International price competition and productivity, 1850-1940

"This paper revisits the question whether Britain, from the late nineteenth century up to the second world war, lagged behind due to a faster structural change or due to a more rapid rise of technology in manufacturing in the up-coming countries. It does so by taking a disaggregate approach and comparing prices for some technologically advanced products in Britain, Germany, and Sweden, from the mid-nineteenth century and through the interwar period: steamships, locomotives, and electrical motors. Price data for technologically advanced products are very scarce and raise methodological difficulties concerning the construction of time series or indexes. The paper argues that matching or splicing, being comparable with hedonic price estimates, can be used. For the mentioned products, the price data indicate that Britain lost in competitiveness against Germany and Sweden, although differently for different products. In a longer perspective technological change and price competition was a necessary condition for catch-up by the latter."