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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use.date: 07 June 2022 DOI:10.1093/acprof:oso/9780198753643.003.0001 The fact that modern industry originated in Britain, and spread initially to Northwest Europe and North America, implied a dramatic divergence in living standards between the industrial ‘West’ and a non-industrial ‘Rest’. This industrial divergence is visibly unravelling today, as Third World economies converge industrially on the rich economies of Europe and North America. This phenomenon has been the subject of much research. Less appreciated, however, are the deep historical roots of this convergence, and in particular of the spread of modern industry to the global periphery. This chapter provides an introduction to the book, which fills this gap by providing a systematic, comparative, historical account of the spread of modern manufacturing beyond its traditional heartland to what we call the poor periphery. The chapter highlights the roles of factor endowments, the international context, luck, and economic policy in determining the timing and extent of manufacturing growth. Keywords: manufacturing, technological transfer, factor endowment, globalization, economic policy, catching-up, convergence, poor periphery, economic history Ever since the British Industrial Revolution, the transition to modern economic growth has been associated with industrialization. New labour-saving and energy-using technologies first originated in Britain, and then spread with a lag to countries such as Belgium and France in continental Europe and North America (Allen, 2009). The initial impact was a ‘Great Divergence’ in living standards between Northwestern Europe and its New World offshoots, on the one hand, and the rest of the world on the other. This divergence is now being eroded as developing economies rapidly industrialize. But when did modern manufacturing first begin to spread to the developing world? Was it only during the ‘second globalization’ which began in earnest in the 1980s? Or are the roots of industrial catch-up to be found in the long period of world deglobalization which began in 1914, and saw two world wars, the Great Depression, the breakdown of formal and informal empires, and import-substituting industrialization (ISI)? Or might the spread of modern manufacturing have started even earlier, during the ‘first globalization’ of the late nineteenth century (O’Rourke and Williamson, 1999)? In both globalization periods, international economic integration may have helped developing countries import new technologies, exploit their lower labour costs, and import those raw materials with which they were poorly endowed (Wright, 1990). Alternatively, trade may have made it difficult for developing countries to compete with established industries in richer countries (Williamson, 2011). In that case, the breakdown of the nineteenth-century international division of labour—which saw the industrial core economies export manufactures and import food and raw materials (Robertson, 1938; Lewis, 1978)—may have favoured industrial growth in the developing world. So what were the impacts of globalization and deglobalization on the spread of modern industry to the developing world? Were the impacts uniform, or did they depend on the characteristics of the individual countries concerned? This volume has three goals. The first is to document the origins of modern industrial growth around the global periphery: those regions in Southern and Eastern Europe, the Middle East, Asia, Latin America, and Sub-Saharan Africa (p.2) that fell behind the industrial core in Northwest Europe and North America during the Great Divergence. When did modern manufacturing first emerge in these regions, what industries did it initially involve, and how did it subsequently develop? The second is to explain these patterns of industrial development. What determined the timing of early industrialization? Did it happen spontaneously, as a result of market forces, or was government intervention required? What sorts of factor endowments encouraged early industrial development, and what sorts hindered it? How important was access to foreign markets, or alternatively, protection for the home market? What was the impact of major shocks to the international economy: world wars, the Great Depression, the spread of Communism, decolonization, the shift to market liberalism in the 1980s and 1990s? How was technology transferred to these regions? The third aim of the volume is to trace the history of modern manufacturing in the global periphery through to the present day, and to understand what determined these long-run trajectories. We have chosen to address these questions by commissioning a series of country and regional studies, written by leading experts in the economic histories of these countries or regions. We believe that the traditional economic history approach used here has many advantages as compared with more standard cross-country regressions used by economists, for at least two reasons. First, a strong message emerging from these chapters is that the impact of factor endowments, country size, government policies, the international environment, and other factors, all tended to depend on each other. The impact of protection, for example, depended on the nature of the economy being protected, and on what other countries were doing. These interactions were so numerous and important that they would be difficult or even impossible to incorporate adequately into a standard panel regression. Second, modern manufacturing consisted of three quite distinct activities: the processing of commodities (especially for export); the production of import-competing or export-competing tradables; and the production of consumer goods for domestic markets which are quasi-non-tradable, because of high transport costs or distinctive local tastes. The same policies or international shocks could (and did) affect these three sub-categories in opposite directions, in ways that a regression explaining aggregate manufacturing output would not capture. Chapter 2 will deal extensively with the first of these themes, and so this introduction will focus more on the second. After a brief summary of when and where modern manufacturing first emerged, we will explore the roles played by factor endowments, policy, and the international context. Two additional introductory comments are necessary before we press on. First, there has been a flood of works dealing with industrialization in the Third World since Simon Kuznets, W. Arthur Lewis, and other giants were writing in the 1950s, 1960s, and 1970s. Why another? The answer is that this volume is about the spread of modern manufacturing, not industrialization; it deals with the origins and development of a particular sector of the economy, rather than with patterns of structural change involving all sectors. Structural change is obviously essential in explaining the transition to modern economic growth. However, studying industrialization requires an understanding, not just of the manufacturing sector, but of (p.3) an additional 75 per cent of the economy—agriculture and services—as well. The development of a modern manufacturing sector is essential for industrialization, but the reverse is not true: a poor country could see its modern manufacturing sector grow rapidly without this leading to structural change. Such was the case, for example, in Southeast Europe before 1939 (Chapter 5). Indeed, the manufacturing sector could grow more rapidly than in rich industrial economies, without the country concerned converging on them in per capita GDP terms. And yet the modern manufacturing sector is crucial for long-run economic development, suggesting that there are intellectual benefits to focusing on it alone. Second, we need to say something about our definition of the ‘periphery’. As Marc Flandreau and Clemens Jobst (2005) have reminded us, the definitions of core and periphery are ex ante unclear, and tend to depend in practice on the purpose at hand. In our case, we are interested in the gradual spread of modern manufacturing from its original heartlands in Northwest Europe and the United States. We therefore include not only regions such as Sub-Saharan Africa and Asia, which were clearly ‘peripheral’ in the context of the late-nineteenth-century world economy, but also ‘middle-class’ or ‘second-tier’ countries in Southern and Eastern Europe. Modern manufacturing gained a foothold there rather later than it had done in countries like Britain and Belgium, and its experience was often less successful. We have chosen Italy to serve as representative of Southern Europe, fully mindful of the fact that it was only marginally peripheral: the judgment of Chapter 6 is that it was still a peripheral industrial nation at the time of unification, but that it had joined the industrial core by the 1930s at the latest. We feel that there are lessons to be learned from the experience of a relatively early ‘peripheral’ industrializer such as Italy, and what is true of that country is even truer of a country like Japan (Chapter 8). Our five peripheral regions are thus: Southern and Eastern Europe; the Middle East and North Africa; Sub-Saharan Africa; Asia; and Latin America. These five regions were certainly poor. In 1913, their per capita incomes expressed as percentages of incomes in the three leading economies (Britain, Germany, and the United States) were: Eastern Europe 34.4 per cent; Southern Europe 42.3 per cent; Middle East 22.5 per cent; Sub-Saharan Africa 13.8 per cent; Asia 16.3 per cent; and Latin America 32.3 per cent (Maddison, 2010). Chapter 2 provides a broad quantitative overview of the spread of modern manufacturing to the global periphery, bringing together evidence on industrial (where possible, manufacturing) growth rates from 1870 to the onset of the global financial crisis in 2007. It shows that developing countries experienced rapid manufacturing growth surprisingly early, in many cases well before the First World War, although this fast growth occurred from very low initial levels of modern manufacturing output. Between 1870 and 1896, industrial output grew at 5 per cent per annum or more in Austria, Hungary, Russia, China, Chile, Brazil, Argentina, and Mexico (p.4) (where annual growth was as high as 9.8 per cent). Growth slowed after 1896 in peripheral Europe and Latin America, but it accelerated in Asia, where Japan, China, and the Philippines all experienced average industrial growth rates of 5 per cent per annum or more between 1896 and the First World War. Modern factory output also expanded rapidly in Bulgaria and Romania during this period. By contrast, in the Middle East and Sub-Saharan Africa rapid industrial growth only started in the inter-war period and, especially, after 1950. The ‘golden age’ of 1950–73 was the high point of industrial growth not just in these regions, but across the global periphery. The industries involved in the initial spread of modern manufacturing varied. The classic industries of the British Industrial Revolution were textiles and metallurgy, and these featured prominently during the spread of modern manufacturing to several peripheral countries as well. Textiles were particularly important in China, India, and Mexico, and they were also prominent in Austria-Hungary and Turkey. On the other hand, despite the importance of silk, they only accounted for 10 per cent of Italian manufacturing in 1870, with the engineering sector nearly twice as large. Iron was important in Mexico from the turn of the century; more generally, heavy industry was important in Austria-Hungary, Italy, and Russia. Early industrialization in Argentina involved a broader range of consumer goods (not just textiles), protected by tariffs and serving a rapidly expanding local market. In Southeast Asia and Egypt, modern industry initially focused on commodity export processing, moving into consumer goods somewhat later. Factor endowments had a profound impact on industrial policy. Labour-abundant and resource-scarce countries could enter at the bottom of the ladder, producing and exporting labour-intensive products (e.g. East Asia). Labour-scarce and high-wage peripheral countries could not exploit that strategy, and thus relied on a tariff-protected domestic market (e.g. Latin America). Where the labour-scarce economy had only a small domestic market (e.g. Southeast Asia), industrial growth was difficult. Modern industry first emerged in high-wage economies: Britain, Northwest Europe, and North America. According to Allen (2009), this is not a coincidence: high wages, cheap capital, and abundant energy gave entrepreneurs the incentive to search for and adopt modern, labour-saving, and capital and energy-using technologies.1 Initially, these new technologies were only economical in regions whose factor endowments corresponded with what the technologies had been designed for. But over time, the technologies improved to such an extent that it made sense to adopt them even where factor endowments were quite different. In addition, key sectors like textiles became labour-intensive relative to other industrial sectors, such as capital-intensive heavy industry. Over time, therefore, cheap labour became an (p.5) advantage in developing modern manufacturing, at least in those economies where other required inputs (financial capital, machinery, energy, skilled labour, and entrepreneurship) were in sufficient supply. The developing economies covered in this volume were characterized by widely varying factor endowments. Sub-Saharan Africa, Latin America, and Southeast Asia were resource abundant and labour scarce, and consequently had wages that were high by developing economy standards. Our authors document these high wages (that is, high relative to other periphery countries), and show how they made it difficult to develop modern, labour-intensive manufacturing. That is, nominal unskilled wages were higher in Southeast Asia than in Japan until the 1920s, and were higher than in India and China for even longer (Chapter 11). In 1911, daily earnings in similar textile mills were 18 US cents in Japan, but 46 cents in Mexico (Chapter 12). Unskilled wages were much higher in West Africa than in India until 1945 (Chapter 14). Commodity export processing, and later import-substituting industrialization (ISI), were the typical routes to industrialization for such economies. Another response to high wages was labour coercion, which kept wage costs low in, for example, South African mining (Chapter 14) and even Soviet manufacturing (Chapter 3). Over time, however, factor endowments evolved in ways that made it easier to sustain a competitive, modern manufacturing sector. Populations grew fast, leading to falling relative wages, and bigger domestic markets; this was the case in Africa, for example, but even so that continent’s recent rapid growth has in many cases been based more on commodity exports than on manufacturing. The supply of educated labour seems to have been just as important as the supply of overall labour, and perhaps even more so, in augmenting the ability of countries to develop modern manufacturing. Lars Sandberg (1979) pointed out long ago that while physical capital can be imported from abroad, it takes much longer to accumulate human capital. Poor education may thus place an effective constraint on development—especially since human capital endowments can influence a country’s ability to adapt foreign technology to local circumstances. From Abramovitz (1986) on, a vast empirical literature has documented that GDP convergence is conditional on a host of factors, including schooling, and this literature suggests that education matters because it allows countries to adopt best-practice manufacturing techniques. This volume provides ample evidence that education facilitated the spread of modern manufacturing. From this perspective, European colonialism damaged many countries: it was not until they achieved independence that major progress was made towards providing universal primary (and later secondary) education. Racist educational policies in colonial Africa hindered development there (Chapter 14). India’s British rulers viewed the sub-continent as a source of primary products, thus investing in railroads but not in schools (Chapter 10). Primary school enrolment rates were low in Southeast Asia in the 1920s, whether the colonizer was Dutch, French or British (Chapter 11). After independence, a literacy revolution took place almost everywhere around the periphery. In contrast, Japan strongly promoted education from the 1870s onwards, and this appears to have benefited its Korean and Taiwanese (p.6) colonies (Chapter 8). American colonial rule benefited the Philippines in a similar fashion (Chapter 11). When modern manufacturing began its spread to the periphery, a lack of skills was therefore often an important constraint. It follows that loosening that constraint was crucial in spurring industrial growth. Sometimes this could be achieved by importing human capital. Technical workers tended to be foreign in early-twentieth-century Mexico and Peru; they were imported from Western Europe into Southeast Europe up until the Second World War; they were also imported from Japan, China, and India into late-nineteenth and early-twentieth-century Southeast Asia (Chapters 5, 11, 12); and British mechanics and managers were important in developing early modern manufacturing in India’s port cities (Chapter 10). But importing skilled foreign labour was a costly option. A much better (long-run) solution was to increase the domestic supply of educated workers. All poor periphery countries, when independent, have tried to change their endowments and thus their comparative advantage by investing heavily in schooling. Those which underwent successful manufacturing catching-up also underwent schooling catching-up, even though it took a few decades for youth enrolment to create a literate and well-schooled adult labour force. Economists have shown econometrically how schooling has raised economy-wide productivity and GDP per capita growth. The chapters in this volume suggest that schooling’s impact on manufacturing productivity has been even bigger. Education was already improving in Southeast Europe before 1939, but Communist governments in Russia, and later Eastern Europe, invested even more heavily in human capital (Chapters 3, 5). In Southeast Asia, school enrolment rates rose sharply from the inter-war decades to the 1970s, contributing to the late-twentieth-century economic miracles of Indonesia, Malaysia, Singapore, and Thailand (Chapter 11). Newly independent countries in Sub-Saharan Africa also improved their educational systems, but not nearly as impressively, and skilled labour remained scarcer for longer (Chapter 14). India is an interesting case, in that it has been services, rather than industry, which have tended to employ better-educated Indian workers in recent decades (Chapter 10). It is easier to overcome a shortage of financial and physical capital than human capital. Poor economies tend to have limited supplies of capital, but in periods when international capital markets are working smoothly, financial capital can be borrowed from abroad. This was certainly the case in the first global century up to the First World War for Imperial Russia, for colonial India, and for Latin America. The diaspora was also a source of financial capital for China, except during the planned economy period (Chapters 9, 13). But borrowing from abroad was only possible when international capital markets were functioning properly, which was not the case from the 1920s to the 1970s. Regions such as Latin America undoubtedly suffered as a result (Chapters 12, 13; Taylor, 1998). Even more important than imports of financial capital were imports of equipment and machinery, which also embody up-to-date technology. These imports were crucial for countries seeking to build a modern manufacturing sector. They also had to be paid for with export earnings when international borrowing was (p.7) difficult. Otherwise, these constraints would begin to bind, with potentially serious consequences for domestic manufacturing. A classic case is offered by the Soviet Union, where between 10 and 30 per cent of equipment investment was accounted for by imports in the late 1970s and early 1980s. In the inter-war period, these imports had been financed largely by grain exports, while in the post-war period they were increasingly financed by oil exports (since the USSR had by this stage become a net food importer). When first grain and then oil prices were weak, manufacturing growth inevitably slowed down (Chapter 3). Governments attempted to relax these constraints in various ways. The USSR, India, Yugoslavia, and Romania all built up their capital goods industries, thus supplying more of their equipment needs (Domar, 1957). The USSR famously encouraged high savings rates, attempting to dramatically shift the country’s factor endowment in a capital-intensive direction. Such policies worked well initially, at least in terms of boosting industrial output. Eventually, however, the strategy of prioritizing capital accumulation ran into severely diminishing returns (Chapters 3, 5, and 10). By the mid-nineteenth century, the global periphery had become the commodity exporter to the industrial leaders, so world commodity price trends and their volatility were central to local manufacturing profitability and performance. That is, commodity price booms generated what we now call ‘Dutch Disease’: labour and capital rushed to commodity export sectors and fled domestic manufacturing. These Dutch Disease forces were powerful as the relative price of commodities soared up to the 1890s (Williamson, 2011). However, that secular boom turned into a secular bust from the 1890s to the Second World War. That is, as commodity prices fell, the relative price of manufactures rose in the global periphery. If a commodity price boom penalized manufacturing in the global periphery up to the 1890s, then the bust must surely have stimulated the growth of domestic manufactures in Asia, Africa, the Middle East, and Latin America. On these grounds alone, we would expect to find more rapid manufacturing growth in the global periphery from the 1890s to the First World War, and during the inter-war decades. And so we do: the numbers in the catching-up club increased during that half-century, and the average rates of growth of the members rose. But the catching-up did not occur everywhere, nor was it as dramatic as one might have expected. The anti-Dutch Disease pro-manufacturing forces were weaker, because these economies had developed offsets by the 1890s. Sub-Saharan Africa, Southeast Asia, and North Africa were colonies of the industrial imperialists, and imperial colonial policies, as the chapters here will show, served to suppress domestic production of tradable manufactures. In addition, export processing dominated local manufacturing by the 1890s, so that a commodity bust damaged manufacturing on those grounds. Finally, domestic demand for quasi-non-tradable consumer goods fell when export revenues and incomes fell, further damaging local manufacturing. (p.8) Latin America had gained independence early in the nineteenth century, so local manufacturing did not have to contend with anti-manufacturing colonial policy, but rather enjoyed supportive pro-manufacturing tariffs. Still, quasi-non-tradable consumer goods industries in Latin America obeyed the same laws of motion as elsewhere in the periphery. Indeed, the chapters that follow characterize these sectors as a source of endogenous manufacturing growth—positive during the commodity booms of the late nineteenth century (and the early twenty-first century) and negative from the 1890s to the Second World War. The chapters that follow also stress the role of world markets for manufactured exports. Geography mattered: Mexico’s manufacturing growth has always been favoured by its big and fast-growing northern US neighbour; Southeast Asia, Taiwan, and Korea were favoured by Japan’s post-Second World War economic miracle; the same countries were favoured again by China’s economic miracle after the 1980s. And Central and Eastern Europe were favoured by the fast growth of Northwest Europe up to 1913; disfavoured by European disintegration after the First World War and their membership of the Soviet bloc after 1945; and then favoured again by their reconnection to the European Union from the 1990s onwards. These contiguous relationships fostered not only trade, but foreign direct investment (FDI) and technological transfer as well. Luck also mattered, both good and bad. Latin America dropped its trade barriers in the late 1970s, only to have China flood world markets with manufactures beginning in the 1980s. This was very bad luck. Southeast Asia started its miracle in the 1970s when Japan shifted from labour-intensive to capital-intensive technologies and used FDI to move its older technologies to Malaysia, Thailand, and other Southeast Asian countries. With a well-established competitive industry, the region was again favoured when China offered a booming market starting in the 1980s. Thus, the region was twice blessed with good luck. Policy has always mattered, but the policies necessary to promote modern manufacturing varied across regions and over time. We have already discussed policies designed to shift factor endowments and prices in a direction more favourable to manufacturing growth, ranging from the unambiguously beneficial (education) to the ambiguous (policies designed to spur capital accumulation) to the morally unacceptable (labour coercion). In this section we will focus primarily on trade and industrial policy. A major point to emerge from this volume is that the relationship between openness and manufacturing growth is inherently ambiguous. This should not come as a surprise, given the extensive empirical literature on the relationship between protectionism and economic growth more generally. While the correlation between protectionism and growth is negative for the late twentieth century, it was positive during the late nineteenth century (at least for a sample of relatively rich countries) and during the inter-war period (Sachs and Warner, 1995; (p.9) Clemens and Williamson, 2004; O’Rourke, 2000). More relevant for the subject of this volume, industrial tariffs were positively correlated with industrial growth, as well as with aggregate economic growth, for the same small sample of predominantly rich late-nineteenth-century economies (Lehmann and O’Rourke, 2011). Not only has the correlation between tariffs and aggregate growth changed over time; it has also differed across countries. Alexander Hamilton and Friedrich List believed that countries should only resort to protection once they had become sufficiently advanced that manufacturing was a feasible option. But ‘sufficiently advanced’ is a bit ambiguous, as the case studies in this book reveal. Certainly the relationship between tariffs and manufacturing growth has been ambiguous. By definition, one would expect tariffs to spur the growth of import-competing manufacturing industry. But, by the same token, you would also expect it to hamper the growth of export-oriented commodity processing, and early on this was the most important modern industrial activity in resource-abundant and labour-scarce regions such as Southeast Asia and Latin America. More fundamentally, the need for protection when developing a manufacturing sector depended on underlying patterns of comparative advantage. In labour-abundant countries, labour-intensive manufacturing had at least a chance of getting off the ground without the artificial stimulus of tariffs: in labour-abundant China and India, for example, modern manufacturing first emerged during the late nineteenth century under conditions close to free trade (Chapters 9, 10). When post-colonial governments in such countries decided to actively promote industrial growth, they were fostering the development of sectors with genuine growth potential. In labour-scarce countries, on the other hand, protection was probably going to be required if labour-intensive manufacturing were to get off the ground at all: industrialization in peripheral Europe, Southeast Asia, and Latin America typically originated behind tariff barriers, which makes sense given their resource-abundant and labour-scarce factor endowments (Chapters 5, 12, 13). The long-run problem, however, was that such protection was explicitly working against the forces of comparative advantage. When these countries eventually liberalized in the 1980s or 1990s, many lost a good deal of the industry that had been built up under protection—Eastern and Southeast Europe offer good examples (Chapters 3–5). The impact of policy was particularly dramatic in those economies which turned to Communism: Russia after the First World War, and its satellites in Eastern Europe as well as China after the Second World War. Russia, and especially Bulgaria and Romania, did not have a natural comparative advantage in manufacturing; China probably did, at least when it came to labour-intensive activities. All promoted capital-intensive heavy industry for ideological reasons, which clearly went against their initial comparative advantage. To this end, foreign trade was monopolized by the state, while it promoted rapid capital accumulation via forced savings. All of these countries eventually suffered massively due to diminished efficiency. The experience following liberalization in the 1980s or 1990s has differed greatly across these countries. While the Chinese central planners helped lay the basis for the subsequent growth miracle, by changing factor endowments, importing technology, and providing a manufacturing base that would become (p.10) much more efficient, Eastern European countries like Bulgaria and Romania have deindustrialized since 1989, while even Russia has reverted to being far more of a resource-exporter (Chapters 3, 5, 9). India, which also pursued capital-intensive industrialization strategies, saw its services sector—rather than manufacturing or the primary sector—expand dramatically after liberalization. These examples suggest once again that comparative advantage determined the impact of liberalization. Protectionism and, more generally, openness had different effects in different countries. Where technologies were imported from abroad, this was typically done by importing both machines and skilled foreign workers to operate and maintain them. This required foreign exchange, so trade openness of some sort was essential. But whereas Chinese and Indian textiles could be produced under conditions of free trade, based on cheap labour, and then sold in large local markets, peripheral European textile industries were protected, and probably had to be in order to survive import competition from industrial neighbours close by. Consumer goods industries in Latin America, which relied on the protection afforded by distance and/or trade policies, and fast-growing local markets, did well when commodity exports boomed, since this increased local demand. Export processing in labour-scarce and resource-abundant African and Southeast Asian regions—with small local markets poorly integrated by transport—relied especially heavily on international trade. Such conditions made it difficult and in some cases impossible to begin much local consumer goods production, until the Second World War and the post-war ISI years offered protection from foreign imports. During the post-war period, labour-abundant and resource-scarce East Asia exploited its comparative advantage by subsidizing export-oriented industries. The ‘gang of four’ (South Korea, Taiwan, Hong Kong, and Singapore) led that charge in the 1960s. Meanwhile, labour-scarce and resource-abundant Sub-Saharan Africa, Latin America, and Southeast Asia had to fight against their comparative advantage if they wanted to develop manufacturing, by protecting their local market. They led the post-Second World War ISI protectionist charge. Finally, several of the chapters in this volume document regional industrialization patterns which suggest the importance of location, irrespective of the country’s trade policies. Modern industry in Austria-Hungary first emerged in the northwest, close to West European neighbours, in what is today Austria and the Czech Republic (Chapter 5). It also appeared in the Italian northwest, also contiguous with a big West European neighbour (Chapter 6). Factory production in China was initially located in the southeast, especially in the Lower Yangzi coastal area around Shanghai, with a smaller cluster in Manchuria (Chapter 9). Modern Indian industry first appeared in port cities such as Calcutta and Bombay (Chapter 10). In Turkey, modern factories initially clustered in Constantinople and Izmir in the west and Adana in the south, both coastal regions (Chapter 7). These regional agglomerations were typically linked to trade connections with the rest of the world: port cities offered access to foreign capital, cheap raw material imports, entrepreneurship and modern technology (as in the cases of India and China), or access to foreign export markets (as in the cases of Austria-Hungary and Italy). Symmetrically, factory production was more regionally dispersed where (p.11) geography inhibited national market integration, as in Mexico, Columbia, and Chile (Chapters 12 and 13). Chapter 2 (Agustín Bénétrix, Kevin O’Rourke, and Jeffrey Williamson) offers a quantitative assessment of manufacturing growth in the periphery from the 1870s to today. It shows that, on average, the periphery has experienced ‘industrial catching-up’ on countries with higher levels of industrial output per capita since at least the inter-war period. The remaining chapters build their narrative interpretations around this empirical summary. The chapters in Part I deal with the European periphery and the Middle East: Russia (Chapter 3, Andrei Markevich and Steven Nafziger); East and Central Europe (Chapter 4, Alexander Klein, Max-Stephan Schulze, and Tamás Vonyó); Southeast Europe (Chapter 5, Michael Kopsidis and Martin Ivanov); Italy (Chapter 6, Mateo Gomellini and Gianni Toniolo); and the Middle East (Chapter 7, Ulaş Karakoç, Şevket Pamuk, and Laura Panza). Part II of the book deals with the biggest part of the periphery, Asia: Northeast Asia (Chapter 8, Dwight Perkins and John Tang); China (Chapter 9, Loren Brandt, Debin Ma, and Thomas Rawski); South Asia (Chapter 10, Bishnupriya Gupta and Tirthankar Roy); and Southeast Asia (Chapter 11, Jean-Pascal Bassino and Jeffrey Williamson). Two chapters on Latin America follow in Part III: Mexico and Peru (Chapter 12, Aurora Gómez Galvarriato and Graciela Márquez Colín) and South America (Chapter 13, Xavier Duran, Aldo Musacchio and Gerardo della Paolera). The volume concludes in Part IV with a chapter on Sub-Saharan Africa (Chapter 14, Gareth Austin, Ewout Frankema, and Morten Jerven). References Bibliography references: Abramovitz, M. (1986). Catching up, forging ahead, and falling behind. Journal of Economic History 46, 385–406. Allen, R. C. (2009). The British Industrial Revolution in Global Perspective. Cambridge and New York: Cambridge University Press. Clemens, M. and Williamson, J. (2004). Why did the tariff–growth correlation change after 1950? Journal of Economic Growth 9, 5–46. Domar, E. (1957). A Soviet model of growth. In Essays in the Theory of Economic Growth. New York: Oxford University Press, 223–61. Flandreau, M. and Jobst, C. (2005). The ties that divide: a network analysis of the international monetary system, 1890–1910. Journal of Economic History 65, 977–1007. Lehmann, S. H. and O’Rourke, K. H. (2011). The structure of protection and growth in the late nineteenth century. Review of Economics and Statistics 93, 606–16. Lewis, W. A. (1978). Growth and Fluctuations 1870–1913. London: George Allen and Unwin. (p.12) Maddison, A. (2010). www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls. O’Rourke, K. H. (2000). Tariffs and growth in the late 19th century. Economic Journal 110, 456–83. O’Rourke, K. H. and Williamson, J. G. (1999). Globalization and History: The Evolution of a 19th Century Atlantic Economy. Cambridge, MA: MIT Press. Robertson, D. H. (1938). The future of international trade. Economic Journal 48, 1–14. Sachs, J. D. and Warner, A. (1995). Economic reform and the process of global integration. Brookings Papers on Economic Activity 1995, 1–118. Sandberg, L. G. (1979). The case of the impoverished sophisticate: human capital and Swedish economic growth before World War I. Journal of Economic History 39, 225–41. Taylor, A. M. (1998). Argentina and the world capital market: saving, investment, and international capital mobility in the twentieth century. Journal of Development Economics 57, 147–84. Williamson, J. G. (2011). Trade and Poverty: When the Third World Fell Behind. Cambridge, MA: MIT Press. Wright, G. (1990). The origins of American industrial success, 1879–1940. American Economic Review 80, 651–68. (1) Of course, relative factor prices are what matter. Thus it might have been abundant and cheap energy (coal) and capital, rather than scarce labour, that favoured Britain’s industrial lead. Page 3
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