The Spread of the Industrial Revolution, c. 1760–Present

After the switch to modern growth, three questions remain. The first is if and how innovation and growth could spread to the rest of Europe and Asia. This mainly draws attention to which factors deviate from the long-term norm that was set by England in the late nineteenth century and at the start of the twentieth century. Besides an initially low level of capital accumulation, it was mainly a strong government that could foster (or at times hinder) growth in Asia. This could occur, for example, by building railways (as regions with high market potential held the highest shares of secondary sector employment in Asia in around 1900). The second question is how already developed countries could develop further from the First Industrial Revolution to the electric, information, and communications technology, and artificial intelligence revolutions. This depended on whether countries were inventors or accumulators. The third question is why, when in the beginning the original division was between capital-saving technologies in China and labour-saving technologies in England, over time technology also became more labour saving in China. When technologies decrease in price or demand for capital-intensive goods in developing economies increases, developed countries outsource the production of less capital-intensive goods (from a developed country’s perspective; but more capital intensive from a developing country’s perspective), and therefore, the whole system benefits from the introduction of new technologies. This explains why countries such as Japan and China began with capital-saving technologies but over time moved to labour-saving technologies.