The Great Inner Divergence: TFP and Manufacturing Dualism in Industrializing Empires before WWI

Guillem Blasco-Piles ()
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Guillem Blasco-Piles: Universitat de Barcelona

No 291, Working Papers from European Historical Economics Society (EHES)

Abstract: This paper provides the first aggregate and disaggregated comprehensive Total Factor Productivity estimates for manufacturing in the Ottoman, Qing and Russian Empires before their collapse, incorporating both the traditional industry and capital estimates. Previous studies relied on modern-only establishments and labor productivity estimates, masking the role of capital and inner economic dynamics, which become essential during structural transformation processes. Using industrial censuses from 1908-1913 and regional reports combined with a novel reconstruction methodology for the traditional industry TFP, our results document extreme internal productivity dualism. Mechanized establishments achieved close to British efficiency levels while traditional non-mechanized plants operated at one-fifth to one-third of the industrial leader. At the aggregate level, lower-productivity traditional establishments seem to determine the aggregate productivity due to their vast weight in the manufacturing landscape. These findings suggest the persistence of the Great Divergence stemmed not from technological adoption incapacity but from the inability to diffuse new technologies beyond modern industrial enclaves—a pattern that illuminates persistent dualism in developing economies today.

Keywords: Empires; Industrialization; Total Factor Productivity; Traditional Industry; Dualism (search for similar items in EconPapers)
JEL-codes: L16 L60 N10 N60 O33 O47 O57 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2025-12
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Persistent link: https://EconPapers.repec.org/RePEc:hes:wpaper:0291

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