Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

1
...
To what extent did entrepreneurial failure/ not adopting mass production techniques
contribute towards Britain’s relative economic decline?
Broadberry (1994) looks at the data from US and UK Census of Manufactures around 1909 and finds that for
manufacturing as a whole, the US had a 2:1 productivity lead over Britain
...

McCloskey and Sandberg (1971) argue that competition ensures the correct choice of technology, and that the
most recent development was not always appropriate
...

In 1830, cotton textiles were half of GB exports, whereas in 1913 they were only a quarter (Broadberry, 1994)
...

One of the principle allegations of entrepreneurial failure was in spinning, where technological conservativism arguably
delayed the switching from mule to ring spindle
...

Mule spinning was more appropriate for British mill-owners as relied on labour relatively more than capital and was
better method for catering to diversified international markets, rather than the homogenised American market
...

The US was scarce in labour, but rich in raw materials; meaning wages were relatively high compared to raw material
prices
...

Britain’s relative factor endowments suggest that ring spinning may have been an inappropriate technology choice
...

In the sense of being 'Schumpeterian entrepreneurs’, they perhaps failed on account of passively accepting these
constraints rather than creatively overcoming them
...

This view is shared by Leunig (2003), who finds Lancashire textiles had a higher output/ labour productivity than
New England textiles due to more intensive competition, manifested through external economies of scale
...

With comparative advantage shifting to low wage producers like Japan/ India, there was little British entrepreneurs
could have done to prevent textiles’ failure
...


Chemicals Industry
Broadberry (1997) looks at data for the chemical industry in 1910, and finds that Britain lags behind both the US and
Germany in terms of comparative labour productivity
...

Proponents of British entrepreneurial failure (Author, Year) point to technological conservatism in persisting with the
Leblanc process for soda ash production long after the superiority of the Solvay process was established
...

Broadberry (1997) supposes that if foregone profit opportunity qualifies as entrepreneurial failure, the lag in the
adoption of the Solvay process in soda making is an apt example
...
a after 1900
...

If Bruner Mond had operated in a more competitive fashion, it may have forced United Alkali Company (UAC) to
adjust or exit
...


Shipbuilding Industry
Data on shipbuilding output and employment from Broadberry (1997) suggests rapid growth, with employment more
than doubling between 1861 and 1911
...
Britannia rules the waves
...

British tramp shipping benefited from Marshall's (1920) idea of external economies of scale; with large numbers of
specialised producers localised in the NE of England, around the Tyne
...

Shipbuilding thus provides a counter example to Elbaum and Lazonick (1986), who wrote on the inadequacies of
GB craft based production in late 19th century
...

The McCloskey and Sandberg (1971) argument applies here: the latest technology is not always the most efficient
...


Conclusion
Entrepreneurial Failure
...
(Williamson and transaction cost
economics)
...

This argument was rebutted by micro-studies of many industries which demonstrated underlying rationality
...
The only exception was Lindert and Trace on chemicals
(1971)
...
In summary, productivity performance in this period was similar to Germany, and the productivity
gap with US was accounted for by different technological choices arising from different conditions and factor
endowments
...

Demand side: US consumers prepared to accept a higher degree of standardisation - more homogeneous market meant
producers
...

Variety of experience across industries, but central theme of spread of high- throughput production methods
Motor vehicles: mass production in US, no mass market in UK → large Y/L gap
Shipbuilding: mass production still not possible → no Y/L gap
Cotton: mass production in US but UK competitive on basis of flexible production with external economies of scale →
small Y/L gap
Chemicals: cartel → inappropriate technological choice in soda ash
...

3rd type of industry where GB attained high Y/L levels was where demand factors allowed early adoption of highthroughput techniques in GB
...


Abramovitz (2001) by the 1920s, American technological progress was underpinned by much larger investments in
intangible and human capital formation and by 1929 the United States had established a clear TFP lead
...




---