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World Growth since 1800

World Growth since 1800. Technological improvements. Speed of diffusion of information Pre-1800: very slow Roman times: 1 mile/hour 1800: 2.7 miles/hour Mid-19 th century 1865: 12 miles/hour 1881: 119 miles per hour. Technological improvements. Decrease in costs of transportation:

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World Growth since 1800

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  1. World Growth since 1800

  2. Technological improvements • Speed of diffusion of information • Pre-1800: very slow • Roman times: 1 mile/hour • 1800: 2.7 miles/hour • Mid-19th century • 1865: 12 miles/hour • 1881: 119 miles per hour

  3. Technological improvements • Decrease in costs of transportation: • Expansion of railroads • Faster and more cost-effective steamships • Transport of 1 ton of cotton • 1793: £31 (London-Bombay) • 1907: £0.9-1.5 (Liverpool-Bombay)

  4. Technological improvements • Mechanized factory • Before the IR: apprenticeships • From the IR: unskilled labor, minimal supervision. • Territorial expansion • By 1900 European states controlled 35% of the land surface of the world.

  5. World Growth since 1800 • Rest of the world did not follow the European rapid growth path. • Gap in material living standards • 1800: 4:1 • Now: 50:1

  6. Concentration of global economic output(Western Europe, North America, and Oceania)

  7. Anatomy of Divergence by Clark • Divergence • NOT explained by • Access to capital • Access to resources • Access to technology • explained by the relative efficiency of utilization of technology.

  8. Why isn’t the whole world developed?* (*) Gregory Clark. Why Isn’t the Whole World Developed? Lessons from the Cotton Mills. The Journal of Economic History, Vol. 47, No. 1 (Mar. 1987), 141-173

  9. Clark’s Take • Differences in cotton textile efficiency ca. 1910 NOT explained by: • Input substitution • Differences in technology • Management • Workers’ training • So, what is it? It’s local culture!

  10. Why does it matter? • Because it gives evidence on a potential explanation of underdevelopment. • It rejects the view that poor countries remain poor due to: • inability to absorb advanced technologies, • lack of management skills, • lack of appropriate institutions, • lack of economies of scale.

  11. The case • Detailed study of cotton textiles in the early 20th century • First step to the path to industrialization • Technology not particularly complex • Ready markets for yarn and cloth

  12. Britain’s advantage?

  13. A question of efficiency? Corrected by labor efficiency, competition with England is reduced to India, Japan, and China.

  14. Explaining differences or not… • Capital-Labor Substitution • Raw Materials-Labor Substitution • Technology • Labor Experience

  15. Local Effects • In India: “The operatives in this mill refuse to attend more machinery.” • In Mexico: “the Mexican operatives are very conservative, […], it has yet been found impossible to persuade them to run any larger number of automatic looms.”

  16. Q & A Yes! Professor Clark, the conclusion of your paper implies cultural determinism?! What about Professor Gupta that claims that it was a question of nutrition? Oh well, she is wrong!

  17. Are “we” just lazy…? • Similar problems in other industries in poorer countries • Inefficiency a major factor in underdevelopment

  18. Questioning • Evidence: • Can we extrapolate the evidence from one industry and infer that the problem with underdeveloped countries is culture? • Methodology: • So, it’s not technology, it’s not labor quality, then can we conclude that it IS culture? • Conclusions: • Can developing countries overcome the “culture of laziness / stubbornness”? • Is culture an institution? If so, is it endogenous or exogenous?

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