1. Technology and the rise and fall
of Nations
Y376 International Political Economy
April 4, 2012
Michael Lee

2. Summary
 Why do economies grow (or fail to grow)?
 Historical patterns
 Why do some countries innovate while others
do not?
 Why did America lead the Fordist revolution
 Why did America lead the ICT revolution?
 What is the next big thing?

3. Discuss
 “Computer chips, potato chips. What does it
matter? They’re all chips!”
 Does it matter which industries the US is
successful in?

4. Types of economic growth
 Smithian
 Division of labor
 Solovian
 Diminishing returns to capital
 convergence
 Schumpeterian
 Endogenous growth theory
 Process vs. product
 Geopolitical implications

5. Discussion
 Why did Britain decline in the 20th century?
Why did the Soviet Union fail to catch the US?
Japan? Do the same forces threaten American
leadership?

6. Soviet and US GDP per capita, 1946-
2006

7. Relative production of high-tech
goods, 1830-2007

8. Relative ownership of global foreign
investment assets, 1829-2007

9. Sussex school
 http://www.youtube.com/watch?v=-
AAyUN7wj9I
 Irruption  frenzy  crisis
 http://www.youtube.com/watch?v=5L0IvI00AY4&
feature=related
 (21:00)
 Crisis  Synergy  maturity
 http://www.youtube.com/watch?v=sICSyC9u5iI
 http://www.youtube.com/watch?v=ONZFkqzuMjI

10. Past technological revolutions
Technology Period Leading country Crisis
Textiles, pig iron 1771 Britain Canal mania
Steam and 1829 Britain  USA Railway mania
Railroads
Steel, electricity 1875 Britain  Baring crisis of
and heavy USA/Germany 1890
engineering
Oil and mass 1908 USA Great Depression
production
Information and 1971 USA Dot com bust and
telecommunicati crisis of 2008
ons

11. What kinds of things facilitate high
tech growth?
 Property rights
 Access to capital
 Education (elite vs. median)
 Tax/subsidy policy
 Leading cities
 Catch-up vs. leadership
 Political cohesion

12. Some plausible drivers of growth don’t
hold up (researchers/1000 people,
OECD countries)

13. Competitiveness in Important
industries historically
 Synthetic dye
 Aniline red
 Copyright rules
 Automobiles
 Mass production
 Engineering vs. pure research
 ICT
 Venture capitalism
 Hardware vs. software

14. Global synthetic dye population,
1857-1914

15. Motor vehicle production, 1930-1990

16. ICT value-added, 1985-2007

17. Question
 What is the next “big thing”?
 Who will get there first?