During the nineteenth century, under free labor market contracting, apprenticeship persisted in Britain but declined in the United States. This article argues that apprenticeship endured in Britain because of its efficiency advantages and because of customs, inherited from the guilds, that favored training certification for entry into skilled jobs. By contrast, within the United States guild traditions were weaker, occupational certification was seldom required, and, as a result, indenture obligations were hard to enforce. Understandably, U.S. employers refrained from making training investments in potentially mobile apprentices.
This paper attributes the relative decline of the British economy in the twentieth century to rigidities in its economic and social institutions that had developed during the nineteenth-century era of relatively atomistic competition. Inherited and persistent constraints impeded British firms from acquiring the market control, authority in labor relations, or managerial hierarchy necessary to avail themselves fully of modern mass production methods. At the societal level there was an interrelated failure to transform the character of British educational and financial institutions, labor-management relations, and state policy in order to promote economic development. By performing better in these respects lateindustrializing countries were able to surpass Britain in economic growth.
From the 1890s to as late as 1960, industrial policy provided vital aid to the development of the Japanese iron and steel industry. Japanese industrial policy proved successful in steel even though public support was much prolonged, subject to political influence, and based on limited forecasting power ex ante, particularly with regard to recurrent raw material problems. Policy success in steel within different time periods suggests that specific targeting mechanisms were less important than the prevalence of market failures within a context of underdevelopment, broad support for industry, and dedicated and capable governmental bureaucracy. By implication, industrial policy in recent years faced greater difficulties insofar as it attempted narrower targeting and operated in a more mature economy.
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