IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/40530.html

Capital Substitution in an Industrial Revolution

Author

Listed:
  • Staley, Mark
  • Berg, Peter

Abstract

A unified growth model is presented in which productivity growth is driven by learning-by-doing. We show that the growth rate of productivity is an increasing function of the share of capital. It is assumed that the industrial sector has a higher capital share than the agricultural sector and that the ability to substitute one output for the other slowly rises over time. Two distinct regimes of constant growth emerge, connected by a rapid transition in which the growth rates of population and income increase by an order of magnitude, indicative of simultaneous agricultural and industrial revolutions.

Suggested Citation

  • Staley, Mark & Berg, Peter, 2012. "Capital Substitution in an Industrial Revolution," MPRA Paper 40530, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40530
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/40530/1/MPRA_paper_40530.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/43605/1/MPRA_paper_43605.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. de la Grandville,Olivier, 2009. "Economic Growth," Cambridge Books, Cambridge University Press, number 9780521725200, December.
    2. Gregory Clark, 2005. "The Condition of the Working Class in England, 1209-2004," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1307-1340, December.
    3. Quamrul Ashraf & Oded Galor, 2011. "Dynamics and Stagnation in the Malthusian Epoch," American Economic Review, American Economic Association, vol. 101(5), pages 2003-2041, August.
    4. David I. Stern & Astrid Kander, 2012. "The Role of Energy in the Industrial Revolution and Modern Economic Growth," The Energy Journal, , vol. 33(3), pages 125-152, July.
    5. de la Grandville,Olivier, 2009. "Economic Growth," Cambridge Books, Cambridge University Press, number 9780521898010, December.
    6. Oded Galor, 2011. "Unified Growth Theory," Economics Books, Princeton University Press, edition 1, number 9477, December.
    7. Miller, Merton H. & Upton, Charles W., 1986. "Macroeconomics," University of Chicago Press Economics Books, University of Chicago Press, number 9780226526232, August.
    8. Liam Brunt, 2003. "Mechanical innovation in the industrial revolution: the case of plough design," Economic History Review, Economic History Society, vol. 56(3), pages 444-477, August.
    9. Gregory Clark, 2005. "The Condition of the Working Class in England, 1209-2004," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1307-1340, December.
    10. Robert E. Lucas, 2009. "Ideas and Growth," Economica, London School of Economics and Political Science, vol. 76(301), pages 1-19, February.
    11. Oded Galor & Omer Moav, 2002. "Natural Selection and the Origin of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1133-1191.
    12. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    13. Gary D. Hansen & Edward C. Prescott, 2002. "Malthus to Solow," American Economic Review, American Economic Association, vol. 92(4), pages 1205-1217, September.
    14. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    15. Allen, Robert C., 2000. "Economic structure and agricultural productivity in Europe, 1300–1800," European Review of Economic History, Cambridge University Press, vol. 4(1), pages 1-25, April.
    16. Michael Kremer, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 681-716.
    17. Crafts, N. F. R., 1995. "Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered," The Journal of Economic History, Cambridge University Press, vol. 55(4), pages 745-772, December.
    18. Oded Galor, 2011. "Unified Growth Theory and Comparative Development," Rivista di Politica Economica, SIPI Spa, issue 2, pages 9-21, April-Jun.
    19. Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
    20. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
    21. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
    22. Liam Brunt, 1997. "Nature or Nurture? Explaining English Wheat Yields in the Agricultural Revolution," Economics Series Working Papers 1997-W19, University of Oxford, Department of Economics.
    23. Wrigley,E. A., 2010. "Energy and the English Industrial Revolution," Cambridge Books, Cambridge University Press, number 9780521766937, January.
    24. Michael Bar & Oksana Leukhina, 2010. "The role of mortality in the transmission of knowledge," Journal of Economic Growth, Springer, vol. 15(4), pages 291-321, December.
    25. Liam Brunt, 1997. "Nature or Nurture? Explaining English Wheat Yields in the Agricultural Revolution," Oxford Economic and Social History Working Papers _019, University of Oxford, Department of Economics.
    26. Wrigley,E. A., 2010. "Energy and the English Industrial Revolution," Cambridge Books, Cambridge University Press, number 9780521131858, January.
    27. Jacob L. Weisdorf, 2006. "From domestic manufacture to Industrial Revolution: long-run growth and agricultural development," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 264-287, April.
    28. Broadberry, Stephen & Campbell, Bruce & Klein, Alexander & Overton, Mark & Van Leeuwen, Bas., 2010. "English Economic Growth: 1270 - 1870," CAGE Online Working Paper Series 35, Competitive Advantage in the Global Economy (CAGE).
    29. Parente, Stephen & Desmet, Klaus, 2009. "The Evolution of Markets and the Revolution of Industry: A Quantitative Model of England's Development, 1300-2000," CEPR Discussion Papers 7290, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tepper, Alexander & Borowiecki, Karol Jan, 2015. "Accounting for breakout in Britain: The industrial revolution through a Malthusian lens," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 219-233.
    2. Ho, Chi Pui, 2016. "Industrious Selection: Explaining Five Revolutions and Two Divergences in Eurasian Economic History within a Unified Growth Framework," MPRA Paper 73862, University Library of Munich, Germany.
    3. Madsen, Jakob B. & Robertson, Peter E. & Ye, Longfeng, 2019. "Malthus was right: Explaining a millennium of stagnation," European Economic Review, Elsevier, vol. 118(C), pages 51-68.
    4. Hans-Joachim Voth, 2013. "The Three Horsemen of Riches: Plague, War, and Urbanization in Early Modern Europe," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 774-811.
    5. M. Aykut Attar, 2023. "Technology and survival in preindustrial England: a Malthusian view," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(4), pages 2071-2110, October.
    6. Jakob B. Madsen & Fabrice Murtin, 2017. "British economic growth since 1270: the role of education," Journal of Economic Growth, Springer, vol. 22(3), pages 229-272, September.
    7. Broadberry Stephen, 2012. "Recent Developments in the Theory of Very Long Run Growth: A Historical Appraisal," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 53(1), pages 277-306, May.
    8. Lehmann-Hasemeyer, Sibylle H. & Prettner, Klaus & Tscheuschner, Paul, 2020. "The scientific revolution and its role in the transition to sustained economic growth," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    9. James Foreman-Peck & Peng Zhou, 2021. "Correction to: fertility versus productivity: a model of growth with evolutionary equilibria," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(4), pages 1473-1474, October.
    10. Rohan Dutta & David K. Levine & Nicholas W. Papageorge & Lemin Wu, 2018. "Entertaining Malthus: Bread, Circuses, And Economic Growth," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 358-380, January.
    11. Jonathan Hersh & Joachim Voth, 2009. "Sweet diversity: Colonial goods and the rise of European living standards after 1492," Economics Working Papers 1163, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2011.
    12. Broadberry, Stephen & Ghosal, Sayantan & Proto, Eugenio, 2017. "Anonymity, efficiency wages and technological progress," Journal of Development Economics, Elsevier, vol. 127(C), pages 379-394.
    13. Clark, Gregory, 2014. "The Industrial Revolution," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 217-262, Elsevier.
    14. Joel Mokyr & Hans-Joachim Voth, 2012. "Understanding Growth in Europe, 1700–1870: Theory and Evidence," Journal of Economic Sociology, National Research University Higher School of Economics, vol. 13(5), pages 57-102.
    15. Jensen, Peter Sandholt & Pedersen, Maja Uhre & Radu, Cristina Victoria & Sharp, Paul Richard, 2022. "Arresting the Sword of Damocles: The transition to the post-Malthusian era in Denmark," Explorations in Economic History, Elsevier, vol. 84(C).
    16. Madsen, Jakob & Strulik, Holger, 2024. "Inequality and the Industrial Revolution," European Economic Review, Elsevier, vol. 164(C).
    17. Jacob Weisdorf, 2024. "Church Book Registry: A Cliometric View," Springer Books, in: Claude Diebolt & Michael Haupert (ed.), Handbook of Cliometrics, edition 3, pages 589-610, Springer.
    18. Karayalcin, Cem, 2016. "Property rights and the first great divergence: Europe 1500–1800," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 484-498.
    19. Ulrich Pfister & Georg Fertig, 2020. "From Malthusian Disequilibrium to the Post-Malthusian Era: The Evolution of the Preventive and Positive Checks in Germany, 1730–1870," Demography, Springer;Population Association of America (PAA), vol. 57(3), pages 1145-1170, June.
    20. Kander, Astrid & Stern, David I., 2014. "Economic growth and the transition from traditional to modern energy in Sweden," Energy Economics, Elsevier, vol. 46(C), pages 56-65.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40530. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.