Yeast or mushrooms? Productivity patterns across Swedish manufacturing industries, 1869–1912

Abstract

This article applies Harberger's yeast versus mushrooms dichotomy to Swedish manufacturing industries in the four decades prior to the First World War. The evidence, broken down to cover five sub‐periods, points to a growth process resembling that of mushrooms more than that of yeast. In addition, it is argued that a yeast‐like (even) pattern of productivity growth rates invites one to search for a general purpose technology at work, whereas mushroom‐like progress leads one to dismiss the idea that a small number of technologies spilled over to a large number of manufacturing processes. The era under investigation coincides with the peak of the use of steam power and the infancy of electricity. The evidence makes it unlikely that steam in Sweden was a general purpose technology with the potential to affect the progress in productivity across industries in a yeast‐like fashion. The rampant spread of electricity may have contributed to the yeast‐like pattern in the last sub‐period preceding the First World War.