Using historical data for the 1700-1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour-saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that 'induced innovation' was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital-augmenting and energy-augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital-labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.
K E Y W O R D S
factor-saving technical change, induced innovation, industrial revolutionThe British industrial revolution was a pivotal phase in the long-run transformation of the world economy, ushering in a new era in economic and technological development. 1 Despite its central role in the history of economic growth and development, its causes remain a source of open debate.Applying the idea that factor price differences drove technological choices, Allen argues that Britain's high wages and abundant coal deposits played a pivotal role in inducing the development 1 Mokyr, Enlightened economy; van Zanden, Long road; Fouquet and Broadberry, 'Seven centuries'.