Triple engines of growth: why Europe and not Asia?

"The paper argues that pre-industrial Western Europe was not special in the world economy, it became special. Namely, before the Industrial Revolution, not only China, India and Japan were probably as productive as Western Europe, but also the pre-industrial economies of both regions had several growth spurts, indicating recurrent periods of dynamism and stagnation. On the other hand, Western Europe forged ahead in the eighteenth century because it was the first region to develop “triple engines of growth”, consisting of human capital, technology, and organisational change. First, after the Renaissance, literacy rates dramatically increased throughout Western Europe and became highly correlated with the level of a country’s economic development. Between 1500 and 1800, literacy rates increased more than 4 times in the most advanced European countries. The quality of European human capital was also enriched by the development of the scientific method and culture, as well as by the diffusion of the printing press. The rise in literacy combined with the science-induced improvement in human capital quality became crucial contributors to the rise of Western Europe. Other countries that had similar levels of development to Western Europe around 1500 (e.g. China, India, Japan) did not develop the scientific culture and method that Newtonian mechanics propagated around the European continent (Jacob 1997). Second, by the eighteenth century Western Europe had developed better technology than other regions of the globe. These technologies were highly complementary to the organisational changes brought by the development of the factory system, which helped and fomented the transition to the new organisational modes. Although in previous periods (e.g. during the Song dynasty), Asia was technologically superior to Europe, at the outset of the Industrial Revolution, Europe was substantially more advanced in terms of technology and mechanisation. Third, by the eighteenth century, factory-induced organisational changes were occurring at a much faster pace in Western Europe than in Asia. Without the factory, it is likely that the growth performances of Western Europe and Asia would not have been so markedly contrasted. In this context, proto-industrialisation and the complementarities resulting from technological innovation were fundamental for Western Europe to forge ahead in the eighteenth century. Inside Europe, Britain was the first to achieve sustained economic growth, because it was the first country in which the three engines were fully operational. The countries that followed suit also developed the triple engines of growth. In Asia, by the nineteenth century, Japan was the country in which the triple engines of growth were better prepared. Compared to the other Asian economies, by the end of the Tokugawa period, the Japanese had better human capital (with higher literacy rates than many European countries, and receptive to foreign learning), it was willing to import technology and knowledge from outside countries (mostly Western Europe), and organisational change was occurring. In spite, of its early development during the Song dynasty, by the eighteenth century the Chinese lagged the Japanese in terms of human capital, and technological creativity."