Technology and the rise and fall
of Nations
Y376 International Political Economy
April 4, 2012
Michael Lee
Summary
 Why do economies grow (or fail to grow)?
 Historical patterns
 Why do some countries innovate while others
do not?
 Why did America lead the Fordist revolution
 Why did America lead the ICT revolution?
 What is the next big thing?
Discuss
 “Computer chips, potato chips. What does it
matter? They’re all chips!”
 Does it matter which industries the US is
successful in?
Types of economic growth
 Smithian
 Division of labor
 Solovian
 Diminishing returns to capital
 convergence
 Schumpeterian
 Endogenous growth theory
 Process vs. product
 Geopolitical implications
Discussion
 Why did Britain decline in the 20th century?
Why did the Soviet Union fail to catch the US?
Japan? Do the same forces threaten American
leadership?
Soviet and US GDP per capita, 19462006
Relative production of high-tech
goods, 1830-2007
Relative ownership of global foreign
investment assets, 1829-2007
Sussex school
 http://www.youtube.com/watch?v=AAyUN7wj9I
 Irruption  frenzy  crisis
 http://www.youtube.com/watch?v=5L0IvI00AY4&
feature=related
 (21:00)
 Crisis  Synergy  maturity
 http://www.youtube.com/watch?v=sICSyC9u5iI
 http://www.youtube.com/watch?v=ONZFkqzuMjI
Past technological revolutions
Technology
Period
Leading country Crisis
Textiles, pig iron
1771
Britain
Canal mania
Steam and
Railroads
1829
Britain  USA
Railway mania
Steel, electricity
and heavy
engineering
1875
Britain 
USA/Germany
Baring crisis of
1890
Oil and mass
production
1908
USA
Great Depression
Information and
telecommunicati
ons
1971
USA
Dot com bust and
crisis of 2008
What kinds of things facilitate high
tech growth?







Property rights
Access to capital
Education (elite vs. median)
Tax/subsidy policy
Leading cities
Catch-up vs. leadership
Political cohesion
Some plausible drivers of growth don’t
hold up (researchers/1000 people,
OECD countries)
Competitiveness in Important
industries historically
 Synthetic dye
 Aniline red
 Copyright rules
 Automobiles
 Mass production
 Engineering vs. pure research
 ICT
 Venture capitalism
 Hardware vs. software
Global synthetic dye population,
1857-1914
Motor vehicle production, 1930-1990
ICT value-added, 1985-2007
Question
 What is the next “big thing”?
 Who will get there first?