron mines in the Lake Superior region.

The article presents a letter that deals with the movement of economy in Germany. In recent years, economic questions have been discussed in Germany more than at any other time. Until within fifteen years, controversy turned on the powers and influence of the representatives of the people, the position of the states in the Empire, the division of the field of Church and State, questions which, as compared to those concerning social and economic policy, have since gone into the background. Political parties have become economic parties, and the vigorous discussion in public life has exercised a stimulating influence on scientific research. Important differences of principle have appeared in the course of this movement; and controversy has arisen, not only on the merits of particular measures, but as to the scope of economic policy as well as of economic research. In most civilized countries, a reaction has set in, in recent times, against the industrial individualism which had for centuries advanced with powerful strides; but nowhere has the reaction been so strong as in Germany.

The article investigates several aspects of the relationship of demographic change and industrial demand in the Philippines. One of the most widely observed and pervasive trends associated with the process of economic development is the rise in the importance of industrial production which accompanies an expansion in per capita income. At the same time, primary production declines as a share of total output. The theoretical explanation of this observed pattern of economic growth typically focuses on Engel's law: food expenditures occupy a declining proportion of household budgets as income rises. By inference, nonfood expenditures plus savings will tend to increase in relative importance. Based in part on these basic laws of economics, the development strategy of hastening the shift in the center of production from agriculture to secondary activity is frequently cited as a policy which is consistent with the natural course of consumption trends and economic development. Unfortunately, the uncritical application of this set of theoretical ideas may he based on a misinterpretation of the factors explaining the widely observed patterns of industrial growth.

Explores the dimensions of postwar Philippine economic progress. Status of labor and capital resources in the Philippines in mid-late 1950s; Analysis of growth performance of the country; Difference between the pre-1955 and post-1955 periods in the Philippines.

Examines the characteristics of import-substituting industrialization (ISI) in Latin America to appraise its evolution and the difficulties it has encountered. Characteristics which set off ISI from other types of industrialization; Phases of ISI; Information on the economic, political and technological determinants of backward linkage.

This article comments on the employment and industrialization in developing countries. One of most perplexing problems of the developing countries is the tendency to create urban employment. An underdeveloped economy is typically one in which interest rates are high and wages low, a situation in which a manufacturing technology employing a relatively high proportion of labor to capital would seem to be indicated. Instead, the new manufacturing industries in underdeveloped countries typically employ the most advanced technology, which is commonly the most labor-saving.

Examines employment effects of industrialization in developing countries. Extent of the employment lag in the manufacturing industries; Explanation for low labor absorption rate; Evidence of the difficulties encountered in effectively absorbing labor in newer industries.

This article examines the industrial growth in Poland. It has long been a common belief in the West that Communist claims of dramatic success in industrialization are exaggerated. These claims have been based on official indexes which represent the gross value of production of industrial establishments. Western scholars have obtained considerably lower rates of growth in independent calculations with methods approximating those used in Western official indexes. The differences between official and calculated rates of growth have been attributed to various factors, including increasing coverage of industrial production in the official index; addition of new products at inflated prices; and increasing double counting in gross value of production because of growing roundaboutness in production and institutional changes. The main reason for the large excess of official growth rates over calculated growth rates is found in institutions rather than in statistical practice, in the use of production indexes in command economies as plan indicators and success criteria for managers. In pursuit of index goals managers manipulate product assortment and prices, and the result is an inflation of the index not only by Western statistical standards, but also by the standards of the Polish government itself.

The article evaluates development program of Puerto Rico. The development program is based primarily on agricultural reform which was supposed to lead to a stricter enforcement of a federal 500 acre limitation law and the creation of a Land Authority and Agricultural Development Company to increase agricultural productivity and diversify agriculture. The government has realized that in able for the development program to be successful it would have to concentrate on industrialization. The initial program was not a complete failure because real gross product and real per capita income has increased. The key features of the new program developed was the introduction of a law in 1947 exempting new industries from taxation for 10 years which has attracted private capital.

This article criticizes the status of employment in manufacturing in underdeveloped countries. The imported equipment constitutes a large fraction of total investment in machinery; The government stipulation of the minimum industrial wage may affect the cost of skilled workers in an industry. Consequently, government policy artificially raising the minimum industrial wage may aggravate difficulties of labor absorption both in inducing substitution of capital for unskilled labor and in accentuating any effects in this direction caused by insufficient supply of skilled labor.

This article focuses on how the terms "social overhead" and "social capital" have come recently into considerable use, especially in connection with the examination of economic growth, industrialization of underdeveloped countries, and the like. The two phrases seem to mean the same thing, but that "thing" appears on examination to be a rather peculiar collection of items, thrown into a pot without adequate thought as to their similarity in character. The elements nominated for inclusion within the rubric possess an obvious diversity in the proximity or distance of their possible promotion of economic change. A commercial bank might well produce a rapid alteration of conditions, a roadway perhaps over a period of some years, and a school only after a generation or two. Likewise, the channels of possible influence appear quite diverse. A hospital would appear to have effects in areas quite variant from an industrial laboratory. Indeed, an examination of history fails to make manifest any close connection between the creation of such truly social institutions as schools and hospitals and economic development.