Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered

The British Industrial Revolution is reviewed in the light of recent developments in modeling economic growth. It is argued that †endogenous innovation†models may be useful in this context particularly for understanding why total factor productivity growth rose only slowly. †Macroinventions†were central to economic development in this period, however, and these are best seen as exogenous technological shocks. Although new growth theorists would easily identify higher growth potential in eighteenth-century Britain than in France, explaining the timing of the acceleration in growth remains elusive. A research agenda to develop further insights from new growth ideas is proposed.