3 - Patterns of Economic Growth, 1850–1914, or Chenery-Syrquin in Historical Perspective

Abstract

This chapter discusses the Chenery–Syrquin patterns of economic growth in historical perspective during the nineteenth century. The conceptual framework of the Chenery–Syrquin statistical analysis is based on a reduced-form model of the interactions between structural changes in the composition of demand, on the one hand, and supply responses, on the other. In reduced form, the changes in both demand and supply can be represented as functions of per capita income and population. During the period under study, 1850–1914, the expansion of foreign trade and investment was spectacular and the increase in colonial empires was striking. The economically more advanced nations of Western Europe industrialized rapidly and expanded their trade and investment throughout the world. Sharp declines in shipping costs, with the introduction of steamships and the development of refrigeration, contributed to an unprecedented increase in the flow of food and raw materials from the far corners of the world to European markets, with striking consequences for the pace and structure of European growth. The nineteenth-century pattern of economic growth of the successful industrializers was more balanced than that of the average developing country: agricultural technology and productivity improved before or with industrial technology and productivity. There had been considerable progress in industrialization in the average country in the sample: cotton spinning and weaving had become predominantly mechanized; factories existed in many consumer goods industries; and a few specialized machines were being produced. However, industry was still less than 20% of GNP.