Why the French did not industrialize first

Why the French did not industrialize first

Thilo R. Huning

Historical Perspectives on Economic Growth

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Why the French did not industrialize first

Questions of this lecture

To further understand the British Industrial Revolution, we would

like to understand
I Why did France not industrialize first?
I Were it absolutist, market-unfriendly political institutions?
I Was it a lack of urbanization, or Londonization?
I Was it the failure of French colonialism?
I What were the consequences of the Napoleonic Wars
(1803–1815) on the European Economy?

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Why the French did not industrialize first

This lecture within my lectures

I We have finished discussing Roman, medieval, and early

modern (–1700) factors of divergence, both global and
European
I We have started to cover some scientific, technological, and
political history of the UK
I We will now compare the UK’s development with other
countries in Europe

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Why the French did not industrialize first

Why should we care about France?

I Historians understand the French
Revolution of 1789 as a watershed
I This starts “the long 19th century
(1789–1914)
I The Napoleonic Wars mark vast
political changes all over Europe,
and the start of nation building
for many European states
I But: The hockey stick shows us
that the British Industrial
Revolution was THE watershed in
human history
I So: If the French were so great
culturally, politically: Why did
they not industrialize first?
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Why the French did not industrialize first

Why was there a French Revolution? Evidence from Sharp and

Weisdorf (2012)

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Why the French did not industrialize first

Why was there a French Revolution? Evidence from Sharp and

Weisdorf (2012)

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Why the French did not industrialize first

Why was there a French Revolution?

I Sharp and Weisdorf (2012) argue that the French Revolution
can be in parts explained by economic hardship
I Compared to a Londoner, Parisians had to work much harder
to make a living
I This economic hardship may have fueled the political turmoils
of 1789–1815 which surely did not help France
I Britain’s economy was hardly hit by Continental Blockade
I While Britain’s empire expanded, France gave up on the
American continent (Louisiana purchase of 1803)
I The 19th in France is full of instability (1815–1848–1871)
I In order to understand how this came about, let’s look at the
17th and 18th century again
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Why the French did not industrialize first

A Lille to King of Orange comparison

I After the Glorious Revolution of

1688, the rulers are constrained by
parliament, and some
representation is established (far
from universal suffrage)
I Meanwhile, the French kings
(especially the XIV) starting from
internal struggles (Fronde Civil
Wars, 1648–53) establish absolute
power against parliament and
nobility

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Why the French did not industrialize first

Demography

Income Population growth in % Urbanization

p.c. (1990 in %
GK$)
1700 1820 1700–1820 1820–1850 1700 1800
England 1250 1706 0.76 0.83 13.3 20.3
France 910 1135 0.31 0.51 9.2 8.8
China 600 600 0.85 0.26 6 3.8

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Lessons from the Demographic Comparison

I Living standards in France 1700 are lower than in UK,

however surplus compared to China. Hence there was
potential for urbanization, and sectoral change
I However, French urbanization in 1800 is lower than in 1700,
compared to almost doubled in UK
I England experiences 36% p.c. income growth vs. 25 % in
France
I This is despite doubling population in UK vs. 50% increase in
France

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Why the French did not industrialize first

Why did France not urbanize?

I Roman origins and Atlantic trade? (Michaels and Rauch 2018)

I Wages in London vs. Paris? (Sharp and Weisdorf 2012)
I War Financing
I Between 1692 and 1815, British government debt rose from 5%
to 200%, while at war for 76 years, 62% of the time (Ventura
and Voth 2015)
I Is there a link?

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Why the French did not industrialize first

British Debt from Ventura and Voth (2015)

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Why the French did not industrialize first

Factor Shares in Britain from Ventura and Voth (2015)

1770 1860 Change

Capital 18% 45% +27%
Land 60% 47% -13%
Labor 22% 8% -14%

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Why the French did not industrialize first

The Londonization of International Finance

Meanwhile many financial innovations of
the premodern era started in Amsterdam,
London becomes increasingly the world’s
financial hub
I Meanwhile the governments of
Spain, the Netherlands, and
Austria reduce war efforts after the
war of Spanish Succession
(1701–14), England’s government
can borrow more
I The debt is held by the “Three
Sisters”, the Bank of England
(1694), the United East India
Company (1709) and the South
Sea Company (1711)
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Why the French did not industrialize first

Economic Consequences of the Napoleonic Wars

I London becomes the financial hub
of world finance. This starts from
British war financing (Neal 2015)
I Britain is able to borrow cheaply.
Markets trust in the stability of
British institutions
I France suffers from the aftermath
of the lack of credibility of the
Ancient Regime
I Capital (financial and human)
flights Europe and stays
I England continues to seek
opportunities on the oceans

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Why the French did not industrialize first

Some debate

I It is debated whether this is all about political institutions

(North and Weingast 1989)
I The changes to London’s financial markets alone can explain a
lot (Neal 2015)
I Dutch, and then French refugees (Huguenots) transfer funds
and human capital
I Financial innovations like stock markets and public companies
are copied, and British oversea expansion overtakes Dutch fast

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The Expansion of the British Empire

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Why the French did not industrialize first

The Expansion of the British Empire

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Why the French did not industrialize first

The Expansion of the British Empire

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Why the French did not industrialize first

The Louisiana Purchase of 1803

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Why the French did not industrialize first

Significance of Louisiana Purchase

I France realizes that its North American ambitions are ended

I It was unable to populate the vast territory it had claimed.
Research indicates this is because French farmers were too
poor to migrate
I Despite American War of Independence and following US and
British wars: They are their closest trading partners

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Why the French did not industrialize first

Conclusion

I France was definitely one of the candidates to industrialize

first
I There is a range of factors where Britain developed differently
between 1700–1800
I It urbanized
I It was able to raise larger amounts of public debt and become
the world’s financial capital
I There are still debates whether the more stable public
institutions, as suggested by North and Weingast (1989) are
really behind it
I Plus the usual: Coal, wages, and the Romans

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Why the French did not industrialize first

A Question of Chance?

I Voigtländer and Voth (2006) propose a model that uses

several variables (demography, sectoral allocation) to predict
the chance of UK, France, and China to industrialize first
I They argue that France could have moved out of agriculture
and into industry, but its chance was less than 25%

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Reading for Today

Please catch up on the other reading

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Concepts of this lecture

—No new concepts—

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Why the French did not industrialize first

References I
Michaels, Guy and Ferdinand Rauch (2018). “Resetting the urban
network: 117–2012”. In: The Economic Journal 128.608,
pp. 378–412.
Neal, Larry (2015). A concise history of international finance: From
Babylon to Bernanke. Cambridge University Press.
North, Douglass C. and Barry R. Weingast (1989). “Constitutions
and Commitment: The Evolution of Institutions Governing Public
Choice in Seventeenth-Century England”. In: The Journal of
Economic History 49.4, pp. 803–832.
Sharp, Paul R and Jacob L Weisdorf (2012). “French revolution or
industrial revolution? A note on the contrasting experiences of
England and France up to 1800”. In: Cliometrica 6.1, pp. 79–88.
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References II

Ventura, Jaume and Hans-Joachim Voth (2015). Debt into growth:

how sovereign debt accelerated the first industrial revolution.
Tech. rep. National Bureau of Economic Research.
Voigtländer, Nico and Hans-Joachim Voth (2006). “Why England?
Demographic factors, structural change and physical capital
accumulation during the Industrial Revolution”. In: Journal of
economic growth 11.4, pp. 319–361.

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