Lecture 18: Early And Late Industrializers

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Lecture 18 Early And Late Industrializers
1. Global Trade And Development 2. British
Economic Development (Early) 3. American
Economic Development (Middle) 4. German Economic
Development (Late) 5. Russian Economic
Development (Very Late)
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Global Trade And Growth
Annual Annual World World World Population Tr
ade Industrial Share of World
Output (Millions) Growth Growth UK FR GE US SU JP
----------- --------- --------- --- ---- ---- --
-- --- --- 1720-1780 -- 1.10 1.5 -- -- -- -- -- --
1780-1830 900 1.37 2.6 24 20 15 4 -- -- 1820-1840
-- 2.81 2.9 21 18 17 5 -- -- 1840-1860 1200 4.84
3.5 21 16 15 14 -- -- 1860-1870 -- 5.53 2.9 32 10
13 23 4 -- 1870-1900 1625 3.24 3.7 20 7 17 31 5 1
1900-1913 -- 3.75 4.2 14 6 16 36 4 1 1913-1929 --
0.72 2.7 9 7 12 42 4 3 1929-1938 -- -1.15 2.0 9 5
11 32 19 4 1938-1948 2500 0.00 4.1 -- -- -- -- --
-- 1948-1971 3900 7.27 5.6 -- -- -- -- -- -- -----
--------------------------------------------------
--------------------------------------- Notes
Figures are rough approximations only. Population
from 1800,1850,1900,1950, 1975. The world trade
and industry are based on averages over the time
periods. The country figures are either
estimated at or near the endpoint in the range or
an average over a portion of the range. The
country abbreviations are as follows UK (United
Kingdom), FR (France), GE (Germany), US (United
States), SU (Soviet Union/Russia), and JP
(Japan) Sources Rostow 1978, Tables II-2, II-7

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Global Trade And Growth

What are the three most important patterns in the
data? What causal explanations account for the
patterns? What are the consequences of these
patterns? What patterns do you expect in the
future?
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British Economic DevelopmentLeading Sectors
1. Textiles A Leading Sector By 1750s -- John
Kays Flying Shuttle Loom In 1733 -- The
Spinning Jenny -- Water Power 2. Coal And Pig
Iron Production (1780-1840) -- Use Of Coke --
The Steam Engine 3. Steam Railroads -- Boom
Period 1830-1850 -- Construction In US, The
Continent, Australia, etc. 4. Steel And Chemical
Production (1870s) 5. Electrical Machinery
(1900s) 6. Motor Vehicle Sector (1920s)
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British Economic Development
1. Going First Propels Britain Into
Leadership 2. Britain Inevitable Becomes
Internationalist -- Saturates Home Markets --
No Competition Abroad 3. British Dominance Wanes
In 1870s -- Fails To Shift Into 2nd
Phase 4. Abundance Of Domestic Coal Plays Vital
Role -- Used For Coke, Iron, And Steel
Production -- Fuel For Steam Engines In
Factories, Rails, Ships
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British Trade Policy
1. Mercantilist Until 1850 -- Irish Potato
Famine (1845) -- Repeal Of Corn Laws (1846) --
Repeal of the Navigation Acts (1849 1854) 2.
Britain France Sign The Cobden-Chevalier Treaty
(1860) -- Followed By Series Of Bilateral
Treaties 3. Collapse Of Free Trade System
1873-1896 -- Conservatives At Home Advocate
Protection Empire 4. Britain Returns To
Imperial System In Great Depression 5. Britain
Joins U.S. Led Trading System After World War II
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War And British Economic Development
1. Wars Trigger Trade Diversion -- e.g., U.S.
Civil War Cotton Production In Egypt/India 2.
World War I -- Economic Exhaustion 3. World War
II -- Hastens Decolonization Process 4. Military
Expenditures Limited During Hegemony -- Less
Than 2 Of GNP -- U.S. Averages Above 6
During Cold War
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British Economic Development
Share of Share of Trade Population GNP World
World (X-M)/ Product (Millions) (85) Industry Tr
ade GNP Cycle ---------- -------- ---------- ----
------ ------------ ----------- 1750 10 -- --- 13
-- textiles 1780 13 -- --- 12 -- textiles, pig
iron 1800 16 -- --- 33 -- textiles, pig
iron 1820 21 -- 24 27 -- textiles, pig
iron 1840 26 -- 21 25 -- railroads 1860 29 -- 21
25 -- railroads 1880 35 -- 27 23 -- steel,
shipbuilding 1900 41 -- 20 16 -- steel,
electrical 1913 47 -- 15 16 -- steel,
electrical 1928 46 -- 9 14 -- motor
vehicles 1938 48 -- 9 14 -- 1950 51 5395 --- 12
47 1960 53 6823 5 9 44 1970 56 8537 4 7 45 1980
56 10167 --- --- 52 1990 57 13217 --- --- 51 Sourc
es Penn World Tables Rostow 1978 Correlates of
War Project
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U.S. Economic Development
1. U.S. Begins In Periphery A Commodity
Producer -- British Laws Limit
Industrialization 2. Textile Production In New
England After 1816 -- Spurs Cotton Production In
The South 3. Eastern Railroad Boom In 1840s
Midwestern In 1850s -- Union Pacific Joins
Central Pacific In 1869 4. Two Implications Of
Railroad Boom -- Great Demand For Iron And
Coal -- Opens Agricultural Heartland Of America
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U.S. Economic Development
1. Phase II Of Industrial Revolution -- Steel,
Chemicals, And Electrical Machinery 2. Age Of
Industrial Empires -- John D. Rockefeller With
Standard Oil (1870) -- Andrew Carnegie With
Carnegie Steel (1872) -- General Electric
(1892) Merges Several Firms Including Edison
Electric Light Company -- Herbert Dow With Dow
Chemicals (1897) Keys Economies Of Scale, Big
Domestic Markets, Relentless Innovation
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American Trade Policy
1. Highly Protectionist Since U.S. Civil War 2.
U.S. Does Not Join British Free Trade System 3.
Tariffs Peak In 1930 With Smoot Hawley Tariff
Act 4. Power Over Tariffs Transferred To
Executive In 1934 5. Establishes Free Trade
System After World War II
Why Didnt Tariffs Undermine U.S. Development?
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War And U.S. Economic Development
1. Oceans Insulate U.S. From War 2. American
System Begins In Arms Development 3. Civil War
Accelerates Industrialization In The North --
But State Building Does Not Take Place 4. World
War I Industrial And Agricultural Demand 5.
Instability Of The Interwar Period 6. World War
II Drags U.S. Out Of Depression -- Unoccupied
U.S. Emerges As Hegemonic Power 7. Vietnam War
Contributes To Collapse Of Dollar In 1971
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U.S. Economic Development
Share of Share of Trade Population GNP World
World (X-M)/ Product (Millions) (85) Industry
Trade GNP Cycle ---------- -------- ---------- --
-------- ----------- ------------------------ 1820
9.6 -- 4 6 -- textiles 1840 17.1 -- 5 7 -- text
iles, iron, railroads 1860 31.4 -- 14 9 -- textil
es, iron, railroads 1880 50.2 -- 29 10 -- steel,
iron, railroads, electrical 1900 76.0 -- 30 11 -
- steel, iron, railroads, electrical 1910 92.0 --
35 11 -- steel, motor vehicles,
electrical 1920 105.7 -- 40 12 -- steel, motor
vehicles, electrical 1930 122.7 -- 42 14 -- steel
, motor vehicles, electrical 1940 131.7 -- 32 10
-- steel, motor vehicles, electrical 1950 151.3 87
72 -- 16 9 steel, motor vehicles, air
craft 1960 179.3 9895 32 11 9 steel, motor
vehicles, air craft 1970 203.2 12963 34 13 11
steel, motor vehicles, air craft 1980 226.5 15295
-- -- 21 telecom, computers 1990 248.7 18054 -- --
22 telecom, computers Sources Statistical
Abstract of the United States Rostow 1978 Penn
World Tables
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German Economic Development
1. Political Fragmentation Limits Growth 2.
Prussia Removes Internal Barrier To Trade In
1818 3. Wurttemberg-Bavaria Customs Union In
1828 4. Four Customs Unions Merge Zollverein
(1834) 5. Coal Boom 1840s Pig Iron Boom 1850s
Textiles 1850s 6. Steel And Chemicals In
1870s 7. Electrical Machinery (1900s) And
Automobiles (1920s) 8. Rapid Growth To 1914
Slow In 1920s Rapid In Late 1930s Explosion
After World War II
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German Trade Policy
1. Frederich List (1789-1846) 2. Limited
Protectionism Due to Austria-Hungary 3. The Iron
And Rye Coalition 4. Instability Of 1920s
Inhibits Trade 5. Nazis Return To Mercantile
System -- Envisions Trade Within An Empire 6.
Joins American System And EU After World War II
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Alexander GerschenkronAnd The Late Developers
Economic Backwardness In Historical Perspective
(1962) 1. Compressed Economic Development (i.e.,
Steep S-curve) 2. Advantages Of Backwardness 3.
Late Development Encourages Financial And
Industrial Concentration 4. Greater State
Intervention In The Economy 5. Autocracy Is More
Likely In Late Developers 6. Importance Of
Coalitions In Development Process
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War And German Economic Development
1. Napoleonic Wars Lead To Consolidation
Internal Reforms 2. Wars Unify Country (1964,
1866, 1870) Unleash Growth 3. World War I
Bankrupts Germany And Leads To Instability --
Germany Is Not Occupied During World War I 4. War
Preparations Bring Germany Out Of Depression 5.
World War II -- Physically Destroys Germany --
Divides Country During The Cold War -- Destroys
Junkers Once And For All
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GERMAN ECONOMIC DEVELOPMENT
Share of Trade Trade Population GNP World Sh
are of (X-M)/ Product (Millions) (85) Industry W
orld Trade GNP Cycle ---------- -------- --------
-- ---------- -------- ----------- 1820 11 -- 15
11 -- coal 1840 15 -- 17 8 -- pig iron,
railroads 1860 20 -- 15 9 -- pig iron,
railroads 1880 45 -- 14 10 -- steel, electrical,
chemical 1900 57 -- 17 11 -- steel, electrical,
chemical 1910 65 -- 16 12 -- steel, electrical,
chemical 1920 43 -- -- -- -- steel, motor veh.,
electrical, chem. 1930 59 -- 12 9 -- steel,
motor veh., electrical, chem. 1940 85 -- 11 9 --
steel, motor veh., electrical, chem. 1950 50 3421
-- -- 19 steel, motor veh., electrical,
chem. 1960 55 6570 6 8 35 motor vehicles,
electrical, chem. 1970 61 9425 5 10 40 telecom,
computers 1980 62 11920 -- -- 53 telecom,
computers 1990 63 14341 -- -- 58 telecom,
computers Sources Rostow 1978 Correlates of
War Penn Tables
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Russian Economic Development
1. The Most Backward Of States -- Cities Develop
Very Late Less Commerce -- Agriculture Relies
On Serfs Into 19th Century 2. Government Takes
Leading Role -- From Peter The Great To
Railroads 3. Railway Boom 1890s Electrical
Machinery 1920s 4. Rapid Growth Late 1800s
Slows w/ Russo-Japanese War 5. Perception Of
Rapid Industrialization Fuels World War I 6. Slow
Growth During War, Revolution, And Civil War 7.
Growth Takes Off With Stalins First Five Year
Plan (1928) 8. Very Late Development Requires
Government Intervention
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Trade Policy
1. Very Protectionist Under Tsar 2. Communist
Soviet Union Remains Isolate Before WWII 3.
Council For Mutual Economic Assistance -- (CMEA
Or COMCON) -- Coordinates Exchange b/w Centrally
Planned Economies -- No Price Mechanisms More
Like Bi-lateral Barter Accords 4. Occasional
Trade With Non-communist World -- Grain Deals
With The U.S. -- Export Of Raw Materials And
Natural Resources
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War And Russian Industrialization
1. Defense Of State Led Tsars To Take A Leading
Role 2. Military Defeat Leads To Revolutions
1905 And 1917 -- Rise Of Communists Due To
War 3. World War II Devastates Country Total
Rebuilding 4. Cold War 15 Of GNP Spend On
Defense 5. Slow Growth Afghanistan Lead To
Rise Of Gorbachev
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Russian Economic Development
Share of Share Trade Population GNP World of
World (X-M)/ Product (Millions) (85) Industry T
rade GNP Cycle ---------- -------- ---------- ---
------- --------- ----------- 1820 53 -- -- 6 --
1840 62 -- -- 5 -- textiles 1860 76 -- -- 3 -- te
xtiles 1880 100 -- 4 4 -- railroads,
textiles 1900 136 -- 3 4 -- steel, pig iron,
railroads 1910 163 -- 5 -- -- steel, pig iron,
railroads 1920 127 -- 4 -- -- steel, motor
vehicles, electrical 1930 157 -- 4 -- -- steel,
motor vehicles, electrical 1940 170 -- 19 1 -- st
eel, motor vehicles, electrical 1950 181 -- 19 2
-- steel, motor vehicles, electrical 1960 214 2397
16 4 5 1970 243 4088 16 4 6 1980 266 6119 --
-- 15 1990 286 7741 -- -- 15 Sources Rostow
1978 Correlates of War Penn World Tables.