The Great Escape: Technological Lock-in vs Appropriate Technology in Early Twentieth Century British Manufacturing

Pieter Woltjer

No GD-141, GGDC Research Memorandum from Groningen Growth and Development Centre, University of Groningen

Abstract: America?s lead over Europe in manufacturing productivity from the late nineteenth century onwards has often been contributed to differences in initial conditions, trapping Europe in a relatively declining, labor-intensive and low-productive technological path. In this paper, I reassess the productivity dynamics in British manufacturing on the basis of a novel analytical framework by Basu and Weil that emphasizes the role of learning and localized technical change and which predicts convergence in light of rapid capital deepening. By means of a data envelopment analysis, I measure the effects of capital accumulation, technological change, and efficiency change. I find evidence for considerable increased capital-intensity levels in British manufacturing during the early twentieth century, particularly in the ?new? industries which actively began to adopt modern techniques of mass-production and managerial control. My findings seriously challenge the traditional, declinist, technological lock-in hypothesis. Instead, the British shift toward mass-production techniques during the interwar period provides a strong case for a remarkable escape from the labor-intensive path which had held the British manufacturing sector in its grasp throughout the nineteenth century.

Date: 2013
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