A Dynamic Input-Output Model of the British Industrial Revolution, 1760-1840
Bart Los, University of Groningen
& Alessandro Nuvolari, Eindhoven University of Technology
The precise contours of economic change of the British Industrial Revolution are still a subject of contention
among economic historians. According to the more traditional view, the British Industrial Revolution
consisted essentially in an acceleration of technical progress covering a wide array of industrial sectors,
leading to a deep process of transformation of British economy and society. This view has been challenged
by Crafts and Harley (1992) who, on the basis of revised estimates of industrial productivity growth,
considers the Industrial Revolution in less dramatic terms with technical progress concentrated in few key
sectors, such as cotton and iron.
A number of recent contributions (see, in particular, Harley and Crafts, 2000 and Stokey, 2001) have
attempted to probe further into these issues, by proposing historical reconstructions of the "mechanics" of the
Industrial Revolution based on Computable General Equilibrium (CGE) models calibrated on historical data.
The ultimate aim of these exercises is to check the mutual consistency of different hypothesis and, in this
way, to assess the plausibility of the various interpretations.
This paper is essentially a contribution in this spirit, but, rather than adopting a traditional CGE simulation
model, opts for a dynamic input-output approach (see, for example, Leontief and Duchin, 1986). The actual
model used is based on Los (2004), as this model is specifically concerned with the effects of technical
change. Whereas CGE models allow only for a "comparative statics" type of exercise, the dynamic inputoutput framework is capable of capturing explicitly the emergence and evolution of linkages between sectors.
This has been frequently pointed out as a fundamental feature of the industrialization process by many
economic historians. Besides the explicit consideration of linkages, the other main features of the model are:
i) demand based on income dependent consumption patterns, ii) international trade, iii) non-immediate
adjustments of markets.
Our dynamic input-output model is calibrated on a slightly revised version of an input-output table for 1841
constructed by Horrell, Humphries and Weale (1994) and on a new table constructed for 1760. We run
simulations assuming a variety of scenarios concerning the dynamics of technical progress in agriculture and
manufacturing sectors. Our preliminary results seem to be consisted with the Crafts and Harley view.
References
Crafts, N. and Harley, K. (1992), "Output growth and the British Industrial Revolution: a restatement of the
Crafts-Harley view", Economic History Review, 45, pp. 703-730.
Harley, K and Crafts, N. (2000), "Simulating the two views of the British Industrial Revolution", Journal of
Economic History, 60, pp. 819-41.
Horrell, S., Humphries, J. and Weale, M. (1994), "An input-output table for 1841", Economic History Review,
47, pp. 545-566.
Leontief, W and Duchin, F (1986), The Future Impacts of Automation on Workers (Oxford: Oxford University
Press).
Los, B. (2004), "Identification of strategic industries: a dynamic perspective", Papers in Regional Science,
83, pp. 669-698.
Stokey, N. (2001), "A quantitative model of the British Industrial Revolution, 1780-1850", CarnegieRochester Conference Series on Public Policy, 55, pp. 55-109.
Industrial Revolution: the case of the Cornish pumping engine” (Cambridge Journal of Economics, 2004),
“The early history of the steam engine: an evolutionary interpretation using complexity theory” (with K.
Frenken, Industrial and Corporate Change, 2004) and “The Diffusion of the Steam Engine in
Eighteenth Century Britain” (with B. Verspagen and N. von Tunzelmann, in Pyka, A. and H. Hanusch
(eds.), Applied Evolutionary Economics and the Knowledge-Based Economy, Cheltenham: Edward
Elgar, forthcoming).