اقتصاد سیاسی صنعتی سازی

This paper analyses how incentives under different sets of political institutions map into policies that promote industrialisation. I set out an endogenous growth model with non-overlapping generations, where agents are heterogeneous with respect to wealth, skills and political power. The skills of the political elite play a crucial role for industrialisation to occur. It is shown that a flat wealth distribution and a skilled political elite enhance development the most in elitist regimes, while democracies perform as well as elitist regimes in terms of industrialisation. The theoretical results regarding elitist regimes are in line with evidence on the Industrial Revolution.

At least since the time of Plato, there has been ongoing discussion about the optimal form of political governance. Should a state be run by the many or the few, and what characteristics should decisive agents possess to most enhance development? From an economic point of view, these questions are of particular interest when a country stands before large structural transformations, such as industrialisation. This paper investigates how incentives under different sets of political institutions map into policies promoting industrialisation. The story is the following. New inventions and innovations can, at times, be of such magnitude that they revolutionize the economy. However when technologies are new and not fully developed, it can be difficult to discern their potential. Therefore, the political elite must be able to realise the potential of new technology, so that it supports public investment in institutions necessary for industrialisation to occur swiftly. The characteristics of the ruling class are in this sense crucial for development. If only the rich are enfranchised, they may have to impose heavy taxes on themselves to finance the public investment necessary for industrialisation. But, the governing class will, of course, implement such taxes only if it gains more than it loses from industrialisation, i.e. if the elite is able to realise the income potentials of the new technology. In democracies, the situation is different in that what matters are the characteristics of the decisive voter rather than of a governing elite. Here it is the ability of the decisive voter that is crucial, since the more skilled he or she is, the more positively inclined to financing infrastructure he or she will be.

The aim of this paper has been to analyse how the interaction of skills, wealth and political rights determines the potential for industrialisation of an economy. The results of the theoretical model suggest important differences between how elitist regimes and democracies, respectively, map into economic policy. Contrary to what might be expected, the outcome does not derive from a simple mismatch between skills and wealth. That is, giving the wealth to the most skilled may not help, since it might completely impede growth under certain institutions. For democracies, finding the optimal mix of skills and wealth characteristics is a fine balance, since there is no unique ‘best’ combination of skills and inequality. What is best fundamentally depends on the actual stage of development of the economy. At the beginning of the industrialisation process, the highest growth rate originates from a skewed wealth distribution, since it produces the largest amount of public investment. However, when the wealth distribution has become less skewed after a few periods, development is more favoured by a skilled decisive voter who favours relatively low taxes. On the other hand, in elitist regimes, the combination of a skilled political elite and a flat wealth distribution is always most favourable for development. When wanting to confront the theoretical predictions with data, the Industrial revolution is the obvious choice as it (consistently with the model) can be characterised as a technological shock. Furthermore, its potentials were mainly determined by country-specific political and economic factors rather than different technological knowledge. Using historical data from 1820 to 1913 enables us to check the implications for elitist regimes since all countries at the beginning of the period had restrictions on franchise.