Comparing British and American Economic and Industrial Performance 1860–1993: A Time Series Perspective

Abstract

This paper considers the persistence of British and American economic and industrial leadership, using the time series properties of productivity series to assess the existence, pace, and timing of convergence. We report evidence in favor of segmented convergence processes for GDP per capita and real wages. In contrast, the industrial output per worker gap between the two economies appears nonstationary, and divergent during the century after 1870. The evolution of distinct industrial systems precludes an important role for industrial technology transfer in GDP per capita convergence. Cointegration-based causality tests and calibration methods are used to argue that the levels of and returns from higher education underpin the disparities in British and American economic and industrial performance during the 20th century.