DISCUSSION PAPERS 03-32 Growth Theory and Industrial Revolutions in Britain and America

Long run economic growth has again become a major focus of economic theory. A perception of technological change as an economic process with externalities has motivated the development of aggregate models that generate different steady state growth paths. Economic history has also long been interested in long-run economic growth. This paper engages in a dialog between growth theory and the historical literature on the industrial revolution in Britain and America’s surge to international economic leadership in the late nineteenth century. It concludes that economists’ recent thinking about the microeconomics of technological change has provided fruitful material for the economic historian of growth. Unfortunately, the models of endogenous growth, on the other hand, present too aggregated a view of the economy to prove helpful when confronted with the details of economic history. JEL Classification: N0, N1.1