(W) – Two topics 9/10/2013 9:16:00 PM
Midterm on Monday (8/19)
Marxian model of industrialization in England
Had a great deal of intellectual influence on the first generation of
First generation economists felt that development economics would
be a recapitulation of Marxist Theory.
Gerschenkron: The Advantages of Being First.
Creation of industrial labor force: scarcity vs. abundance.
o Early industrialization : labor intensive, requires fairly large
numbers of unskilled and semi-skilled workers; roads,
railroads, mines; craft workshops play a large role.
o Late industrialization : small numbers of highly skilled
workers, computers, flat screens, etc…
Involved with Western Europe.
Countries that industrialized first had a number of hugely important
advantages and those that industrialized later had a huge number
of important disadvantages.
Disadvantages faced by countries that industrialized later.
o 1) Technical and Technological – textile industry in developing
world will not use foot-pedal sewing machines, meaning there
is no incremental development of labor force.
Ex. Apparel industry – elementary technology over a
period of time went through a total process of evolution
where everything is automated and requires a great
deal of capital investment.
*Doesn’t go through sequence of stages
Ex. Automobile industry – Went through early evolution
in small workshops that were relying on horse-drawn
carriages, hence similarity in design.
Don’t begin an automobile industry in the
workshops that build horse-drawn carriages. Build
them in their own workshops tailored to
automobile manufacturing. *Developing countries do not have the luxury of going
through stages of development like the first developing
countries (now developed countries) did.
o 2) Vast amounts of capital for investment in early
Problem: how to gain that investment in capital.
o 3) Advantages that early industrializers had by default –
Advantages of having Markets
Very few other players experiencing evolution of the
marketplace in the same way the Western World was.
o 4) Training of the labor force – Need for planned
Countries that went through their industrialization first
had the luxury of being able to take a period of time
and evolve gradually the skill set of their industrial
workforce to the point where at any given moment in
time the additional increment of skills that would be
required to perform a different task, is already
Ex. Underwater welding – requires a lot of skill and
development before task is undertaken. Developing
countries don’t have time.
Early industrializers had the luxury of industrializing
with labor-intensive industries.
Ex. textile mills, coal mines. Drew a large number of
people out of the countryside, especially out of small-
scale farming, to labor-intensive labor.
o Technological leap that is vastly difficult to overcome.
o Those countries that developed early on were those that had
o Banking institutions that could get money and then lend it
Arguments. o Later industrializers – capital entry threshold – would need
larger and more centralized institutions for capital
Germany and France (Credit Mobilier) developed
powerful banking institutions.
o Last industrializers – Russia – would need large public works
projects to stimulate industrialization; e.g. railroads,
o Gerschenkron’s ideas anticipated development economics
Industrial Revolution Timeline
Large-scale capital intensive industrialization after 1830
1780, Adam Smith was arguing against the Welfare state
implications of the Methodist Church with its emphasis on
philanthropy on the private basis and increasing emphasis in public
Emphasis of welfare state as a public responsibility and a cultural
ethos came about during the Great Depression.
o Part of debate that Smith won: resistance of welfare state
type of management for newly developing country. Creates
Incremental capital not being diverted to poverty-alleviation efforts
in newly industrializing countries.
o *Didn’t have to bother with welfare state if until they had
already reached a far enough along stage in the
o This was a benefit because they could get the process of
industrialization started without diverting valuable capit