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Innovation growth clusters: Lessons from the industrial revolution

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  • DUDLEY, Leonard
  • RAUH, Christopher

Abstract

Over three centuries ago, a new technology suddenly increased the amount and frequency of available information. Might such «Big Data» have disrupted the causal relationships linking economic growth and innovation? Previous research has affirmed that a society’s economic success during the Industrial Revolution depended on its institutions. Here we examine the hypothesis that by allowing people to cooperate more easily with one another, language standardization raised a society’s rate of innovation. As a result, the region could attract the resources needed to grow more rapidly. Empirical tests with 117 innovations and 251 Western cities suggest that the presence of a standardized tongue helps to explain the burst of innovation and growth observed between 1700 and 1850. Moreover, once one has accounted for language standardization, institutional quality has little further power to explain economic progress.

Suggested Citation

  • DUDLEY, Leonard & RAUH, Christopher, 2018. "Innovation growth clusters: Lessons from the industrial revolution," Cahiers de recherche 2018-14, Universite de Montreal, Departement de sciences economiques.
  • Handle: RePEc:mtl:montde:2018-14
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    File URL: http://hdl.handle.net/1866/20939
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    1. Sheilagh Ogilvie & A. W. Carus, 2014. "Institutions and Economic Growth in Historical Perspective: Part 2," CESifo Working Paper Series 4862, CESifo Group Munich.
    2. Hans-Joachim Voth, 2013. "The Three Horsemen of Riches: Plague, War, and Urbanization in Early Modern Europe," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 774-811.
    3. Sheilagh Ogilvie & A. W. Carus, 2014. "Institutions and Economic Growth in Historical Perspective: Part 1," CESifo Working Paper Series 4861, CESifo Group Munich.
    4. Christine MacLeod & Alessandro Nuvolari, 2016. "Inventive Activities, Patents and Early Industrialisation: A Synthesis of Research Issues," Rivista di storia economica, Società editrice il Mulino, issue 1, pages 77-108.
    5. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, May.
    6. Donges, Alexander & Meier, Jean-Marie A. & Silva, Rui C., 2016. "The Impact of Institutions on Innovation," Annual Conference 2016 (Augsburg): Demographic Change 145952, Verein für Socialpolitik / German Economic Association.
    7. Maddison, Angus, 2007. "Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History," OUP Catalogue, Oxford University Press, number 9780199227204.
    8. repec:oup:oxecpp:v:69:y:2017:i:4:p:1138-1161. is not listed on IDEAS
    9. Ogilvie, Sheilagh & Carus, A.W., 2014. "Institutions and Economic Growth in Historical Perspective," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 8, pages 403-513 Elsevier.
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