Question

Main causes behind industrialisation” according to Allen, 2011; North, 1991; Pomeranz, 2000; Acemoglu et at 2005 articles. Explain the most important factors that led to industrialization. discussing institutions and the great divergence; what was the role of institutions for explaining the great divergence?

Answer 1

Industrialisation is the process of transformation of a primarily agricultural economy into one based on manufacturing of goods leading to overall replacement of individual manual labour by mechanised and mass production activity with craftsmen being replaced by assembly lines. For any economy to make a successful transition in its basic foundation requires existence of strong factors which propel and necessitate this transition, prosperity with availability of resources and disposable capital becoming the main factors which lead to Rapid increase in needs and desires within an economy creating a gap which was successfully exploited by Business organisations setting up manufacturing units to fulfill the greatly increased requirements which were diverse and different from earlier once leading to innovation in production of goods. This required to be facilitated with the backing of a stable political environment to provide confidence by minimising risk from an political instability, with expectations of growth becoming increasingly optimistic greater the prosperity and incomes of the citizens within the economy. Another factor leading to industrialization was a growth in population with individuals looking for more innovative and satisfying work options as compared to agriculture which was facing saturation, leading to fulfillment of the requirement of large human resources for industrialisation becoming available. The increase population as it also propelled demand due to larger number of consumers. The other major input requirements for industrialisation of a facilitative infrastructure also became available due to new inventions and greatly improved transportation facilities, satisfying the requirements for Logistics through inventions such as steam engines, along with machinery for processing of goods, paving the way for adoption of industrialisation and manufacturing of goods as a major business activity.

Great Britain became the seat of the industrial revolution largely due to existence of all the factors conducive for encouraging a transition successfully. The agricultural revolution add resulted in increase in food production leading to prosperity it food being available at lower prices with minimal effort leading to surplus buying power for purchasing of other manufactured goods. Demand increase in population lead to do exercises towards urban areas waiting available human resource for the new industries due to existence of Institutions in the form of cities. Financial Institutions were already in place Saturday Central Bank for helping to finance new manufacturing ventures in the form of factories. The profitability and boon within the cotton and trade industries created an optimistic Outlook with many investors willing to support construction of factories and growth of industrialisation. This was due to available of large disposable capital resources with British entrepreneurs who were leading the transition through investments for industrialisation, as they were open to risk and willing to wait for long term Returns rather than immediate profitability. Between adverse supply of mineral resources operation of industrial machinery Central School with the area of operation being small the transportation of resources could be achieved in a feasible Lead time and at a reasonable cost. This was further supported by political environment with the government passing laws protecting private property with minimal restrictions on private business owner encouraging export of goods to foreign markets through the available harbours and ports and access to various waterways having transportation facilities. The large colonial Empire a great Britain created an extremely wide market for supply to consumers and also provided unlimited resources available within these colonies which could be exploited as and when required. Technological innovations what provided the much required impetus to the industrial revolution with Britain's Cotton Industry becoming the initiator of success through adoption of Technology with James hargreaves invention of the spinning Jenny in 1764 and the power loom invented by Edmund cartwright in 1787 and finally the steam engine developed by James Watt in 1760 transformed not only the Cotton Industry but the economy and the thinking of people and business society. Call came to be utilised as a source of power providing rate flexibility to factories in terms of location closer to other inputs rather than water which was the only source of power earlier. The Other major innovation was the production of iron during the early 18th century by using coke leading to great increase in rate of production of iron. Since iron was the major input for creation of all machinery and the all important railroad tracks, it greatly supported industrialisation and contributed to its success.

These extreme advantages which Britain had over the rest of the world, along with its successful exploitation of these advantages for supporting and encouraging transition of the economy from agricultural to industry provided it an exceptional lead in industrialisation which propelled economic success and power achieved through monopolization over manufactured goods. Combined with its access to resources and Consumers worldwide through its Colonies the nation surged ahead gaining an extreme advantage and lead represented by an extremely dynamic and successful economy with large incomes exhibiting great disparity with the incomes present within Europe and the rest of the world. This phenomenon searching the head of economies and gross domestic product ascertain Nations in comparison to others and the rest of the world was defined as the great divergence. Various economist have attributed different reasons for the great divergence having occurred and sustained, write from social and cultural behaviour including the spirit of capitalism which existed within Britain along with its exploitation of other Nations wealth providing huge resources which were not available to competitors such as Japan and Netherlands or India and China. Great Britain obtained a massive advantage by exploiting its colonies and their resources is clearly evident from the successful economy of India which was plundered mercilessly by the British for improvement of their economy including the Cotton Industry receiving resources from India. this resulted in extensive damage to the economies of the colonies which the British ruled over rendering them incapable of revival within a short term. This provided exceptional monopolistic advantage to Britain enabling it to control the manufacture and supply of all manufactured goods within Britain while it discouraged manufacturing within the colonies and utilised as a source for providing resources to the manufacturing units in Britain.