Preindustrial Patterns of Growth: Why did the industrial revolution take place in Britain rather than in Morocco?
Introduction
Some five centuries ago, many parts of the world had almost similar levels of economic activities and wealth. Since the Industrial Revolution which started in Britain, roughly between mid-18th and mid-19th centuries, the gap between poor and rich parts of the world did not stop to grow.
Few centuries before this revolution, the gap between Britain (part of Europe) and Morocco (part of the Islamic World) was not very significant. It is therefore legitimate to wonder about the preindustrial patterns that led to the revolution and thereafter the economic growth happening in Britain rather than some part of the Islamic World like Morocco.
To analyze the question and discuss some possible answers, we present some relevant concepts and theories. We also mention some important historical events that shed some light on the question at hand. The aim of the analysis is to study the main causes from an economic history perspective rather than economist one. In particular, we attempt to find patterns in relation to historical events that took place before the revolution rather than only using economic theories/data. Moreover, we restrict our analysis to the Industrial Revolution and not the post-industrial growth that came after. We also do not pretend to answer the general question of why certain countries are poor whereas other are rich.
Background
The event of increasing economic gap between certain parts of the world (Britain) and others (Morocco) is often referred to, in the literature, as the Great Divergence. Until the end of 11th century, the Islamic world (and China) were similar or even more developed than Europe[1]. The divergence emerged only between the period of the explorations of the New World (called mercantilism), and the Industrial Revolution. For instance, before this period China and India (25%) were big producers with 33% and 25% of the world production, respectively. After this period their production dropped to only 1–4% whereas Britain went from 2% to 23%[2]. Trying to explain the preconditions for this shift could give some answers to our original question.
Many scholars have studied the reasons behind this divergence or gap. This led to various concepts and theories. One important concept, introduced by Paul David, is the path dependence which is the explanation of technological/institutional configurations from specific historical courses and not as a sequence of universal rational economic laws. A typical example is the QWERTY keyboard today, although rationally inefficient, it is the result of (almost random but) specific historical events. It is therefore important to distinguish between random events and those which are part of a sequence or feedback loop, i.e., long-term process.
A comparison between Europe/Britain and Islamic world/Morocco (as well as China) during pre-industrial era indicates several differences (and similarities) in terms of strategic factors for economic development. For instance, city-states versus theocratic governments, high versus light taxation, many versus few public goods, code-based justice versus will of elite. These structural differences relate to another important concept, namely institutions which reduce transaction costs and thus increase trade and economic development.
Long before industrialization, people have been used to a nomadic lifestyle living in small groups and tribes. After events such as the Agricultural Revolution, these small groups will be soon transformed into larger and more complex societies. Thus, the need for different kinds of institutions which are often shaped by climate, geographic location, natural resources, and philosophical and religious visions, organization of society with appropriate institutions. Douglass North defines these as a combination of formal rules and informal constraints and their enforcement characteristics [3].
Discussion and conclusions
Although common between the two parts, the Agricultural Revolution played an important role in creating and promoting an early division of labor, not necessarily within agriculture. This played an important role in the Industrial Revolution.
As mentioned in the background, (financial) institutions have simplified trade by reducing transaction codes. For instance, monetary systems were made safer and simpler, credit banks made it possible for many to do more business and investments. Although far from being democratic, the political institutions and the constitution had also many features promoting economic growth such as taxation for more and better public goods, security of property rights.
In addition to the political system, philosophical and religious visions in general and the scientific culture (e.g., Newton’s Principia Mathematica) during the 17th century accelerated processes such as increased literacy (also among girls/women), reading newspapers and following politics, and urbanization.
Given these circumstances, technological changes accelerated and inventions like steam engine with wide ranges of applications/industries and other simpler inventions like hats appeared to increase productivity. The high wage, increasing labor costs and cheap energy/coal provided even more incentives to mechanize/automatize production. British inventors have therefore spent time and money in research & development to operationalize often pre-existing inventions or ideas from elsewhere. This sequence of events is hence a good example of how economic incentives are inducing inventions.
References
[1] Vera Zamagni, An economic history of Europe since 1700 (2017, Agenda publishing).
[2] Robert C. Allen, Global Economic History: A Very Short Introduction (2011, Oxford University Press).
[3] Douglass North, North, D.C (1991) Institutions, Journal of Economic Perspectives 5:1 pp 97-112.
