Developing Paths
Codification, Technology Absorption, and the Globalization of the Industrial Revolution
Réka Juhász, Shogo Sakabe & David Weinstein
NBER Working Paper, July 2024
Abstract:
This paper studies technology absorption worldwide in the late nineteenth century. We construct several novel datasets to test the idea that the codification of technical knowledge in the vernacular was necessary for countries to absorb the technologies of the Industrial Revolution. We find that comparative advantage shifted to industries that could benefit from patents only in countries and colonies that had access to codified technical knowledge but not in other regions. Using the rapid and unprecedented codification of technical knowledge in Meiji Japan as a natural experiment, we show that this pattern appeared in Japan only after the Japanese government codified as much technical knowledge as what was available in Germany in 1870. Our findings shed new light on the frictions associated with technology diffusion and offer a novel take on why Meiji Japan was unique among non-Western countries in successfully industrializing during the first wave of globalization.
Fuelling Organised Crime: The Mexican War on Drugs and Oil Theft
Giacomo Battiston et al.
Economic Journal, forthcoming
Abstract:
We show that the Mexican War on Drugs pushed drug cartels into large-scale oil theft. We propose a simple model in which government crackdowns on one criminal sector induce criminal organisations to invest in a new sector. When entering the new sector, challenger organisations with a residual share of the market in the traditional sector may leapfrog incumbent organisations. We bring the model to the data using detailed information on drug cartel presence, oil pipelines, and illegal oil taps across Mexican municipalities. In line with the model predictions, municipalities with oil pipelines witnessed a greater increase in cartel presence than municipalities without pipelines after the crackdown on drugs, and the effect is driven by challenger criminal groups. Within the subset of municipalities with oil pipelines, we observe more illegal oil taps where the political party in favour of anti-drug trafficking policy won local elections by a small margin. Due to specialisation in different criminal sectors, municipalities with pipelines did not witness a surge in violence, but they did experience a decline in socioeconomic conditions.
Revisiting the resource curse: Does volatility matter?
Yassine Kirat
Kyklos, forthcoming
Abstract:
Countries with abundant natural resources often possess greater wealth, yet the impact of these resources on economic growth remains unclear. This paper examines how natural-resource abundance and its volatility impact economic growth. It questions whether natural resources themselves are a curse or if the negative growth effects are due to the volatility of natural-resource revenues. The study also investigates how volatility of natural resources affects key economic growth channels, such as investment, human capital, and institutional quality. Using the standard panel model and panel smooth transition regression (PSTR), the paper analyzes data from 125 countries (1988–2020). Results show that natural-resource abundance boosts economic growth, contradicting the resource-curse theory. However, the growth impact is non-linear and varies with natural-resource volatility. Countries with high volatility face up to a 22 percentage point annual GDP growth loss compared with those with low volatility, suggesting that volatility and poor government responses drive the resource-curse paradox, not the abundance of resources per se.
Identifying Agglomeration Shadows: Long-run Evidence from Ancient Ports
Richard Hornbeck, Guy Michaels & Ferdinand Rauch
NBER Working Paper, June 2024
Abstract:
We examine “agglomeration shadows” that emerge around large cities, which discourage some economic activities in nearby areas. Identifying agglomeration shadows is complicated, however, by endogenous city formation and “wave interference” that we show in simulations. We use the locations of ancient ports near the Mediterranean, which seeded modern cities, to estimate agglomeration shadows cast on nearby areas. We find that empirically, as in the simulations, detectable agglomeration shadows emerge for large cities around ancient ports. These patterns extend to modern city locations more generally, and illustrate how encouraging growth in particular places can discourage growth of nearby areas.
Consumer Goods or Store of Value? Textile Evidence and Standards of Living in Eighteenth-Century Amsterdam
Ellan Spero & Anne McCants
Journal of Interdisciplinary History, Summer 2024, Pages 31–55
Abstract:
Before the advent of cheap, mass-produced (and largely cotton) textiles during the classic period of the Industrial Revolution (late eighteenth to mid-nineteenth centuries), clothing was relatively expensive and, because of the care it received, remarkably durable. Textiles often represented a substantial portion of the total assets held by early modern households. Drawing on over 900 after-death inventories of poor and lower middling Amsterdam burgher families registered by the Municipal Orphanage between 1740 and 1782, this article examines the role played by textiles as a “store of value.” The retention of clothing designated as “old,” “very old,” or “old and poor” reveals understandings of the worth of possessions. Indeed, textile goods were for many poor households their main store of wealth, comprising a significant portion of their accumulated assets over a lifetime. Textile goods were also a key access point to new kinds of consumption (new fabrics sometimes from exotic locations and made up in new styles) despite the relative poverty of the population leaving children to the Municipal Orphanage, suggesting that such items also carried important symbolic value not easily captured by their financial value alone.
When beer is safer than water: Beer availability and mortality from waterborne illnesses
Francisca Antman & James Flynn
Journal of Development Economics, October 2024
Abstract:
We investigate the impact of beer on mortality during the Industrial Revolution in 18th century England. Due to the brewing process, beer represented an improvement over available water sources during this period prior to the widespread understanding of the link between water quality and human health. Using a wide range of identification strategies to derive measures of beer scarcity driven by tax increases, weather events, and soil quality, we show that beer scarcity was associated with higher mortality, especially in the summer months when mortality was more likely to be driven by waterborne illnesses related to contaminated drinking water. We also leverage variation in inherent water quality across parishes using two proxies for water quality to show that beer scarcity resulted in greater deaths in areas with worse water quality. Together, the evidence indicates that beer had a major impact on human health during this important period in economic development.