One important question that has arisen in various forums in the world concerns why sustained industrial growth began in Northwest Europe and not anywhere else in the world. In fact, this sustained growth led to a phenomenon popularly referred to as “the Great Divergence,” where Northwest European countries witnessed great economic developments and immense wealth. In contrast, other countries in the world stagnated. Therefore, there was a rapid and continued widening of the inequality gap between Northwest Europe and the other countries of the world, particularly in the periods of the 17th and 18th centuries. Currently, some countries, especially America and some Asian countries, have played catch-up and either reached or surpassed these Northwestern European countries, but many others in Asia, Latin America, and Africa still trail. To delve into the question of why sustained industrial growth began in Northwest Europe, no single factor can explain this event since there was no “big bang” scenario; rather, a combination of factors such as culture, presence of institutions, education, and scientific knowledge, availability of capital, presence of ready markets, and spatial competition among other factors can attempt to explain why sustained industrial growth started in Northwest Europe, and more so, in Britain.
Investment in education and science and the subsequent spread and sharing of knowledge can partly explain why sustained industrial growth started in Northwest Europe and not anywhere else in the world. Growth in world trade during the 17th and 18th centuries led to commercial expansion and a spike in wages in Northwest Europe, more so Britain, where the public and private institutions invested in improving the health of the workforce and developing education and skills.[1] The consequence was a rise in trade, numeracy, and literacy skills, which supported the manufacturing sector. The Industrial Revolution was anchored by the Scientific Revolution of the 17th century, which mainly happened in Britain.[2] The belief in and pursuit of scientific knowledge in Europe, especially in Britain, led to important inventions and developments that were crucial in spurring the economic development of the region.[3] The cotton industry particularly benefited from the fruits of education and knowledge sharing. For instance, Samuel Crompton, who invented mule spinning, attended school where he reportedly was excellent in mathematics.[4] Also, Reverend Edmund Cartwright, who attended Magdalen College, Oxford, attempted to design a weaving machine, and although his attempts did not bear fruits, other individuals built from his ideas to design the weaving machine.[5] In both these cases, it is evident that education triggered some curiosity among individuals in Europe, who used the knowledge gained in school to invent things and improve processes.
Knowledge and skills were not just learned and stored but were shared, leading to improvement in various processes in Northwest Europe. Countries such as Britain, France, and Germany had colonies, and in these regions, they deployed different professionals such as surgeons, botanists, and other officials who learned vast amounts of knowledge, which they took back to Europe and implemented in different processes and activities.[6] For instance, they could learn botany and forestry skills and practices in regions such as India and China and take this knowledge to Europe. On the other hand, the colonized countries did not have the chance and privilege to acquire similar knowledge and skills from these European countries because of limited powers, and to some extent, these European countries limited what they could and could not do. Back in Europe, many of the inventions were open to improvements, something that allowed individuals to learn on the job and to share skills in an attempt to improve processes, hence more economic growth.
Culture can also explain the great divergence phenomena. The protestant work ethic in Northwest Europe sometimes emerged as the “right” culture that helped spur rapid and sustained economic growth in Europe. At the same time, somehow, other regions in the world had “wrong” cultures to match this growth.[7] Societies such as those in Asia had collectivist cultures and beliefs in spirituality that focused on aspects such as meditation and cleansing of souls, things that offered somehow little chance for diversity and pragmatism. Protestantism in Europe somehow gave people the freedom to exercise pragmatism, try new ideas, and pursue individual aspirations. For instance, historians often remarked that the British were a people who were fascinated by commerce and wealth, collectively and individually.[8] Northwestern Europe had an individualistic culture, where people were self-driven and often aspired to own and acquire immense wealth. On the contrary, collectivist cultures, especially those in Asia, did not pursue commerce individually but believed in kins and ties, which to some extent impeded progress. When many people pursue commerce and wealth individually, it likely results in a boom in economic activities as people invent new things, improve processes, and generally increase competition. In a way, the economy becomes lively because of the activities of many people involved in profit-ventures, and this might be one of the plausible reasons why sustained economic growth started in Northwest Europe.
Northwest Europe’s institutions during the 17th and 18th centuries also enabled the region to witness sustained economic growth compared to other regions. At the vanguard were the Parliaments in the various countries within Europe, which passed favorable laws that protected enterprises.[9] Robust institutions like the parliament also enabled the creation and protection of property rights.[10] The emergence of property rights also meant individuals in Northwest Europe owned and managed private property as opposed to other regions in the world that mainly had communal systems of ownership. While people in Britain and other countries in Europe owned private land where they raised cattle or planted crops individuals, people in countries like China, for instance, farmed on communal land. Private property in Europe gave people the freedom to test individual ideas compared to other cultures, where communal ownership of property impeded people from testing ideas. Other important institutions in Northwest Europe that triggered sustained growth were the financial institutions. For example, Britain had an effective central bank and well-organized, flexible credit services.[11] These institutions were important, especially for people involved in trade and those with ideas that led to the creation of machines that subsequently spurred economic growth.
Another robust reason why sustained economic growth started in Northwest Europe was due to a phenomenon known as spatial competition. Spatial competition was basically competition among manufacturers in various cities, especially in Britain, to sell in cities other than their cities of operation. Spatial competition boosted innovation in many ways.[12] For example, transport and communication systems needed to be built for goods to move from one city to another in Britain. Private and public entities constructed roads, rail systems, sea transport, and other modes of moving goods from factories to consumers. Spatial competition also involved transporting goods not just within Europe but also in other regions of the world, such as Asia and Africa. In fact, the movement of goods within European countries faced restrictions because most European countries created laws in an effort to protect their industries. Therefore, individual European countries focused on selling to consumers either within their countries or to countries outside Europe.
Spatial competition also meant that enterprises needed to produce goods cheaply and efficiently to make a profit. Enterprises had to invest in labor-saving technologies in order to achieve these outcomes.[13] However, as expected, these enterprises were met with resistance from craft guilds, who opposed the use of machines because people felt these machines would make them lose their jobs. Nevertheless, as spatial competition intensified, this resistance declined and finally subsided for some reasons. For example, if a craft guild in one region opposed factories in that region to using machines or labor-saving technologies, factories operating in other regions would still sell their goods in this region, causing factories in this region to lose business. Therefore, there were few benefits in resisting technology or the use of machines because once factories in a region stopped working, it was the people who would lose out since goods from other regions would be sold to their region. Certainly, spatial competition helped in the intense use of machines, and consequently, there was sustained economic growth in Europe, most especially Britain, that made the region wealthier by a large degree compared to other parts of the globe.
The high wages paid especially to skilled labor in European factories somehow made the Europeans find ways of cutting costs, and in the process, made various discoveries that would slowly and surely place them on a trajectory of economic growth. The cotton industry’s cottage mode of production in both spinning and weaving somehow contained its own seeds of destruction, which would later lead to better production techniques. When the cost of production and demand were favorable, the cottage mode of operation responded with increased employment and production, and as the employment reached the limits of the available workforce, the wages of people with the necessary skills rose, and it is this very situation that prompted inventors to find a way out that would lower costs.[14] The consequence was that inventors focused on creating labor-saving technologies that would help them make a profit to avoid incurring the high costs of labor. In the process, individuals invested their time and resources in making machines. Wages in Asian industries were low, and there was no incentive for enterprises to make machines to lower labor costs like in Europe. Therefore, while Asians continued to operate in cottages, people in Europe moved to factories because machines were being invented to lower the cost of labor, and in the process, these machines also enabled the efficient production of goods.
The availability of a large market can also explain why sustained economic growth started in Northwest Europe. Most European countries had colonies abroad, creating a huge opportunity for trade.[15] A country like Britain, which led economic growth in the 17th and 18th centuries, had colonies in virtually every part of the world, such as America, Africa, and Asia. Britain would export goods manufactured in its factories at home to these colonies and, therefore, witnessed great wealth. On the same note, the colonies gave Britain and countries like France and Belgium cheap raw materials for their products at home. Colonization was a form of exploitation; countries from Northwest Europe used force and did not pay to extract the raw materials from the colonies. Once they manufactured goods, they sold them to these colonies, which mostly did not have any factories. Therefore, Northwest European countries experienced little or no competition in trade because they used political and military power to amass resources and sell products to different parts of the world. The exploited countries lagged behind, while the Northwest European countries became extremely wealthy.
In conclusion, sustained economic growth started in Northwest Europe not because of a single factor but because of different factors, either working singly progressively or in combination. Firstly, Europe invested in education and scientific knowledge, which helped in the invention and discovery of various ways of automation and achieving efficiency. This knowledge was often shared, and processes were improved, especially in factories that maximized production and output. Northwest Europe also had a sort of individualistic culture that spurred personal growth compared to collectivist cultures in other parts of the world that often impeded growth. The availability of robust institutions like parliaments and banking systems enhanced the protection of private property and the provision of finance and credit services, respectively, which enabled heightened enterprise. Apart from other factors, one other important factor was the availability of a large market for Northwest European countries’ products, mainly because a significant number of these countries had colonies around the globe. These countries obtained raw materials cheaply from their colonies, processed them at their home factories, and sold them throughout the world, especially in their colonies, where they had little or no competition. The countries became extremely rich while their colonies turned out poor, leading to the “great divergence” or, simply, a huge economic gap between the Northwest European countries and other countries in the world. Therefore, a myriad of factors acting progressively and in combination led to the divergence as opposed to a single factor or a kind of “big bang” that led to this phenomenon.
Bibliography
Allen, Robert C. The Industrial Revolution: A very short introduction. Vol. 509. Oxford University Press, 2017.
de Pleijt, Alexandra M., and J. L. van Zanden. “Accounting for the ‘Little Divergence’ what drove economic growth in preindustrial Europe.” (2013).
Desmet, Klaus, Avner Greif, and Stephen L. Parente. “Spatial competition, innovation, and institutions: The Industrial Revolution and the Great Divergence.” Journal of Economic Growth 25 (2020): 1-35.
Jones, Geoffrey Gareth. “Business history, the great divergence, and the great convergence.” Harvard Business School General Management Unit Working Paper 18-004 (2017).
Karayalcin, Cem. “Property rights and the first great divergence: Europe 1500–1800.” International Review of Economics & Finance 42 (2016): 484-498.
Mokyr, Joel. “Why was the Industrial Revolution a European phenomenon?” Supreme Court Economic Review 10 (2003): 27-63.
Pomeranz, Kenneth. The great divergence. Princeton University Press, 2021.
Spielvogel, Jackson J., and J. J. Spielvogel. “The Industrial Revolution and Its Impact on European Society.” Western civilization. Volume C, Since 1789 (2005): 583-608.
[1] Robert C. Allen, The Industrial Revolution: A very short introduction. Vol. 509. Oxford University Press (2017), 35.
[2] Ibid., 35.
[3] Joel Mokyr, “Why was the Industrial Revolution a European phenomenon?” Supreme Court Economic Review 10 (2003), 34.
[4] Allen, The Industrial Revolution: A very short introduction, 37.
[5] Ibid., 47.
[6] Kenneth Pomeranz, The great divergence. Princeton University Press (2021), 59.
[7] Geoffrey Gareth Jones, “Business history, the great divergence and the great convergence.” Harvard Business School General Management Unit Working Paper 18-004 (2017), 5.
[8] Jackson J. Spielvogel, and J. J. Spielvogel, “The Industrial Revolution and Its Impact on European Society.” Western civilization. Volume C, Since 1789 (2005), 583.
[9] Alexandra M. de Pleijt, and J. L. van Zanden, “Accounting for the ‘Little Divergence’ what drove economic growth in preindustrial Europe.” (2013), 387.
[10] Cem Karayalcin, “Property rights and the first great divergence: Europe 1500–1800.” International Review of Economics & Finance 42 (2016), 484.
[11] Spielvogel, “The Industrial Revolution and Its Impact on European Society,” 583.
[12] Klaus Desmet, Avner Greif, and Stephen L. Parente, “Spatial competition, innovation and institutions: The Industrial Revolution and the Great Divergence.” Journal of Economic Growth 25 (2020), 18.
[13] Ibid., 18.
[14] Allen, The Industrial Revolution: A very short introduction, 41.
[15] Pomeranz, The great divergence, 59.
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