Factor prices and induced technical change in the industrial revolution

Using historical data for the 1700–1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour-saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that ‘induced innovation’ was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital-augmenting and energy-augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital–labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.     

Challenging the de‐industrialization thesis: gender and indigenous textile production in Java under Dutch colonial rule,c. 1830–1920

Many dependency theorists as well as economic historians have contended that nineteenth‐century imperial policies and economic globalization de‐industrialized the global ‘periphery’. European metropoles extracted raw materials and tropical commodities from their overseas territories, and in turn indigenous consumers bought their industrial products, textiles in particular. This article investigates three of the assumptions of Ricardian trade theory that are often behind the de‐industrialization narrative. In this article it is argued that, at least for colonial Java's textile industry, these assumptions should be reconsidered. Adverse trade policies imposed by the Dutch and a prolonged terms‐of‐trade boom in favour of primary commodities make colonial Java a unique case for exploring the merits of the de‐industrialization thesis. Here it is demonstrated that Javanese households resourcefully responded to changing market circumstances, in the first place by flexible allocation of female labour. Moreover, indigenous textile producers specialized in certain niches that catered for local demand. Because of these factors, local textile production in Java appears to have been much more resilient than most of the historical literature suggests. These findings not only shed new light on the social and economic history of colonial Indonesia, but also contribute to the recent literature on alternative, labour‐intensive paths of industrialization in the non‐western world.     

Assessing the Impact of Agricultural Technology Adoption on Farmers' Well‐being Using Propensity‐Score Matching Analysis in Rural China

The present paper assesses the impact of improved upland rice technology on farmers' well‐being. The study uses propensity‐score matching to address the problem of ‘self‐selection,’ because technology adoption is not randomly assigned. It applies this procedure to household survey data collected in Yunnan, China in 2000, 2002 and 2004. The findings indicate that improved upland rice technology has a robust and positive effect on farmers' well‐being, as measured by income levels and the incidence of poverty. The effect of technology on well‐being shows a diminishing impact on producers' incomes. This implies that newer innovations are continuously needed to replace older technologies that have reached their saturation points.     

Agrarian Transformation? Rice Production in A Javanese Village∗

The paper examines the impact of the new rice technologies in Klaten, Central Java, a region considered the cradle of the Green Revolution in Indonesia. It is argued that the changes which have occurred since the 1960s should be viewed not as a dramatic transformation of a formerly static rural economy but rather as part of a continuous process of socio-economic change which has occurred over many decades.

     

The Beginnings of the New Supra Insus Rice Intensification Program: The Case of the North Coast of West Java and South Sulawesi 1

In 1987 the Indonesian government introduced a new rice intensification program, Supra Insus, because production was not keeping pace with demand growth. This paper examines the operation and effectiveness of Supra Insus in West Java and South Sulawesi, and identifies some constraints to the program's success. These include inadequate resources and heavy administrative workloads which hamper the efforts of agricultural extension personnel; consequent slow development of necessary skills among farmers; delays in implementing organisational improvements to the program; complex procedures for formulation and ratification of credit proposals; institutional and other barriers to the adoption of some technologies; and conflicts between program administrators and regional governments on credit policy. The practice in South Sulawesi of harnessing traditional forums to the purposes of the program may offer a model for other areas. Further research is needed to evaluate the program's economic performance.     

Wage Trends in Rice Production on Java: 1976–1988

Lack of consensus among researchers in Indonesia concerning real wage trends in rice production has generated disagreement over rural labour market conditions on Java. This paper identifies some empirical difficulties associated with measuring real wages, difficulties which have contributed to conflicting results in the literature. It is argued that the choice of deflator and the time period of analysis play a significant role in the calculation of real wages. In addition, the regional dimension of analysis is shown to be important, particularly during certain discrete time periods in recent history.     

Unity or diversity? On the integration and efficiency of rice markets in Indonesia, c. 1920-2006

The emergence of an integrated national economy in Indonesia has been a slow and ongoing evolutionary process. Using rice price series for a number of cities across the Indonesian archipelago, this paper provides quantitative evidence to track this process for the specific case of the rice market. It shows that during Indonesia’s colonial period rice markets were relatively well integrated and functioned efficiently. However, the Second World War and the subsequent struggle for independence resulted in disintegrated and inefficient markets. It is only since the late 1970s that markets in Indonesia have returned to a situation in which we can speak about a national integrated economy with well-functioning markets.     

MARKET RESPONSES TO CLIMATE STRESS: RICE IN JAVA IN THE 1930S

Do markets in less-developed countries abate consequences of climate stress? Using changes in regional rice prices across the 19 regions in Java, Indonesia, during 1935–40, this paper will assess how rice markets responded to variations in rainfall, which is an important factor in rice production. It finds that rice markets were highly integrated across Java. The El Niño-induced episodes of lower than usual rainfall in 1935 and 1940 did not have a negative effect on levels and variations in regional rice prices, nor did they have adverse consequences for the supply of rice. Adaptive responses of firms specialising in the trade of rice are argued to have mitigated regional deficiencies in food production caused by climate stress.     

Information and Price Setting in a Rural Javanese Market∗

The paper examines the thesis established by Geertz and Dewey that Javanese rural trading practices, although well suited to the pasar marketing system, are maladaptive to larger scale trade. Focusing on a chilli marketing depot in Java the paper outlines the network of trading links which stretch from farmer to end-market, as well as the mechanisms of price setting and credit arrangements. The conclusions reached are that the volume and value of goods handled at this level are considerable and that both price setting and commercial relationships are largely stable. Constraints on entrepreneurial activity are attributed not to a Javanese peasant ethos of “shared poverty” but to lack of capital, dispersed markets, perishable goods and discontinuous information on supply of produce and current market prices.

     

Comparative Economics of Maize and Rice Production among Resource-Poor Farmers in Anambra State of Nigeria

Abstract: Maize and Rice are some of the most important grains in Nigeria. Although Nigeria has the potential to become self-sufficient in their production, maize and rice production currently lags behind demand. This study has examined the characteristics of resource-poor maize and rice farmers, (defined in terms of land availability, estimated income per farmer, access to credit and capital) in Anambra State of Nigeria, the impact of these characteristics on yield, and the efficiency of use of stated inputs by the farmers. It was found that low income farmers (both maize and rice) had smaller farm size, smaller loan size (credit), adopted a smaller number of recommended production technologies, had lower levels of formal education, are younger, had a smaller household size, and less number of years of farming experience than high income farmers. The regression analysis result shows that farm size, credit, level of adoption of recommended production technologies, level of formal education of fanners, and age of farmers are significantly related to the maize farmers' output, but household size and number of years of farming experience account for less. In the case of rice farmers, the regression analysis result reveals that farm size, level of adoption of recommended production technologies and number of years of farming experience are significantly related to the farmers' output, but level of formal education of farmers, age of farmers, household size, and credit account for less. The results of gross margin analysis reveal that maize and rice production are not very profitable when the present value of the Naira in relation to cost of living in Nigeria is considered.     

INTENSIFICATION OF RAINFED LOWLAND RICE PRODUCTION IN WEST AFRICA: PRESENT STATUS AND POTENTIAL GREEN REVOLUTION

The objective of the current paper is to explore the factors influencing the expansion and intensification of rice production in rainfed lowland sites. The village/lowland‐level data show the following: (1) the expansion of lowland rice cultivation has been driven by population pressure and accessibility to the market; and (2) the adoption of water control technologies is enhanced by the existence of immigrants and accessibility to the market. Rice cultivator data show that investment in water supply canals is influenced by land tenure security and that the canals enhance yield. This suggests that investment in water control technologies in rainfed lowland is necessary to realize a rice Green Revolution. Considering the fairly high average yield already achieved with water control technologies and the vast area of lowlands without water control technologies in rural area, there is a high potential of a rice Green Revolution in rainfed lowland in West Africa.     

Rural Economic Change and Labour Mobility: A Case Study From West Java

The paper uses data from six West Java villages which were surveyed in 1976 and again in 1983 to examine the impact of temporary migration, mainly to urban areas, on the rural economy. It finds that despite substantial increases in rice production in the region in the years under discussion, a large proportion of the extra employment opportunities were in non-agricultural occupations in urban areas. Households from all socio-economic strata appear to have benefited from these employment opportunities However much of the employment was seasonal in nature and most migrants returned to the village to take up agricultural employment at peak periods.     

Toward a service-oriented growth strategy

This article suggests that the linkage between industrial modernization and significant service sector employment gains has not been adequately considered and that such consideration might lead to a re-evaluation of the labour absorption argument which calls for more ‘appropriate’ technologies with higher labour intensity. This paper reviews the literature on labour absorption and appropriate technology. It then examines the experience of the service sector in both DCs and LDCs. The key relationships between the service sector and the economy are then developed, leading up to possible implications for LDC growth strategies.     

Spinning the industrial revolution

The prevailing explanation for why the industrial revolution occurred first in Britain during the last quarter of the eighteenth century is Allen's ‘high wage economy’ view, which claims that the high cost of labour relative to capital and fuel incentivized innovation and the adoption of new techniques. This article presents new empirical evidence on hand spinning before the industrial revolution and demonstrates that there was no such ‘high wage economy’ in spinning, which was a leading sector of industrialization. We quantify the working lives of frequently ignored female and child spinners who were crucial to the British textile industry with evidence of productivity and wages from the late sixteenth to the early nineteenth century. Spinning emerges as a widespread, low‐productivity, low‐wage employment, in which wages did not rise substantially in advance of the introduction of the jenny and water frame. The motivation for mechanization must be sought elsewhere.     

A Tale of Two Countries and Two Stages: South Africa,China and the Lewis Model

The paper compares the economic progress of two countries, South Africa and China, in relation to the Lewis model. These economies are chosen because they have interesting similarities and also interesting differences. At the start of economic reform in China and with the advent of democracy in South Africa, both countries had surplus labour: they were at the first, labour-surplus, stage of the Lewis model. It is shown that, since then, South Africa has continued to experience surplus labour: the unemployment rate has risen. By contrast, China’s labour market is shown to have tightened, and there is evidence that China has entered the second, labour-scarce, stage of the Lewis model. The difference lies in their growth rates. There are sections explaining why the South African economy has grown slowly and why the Chinese economy has grown rapidly, in relation to the growth of their labour forces. The Lewis model provides an enlightening framework for explaining how widely the fruits of economic development can be shared.     

Sensitivity of Yield and Input Demand Elasticities for Wetland Rice in Java

This study uses pooled time series data for wetland rice in Java to analyse the sensitivity of yield and input demand elasticities to differences in the specification of farmers' expectations, in alternative data sources and in the functional forms used in the estimation. The results show that yield and fertiliser input elasticities are less fragile than those of labour demand, which are quite sensitive to data and model specifications.     

Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour

We test the often-cited hypothesis that high levels of child labour attract foreign investors. Using panel data we show the overall effect which child labour has on foreign direct investment (FDI) to be a (small) negative one. We find strong evidence for the theoretical prediction that child labour deters FDI by slowing down economic development. Weaker evidence is provided for our theoretical prediction that child labour can discourage FDI via its impact on the availability of a skilled labour force in an economy. The data do not indicate that high levels of child labour drive down the factor share of labour, thereby increasing the attractiveness of an economy for foreign investors. JEL no. C33, F23, J82     

Rich and poor before the Industrial Revolution: a comparison between Java and the Netherlands at the beginning of the 19th century

This paper examines disparities in the level of economic development at the beginning of the 19th century, comparing between the Netherlands and Java. A detailed reconstruction of GDP and purchasing power parities shows that before the Industrial Revolution Java’s GDP per capita was about a third of the level of the Netherlands, confirming Angus Maddison’s estimates. Disparities in real wages were much smaller, however, for skilled laborers real wages on Java were higher than in the Netherlands. This paradox arises because the structure of the economy and the distribution of income of both countries was very different.     

Wages,prices, and technology in early Catalan industrialization

Catalonia was the only Mediterranean region among the early followers of the British industrial revolution. The roots of this process can be traced back to the seventeenth and eighteenth centuries when the Catalan economy became integrated into international trade, and a successful printed calico industry concentrated in the city of Barcelona. Although the factory system was largely adopted by the cotton industry in the 1840s, the diffusion of the spinning jenny in Catalonia had occurred earlier, in the 1790s. In line with Allen, this article explores whether relative factor prices played a role in the widespread adoption of the spinning jenny in Catalonia. First, series of real wages in Barcelona are supplied for the period 1500–1808. Second, the prices of labour and capital are compared and the potential profitability of the adoption of the spinning jenny is analysed. Findings show that although Catalonia was not a high wage economy in the way that Britain was in the second half of the eighteenth century, evidence from the cotton spinning sector confirms the relevance of relative factor prices in the adoption of new technology. Within the booming cotton sector after the 1780s, high wages created strong incentives for the adoption of the labour‐saving spinning jenny.