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Flowers of Evil? Industrialization and Long Run Development

Author

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  • Raphael Franck
  • Oded Galor
Abstract
This research explores the effect of industrialization on the process of development. In contrast to conventional wisdom that views industrial development as a catalyst for economic growth, the study establishes that while the adoption of industrial technology was conducive to economic development in the short-run, it has detrimental effects on the standard of living in the long-run. Exploiting exogenous geographic and climatic sources of variation in the diffusion and adoption of steam engines across French departments during the early phases of industrialization, the research establishes that intensive industrialization in the middle of the 19th century increased income per capita in the subsequent decades but diminished it by the turn of the 21st century. The analysis further suggests that the adverse effect of earlier industrialization on long-run prosperity can be attributed to the negative impact of the adoption of unskilled-intensive technologies in the early stages of industrialization on the long-run level of human capital and thus on the incentive to adopt skill-intensive technologies in the contemporary era. Preferences and educational choices of second generation migrants within France indicate that industrialization has triggered a dual techno-cultural lock-in characterized by a reinforcing interaction between technological inertia, reflected by the persistence predominance of low-skilled-intensive industries, and cultural inertia, in the form of a lower predisposition towards investment in human capital. These findings suggest that the characteristics that permitted the onset of industrialization, rather than the adoption of industrial technology per se, have been the source of prosperity among the currently developed economies that experienced an early industrialization. Thus, developing economies may benefit from the allocation of resources towards human capital formation and skilled intensive sectors rather than toward the promotion of traditional unskilled-intensive industrial sectors.

Suggested Citation

  • Raphael Franck & Oded Galor, 2018. "Flowers of Evil? Industrialization and Long Run Development," Working Papers 2018-7, Brown University, Department of Economics.
    • Handle: RePEc:bro:econwp:2018-7
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    Cited by:

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    3. Vincent Bignon & Cecilia Garcia-Peñalosa, 2018. "The Toll of Tariffs: Protectionism, Education and Fertility in Late 19th Century France," Working papers 690, Banque de France.
    4. Stephan Heblich & Marlon Seror & Hao Xu & Yanos Zylberberg, 2019. "Industrial clusters in the long run: evidence from Million-Rouble plants in China," CESifo Working Paper Series 7682, CESifo.
    5. Asmus, Gerda & Franck, Raphaël, 2022. "State Capacity, National Economic Policies and Local Development: The Russian State in the Southern Urals," CEPR Discussion Papers 17103, C.E.P.R. Discussion Papers.
    6. Björn Brey, 2021. "The long-run gains from the early adoption of electricity," Discussion Papers 2021-05, University of Nottingham, GEP.
    7. Guillaume Blanc & Masahiro Kubo, 2023. "French," Economics Discussion Paper Series 2308, Economics, The University of Manchester.
    8. Adrian Palacios-Mateo, 2023. "Education and household decision-making in Spanish mining communities, 1877–1924," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(2), pages 301-340, May.
    9. Stephan Heblich & David Krisztian Nagy & Alex Trew & Yanos Zylberberg, 2023. "The Death and Life of Great British Cities," Working Papers 2023_09, Business School - Economics, University of Glasgow.
    10. Nina Boberg-Fazlic & Peter Sandholt Jensen & Markus Lampe & Paul Sharp & Christian Volmar Skovsgaard, 2023. "‘Getting to Denmark’: the role of agricultural elites for development," Journal of Economic Growth, Springer, vol. 28(4), pages 525-569, December.
    11. Christoph Eder, 2022. "Missing Men: Second World War Casualties and Structural Change," Economica, London School of Economics and Political Science, vol. 89(354), pages 437-460, April.
    12. Berbée, Paul & Braun, Sebastian Till & Franke, Richard, 2022. "Reversing Fortunes of German Regions, 1926–2019: Boon and Bane of Early Industrialization?," IZA Discussion Papers 15463, Institute of Labor Economics (IZA).
    13. Marta C. N. Simões & Adelaide Duarte & João Sousa Andrade, 2019. "Human capital and productivity growth in a services economy: Some insights from the Portuguese case," International Economics and Economic Policy, Springer, vol. 16(3), pages 511-534, July.
    14. Muhammad Fikry Hadi & Muhammad Hidayat & Dwi Widiarsih & Neng Murialti, 2021. "The Role of Electricity and Energy Consumption Influences Industrial Development between Regions in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 403-408.
    15. Elena Esposito & Scott F. Abramson, 2021. "The European coal curse," Journal of Economic Growth, Springer, vol. 26(1), pages 77-112, March.
    16. Arnaud Deseau, 2023. "Land Reform and Productivity: Evidence from the Dissolution of the French Monasteries," LIDAM Discussion Papers IRES 2023009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    17. Franck, Raphaël & Gay, Victor, 2024. "Urbanization and the Change in Political Elites," GLO Discussion Paper Series 1366, Global Labor Organization (GLO).

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    More about this item

    JEL classification:

    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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