Technology and Human Capital in Historical Perspective

Also by Jonas Ljungberg THE PRICE OF THE EURO

Technology and Human Capital in Historical Perspective Edited by

Jonas Ljungberg Lund University Sweden and

Jan-Pieter Smits University of Groningen The Netherlands

Editorial matter and selection © Jonas Ljungberg and Jan-Pieter Smits 2005 Individual chapters © contributors 2005

Softcover reprint of the hardcover 1st edition 2005 978-1-4039-2067-6 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2005 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin^s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries.

ISBN 978-1-349-51489-2

ISBN 978-0-230-52381-4 (eBook)

DOI 10.1057/9780230523814 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Technology and human capital in historical perspective/edited by Jonas Ljungberg and Jan-Pieter Smits p. cm. Includes bibliographical references and index. ISBN 978-1403920672 (cloth) 1. Technological innovations“Economic aspects“History. 2. Human capital“History. 3. Economic history. I. Ljungberg, Jonas. II. Smits. Jan-Pieter HC79.T4T413 2005 2004049121 338 .064“dc22 10

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Contents

List of Figures

vii

List of Tables

ix

Preface

xi xii

Notes on the Contributors

xiii

List of Abbreviations 1 Technology and Human Capital in Historical Perspective: An Introduction Jonas Ljungberg

1

2 Human Capital and Industrialization: The Case of a Latecomer – Portugal, 1890 Jaime Reis

22

3 Engineering Expertise and the Canadian Exploitation of the Technology of the Second Industrial Revolution Marvin McInnis

49

4 Technology Shifts, Industrial Dynamics and Labour Market Institutions in Sweden, 1920–95 Lars Svensson

79

5 Did Higher Technical Education Pay? Jonas Ljungberg

102

6 Economic Growth, Technology Transfer and Convergence in Spain, 1960–73 Mar Cebrián and Santiago López

120

7 Variations in Total Factor Productivity Analysed with Cointegration: Swedish Manufacturing Industry, 1950–94 Camilla Josephson

145

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vi Contents

8 Spain’s Low Technological Level: An Explanation José Ortiz-Villajos

182

9 Technological Specialization in Sweden and Finland 1963–97: Contrasting Developments Svante Lingärde and Jani Saarinen

205

Index

229

List of Figures

2.1 Wage–age profiles for boys (reis per day) 4.1 Technology shifts and the labour market 4.2 The female-to-male blue-collar hourly wage ratio (1), the female-to-male white-collar wage ratio (2), and the ratio between hourly wages of blue-collar workers and white-collar workers (3), in the manufacturing industry 4.3 Deviations from the linear trend in the female-to-male blue-collar wage ratio (1), the female-to-male white-collar wage ratio (2), and the ratio between hourly wages of blue-collar workers and white-collar workes (3), in the manufacturing industry 4.4 Female-to-male relative wages in total manufacturing (1), and in the engineering industry (2), 1917–95 5.1 Expenditures on higher technical education and GDP, 1867–1992 5.2 Relative earnings of a graduate engineer over a college engineer and a worker in manufacturing, 1867–2002 5.3 Salaries of 25 year old relative to 40–45 year old engineers, 1867–2002 5.4 The premium on higher technical education and the expenditure of the schools per student 1867–2002 5.5 Estimates with different methods: contribution to GDP by higher technical education, 1871–1992 6.1 The ratio between costs of technical assistance and royalties, 1963–71 7.1 Actual and fitted TFP in labour-intensive industry 7.2 Actual and fitted TFP in capital-intensive industry 7.3 Actual and fitted TFP in knowledge-intensive industry 8.1 The process of technical change 8.2 Total patent applications per thousand inhabitants in 9 countries: percentage over the average value for 23 countries, 1820–1985 vii

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viii List of Figures

8.3 Domestic patent applications per thousand inhabitants in 9 countries: percentage over the average value for 23 countries, 1820–1985 8.4 Public R&D expenses in Spain, 1850–1964 8.5 Public R&D expenses in Spain: percentage of total public budget, 1850–1964 9.1 Total number of Swedish and Finnish US patents according to the date of application, 1963–97 9.2 Variance in revealed technological advantage in Sweden and Finland, 1963–97 9.3 Correlations for Sweden and Finland

186 189 189 211 212 217

List of Tables

2.1

Distribution of hourly earnings of adult male industrial workers 2.2 The determinants of the skill premia of adult males 2.3 Factor shares in industrial production: Lisbon, 1890 2.4 Determinants of capital – skill complementarity 3.1 Comparative real per capita income growth, selected industrialized countries 3.2 International comparative growth of industrial output 3.3 Growth rates and size of industrial sectors in Canada, 1897–1907 3.4 Engineering graduates of Canadian Universities, 1891–1914 3.5 Summary of evidence on engineers in Canada in 1911 4.1 Change in the female-to-male wage ratio of blue-collar workers in manufacturing and in the engineering industry (percentage points) 4.2A Proportion of white-collar workers (percentage of the total work force) in the manufacturing industry, the engineering industry, and the chemical industry 4.2B Change in proportion of white-collar workers in the manufacturing industry, the engineering industry, and the chemical industry 4.3A Proportion of white-collar workers in selected industrial subsectors 4.3B Change in proportion of white-collar workers in selected industrial sub-sectors 4.4 Ratio of firms that reported a shortage of technical staff to firms that reported a shortage of semi-skilled and unskilled workers 5.1 National accounts and productivity of higher technical education (HTE): annual rate of change in per cent, 1871–1992 6.1 Levels and growth rates of GDP per capita, 1950–73 ix

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x List of Tables

6.2 Growth rates of GDP, factors and TFP, 1960–73 6.3 Contribution of growth rates of inputs and TFP to growth in real product (percentages), 1960–73 6.4 Contribution of growth in quality of capital stock, quality of hours worked, capital stock, and hours worked to growth in GDP, 1960–73 6.5 Growth rates of capital stock, quality of capital stock, worked hours, and quality of worked hours (annual averages), 1960–73 6.6 Total R&D expenditure as a percentage of GNP: Spain and other industrialized countries, 1962–71 6.7 Educational attainment of the working population 1964–73 6.8 Technological dependency, 1963–73: expenditures/incomes 7.1 Average annual percentage change of production, production factors, capital intensity, labour productivity and average TFP in industrial subsectors 1950–94 7.2 Misspecification tests of the model applied on each data set 7.3 Testing for cointegration of the sectoral series 7.4 Test for weak exogeneity 7.5 The hypotheses in model form 7.6 Results of testing the eight different hypotheses expressing steady state relations on data sets for labour-intensive, capital-intensive and knowledge-intensive industry 7.7 Identifying cointegration relations and speed of adjustment in labour-intensive, capital-intensive and knowledge-intensive industries 7.8 Explanatory models for TFP in labour-intensive, capital-intensive and knowledge-intensive industries including cointegration relations (CR) and direct effects from other variables 8.1 R&D expenses as a percentage of GDP, 1986–98 8.2 Percentage of R&D expenses implemented and financed by companies 8.3 Number and percentage of patents applied for in Spain by countries of origin, 1882–1935 8.4 Patent applications in Spain in four economic sectors, 1882–1935 8.5 Domestic and foreign patent applications in Spain by sector of use, and RTA, 1882–1935 8.6 Patents registered in Spain by country and type of applicant, 1882–1935 9.1 Revealed technological advantage indices for Sweden and Finland 9.2 Correlation between RTA and other indices

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Preface

Many colleagues have contributed to the present book. It is a produce of a network around issues related to long-term economic growth. Some networkers, among them the two editors of this volume, discussed the topic of technological change and economic growth at the conference ‘Technology and productivity in historical perspective’, which was organized in Wassenaar (The Netherlands) in 1999 under the auspices of the Posthumus Institute. Over time this network has substantially broadened, and had one stepping stone at the XIII International Economic History Congress in Buenos Aires, summer 2002, where we organized a session from which the book has inherited its title. Traditionally such sessions used to be prepared through a pre-conference but in this age of new information technology an e-dialogue, including comments by anonymous referees, filled that purpose. Most chapters have an origin in the Buenos Aires session, although a few have materialized afterwards. In preparation of the book the authors and editors gathered at a workshop outside Lund, in the autumn 2003, financed by the Bank of Sweden Tercentenary Foundation, which also has supported the Lund research project ‘Economic Growth and Productivity in a European Perspective since 1870’. This project, headed by Lennart Schön, motivated, and made out much of the basis, for the networking. Now, when this book comes off the print, we would like to acknowledge our gratitude to those networkers who in various ways have contributed in the process: Bart van Ark, Steve Broadberry, Erik Buyst, Herman de Jong, Jan Tore Klovland, Pedro Lains, Anders Nilsson, Albrecht Ritschl, Max Schulze, Lennart Schön, Ken Sokoloff, Hans Voth. Finally, thanks to Kyla Madden, Kingston, for her daunting effort to brush up the style and to Astrid Lieng, Lund, for standardization of the format of the diverse chapters. Lund University

Jonas Ljungberg

University of Groningen

Jan-Pieter Smits

xi

Notes on the Contributors

Maria Mar Cebrián is a PhD student in the Department of History and Civilization, European University Institute, Florence, Italy. Camilla Josephson is a PhD student in the Department of Economic History, Lund University, Sweden. Svante Lingärde is a PhD student in the Department of Economic History, Lund University, Sweden. Jonas Ljungberg is Associate Professor and Director of Studies in the Department of Economic History, Lund University, Sweden. Santiago López is Associate Professor in the Department of Economics and Economic History, Salamanca University, Spain. Marvin McInnis is Professor Emeritus of Economics, Queen’s University, Canada. José Ortiz-Villajos is Associate Professor in the Department of Economic History, Complutense University of Madrid, Spain. Jaime Reis is Senior Research Fellow, Instituto de Ciências Sociais, University of Lisbon, Portugal. Jani Saarinen is a PhD student in the Department of Economic History, Lund University, Sweden. Jan-Pieter Smits is Associate Professor in the Faculty of Economics, University of Groningen, The Netherlands. Lars Svensson is Associate Professor in the Department of Economic History, Lund University, Sweden.

xii

List of Abbreviations

CIS CPI CR CSIC DCB EMS FNICER GDP GNP HTE ICT IPC ISIC IVIE JAE LM LO OLS R&D RCA RMC RPA RRDA RTA SAF SIC TAF TFP USPOC USPTO VAR VF

Community Innovation Survey consumer price index cointegration relation Consejo Superior de Investigaciones Científicas Dictionary of Canadian Biography European Monetary System Fundación Nacional para Investigaciones Científicas y Ensayos de Reformas gross domestic product gross national product higher technical education information and communications technology International Patent Classification International Standard Industrial Classification Instituto Valenciano de Investigaciones Económicas Junta para la Ampliación de Estudios Lagrange Multiplier Confederation of Labour (Sweden) ordinary least squares research and development Revealed Comparative Advantage Royal Military College (Canada) Revealed Production Advantage Revealed R&D Advantage revealed technological advantage Swedish Employers’ Confederation Standard Industrial Classification Technology Assessment and Forecast (by USPTO) total factor productivity United States Patent Office Classification United States Patent and Trademark Office vector auto-regressive Engineering Employers’ Association (Sweden) xiii