Trade, Knowledge and the Industrial Revolution

Centro Studi Luca d'Agliano Development Studies Working Paper No. 230

52 Pages Posted: 25 Jul 2007  

Kevin H. O'Rourke

University of Dublin, Trinity College; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Ahmed Rahman

United States Naval Academy

Alan M. Taylor

University of California, Davis - Department of Economics; University of Virginia - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

Date Written: May 2007

Abstract

Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

Keywords: Endogenous growth, demography, trade

JEL Classification: O31, O33, J13, F15, N10, J24

Suggested Citation

O'Rourke, Kevin H. and Rahman, Ahmed and Taylor, Alan M., Trade, Knowledge and the Industrial Revolution (May 2007). Available at SSRN: https://ssrn.com/abstract=1002625 or http://dx.doi.org/10.2139/ssrn.1002625

Kevin H. O'Rourke (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Centre for Economic Policy Research (CEPR)

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University of Dublin, Trinity College ( email )

Department of Economics
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Ireland
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HOME PAGE: http://econserv2.bess.tcd.ie/korourke/homepage.htm

Ahmed Rahman

United States Naval Academy ( email )

121 Blake Road
Annapolis, MD 21402
United States

Alan M. Taylor

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-1572 (Phone)
530-752-9382 (Fax)

HOME PAGE: http://www.econ.ucdavis.edu/faculty/amtaylor/

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
(434)-924-3177 (Phone)
(434)-982-2904 (Fax)

HOME PAGE: http://people.virginia.edu/~amt7u

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://nber.org

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

HOME PAGE: http://cepr.org

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