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The determinants of productivity growth in Dutch manufacturing, 1815–1913

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  • SMITS, J.P.

Abstract

In this article time series on labour productivity in the manufacturing sector are the starting point of the analysis. Using a growth accounting framework (Cobb-Douglas production function) we try to assess to what extent increases in labour productivity are due to rises of total factor productivity or to a growth of capital intensity. The results of this accounting exercise seem to contradict the views expressed by a great number of historians who have written on this subject. By relaxing some of the strong assumptions regarding perfect competition, a new view on the determinants of long-term industrial growth can be developed. The increase in the capital/labour ratio – which undoubtedly has been the engine in the process of industrial growth – cannot be explained exclusively by changes in relative factor prices. Also changes in institutional arrangements as well as demand shocks (resulting in economies of scale) play an important role. By taking imperfect competition (and non-equilibrium prices) into consideration, the puzzling results of the Cobb-Douglas accounting experiment can be reconciled with traditional literature on this subject.

Suggested Citation

  • Smits, J.P., 2000. "The determinants of productivity growth in Dutch manufacturing, 1815–1913," European Review of Economic History, Cambridge University Press, vol. 4(2), pages 223-246, August.
    • Handle: RePEc:cup:ereveh:v:4:y:2000:i:02:p:223-246_00
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    1. repec:dgr:rugsom:01c52 is not listed on IDEAS
    2. repec:dgr:rugccs:200507 is not listed on IDEAS
    3. repec:dgr:rugggd:gd-113 is not listed on IDEAS
    4. Jacobs, Jan & Smits, Jan-Pieter, 2001. "Business cycles in the Netherlands, 1815-1913," Research Report 01C52, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    5. Bonenkamp, Jan P.M. & Jacobs, Jan P.A.M. & Smits, Jan-Pieter, 2005. "Consumer demand in the Industrial Revolution: The Netherlands, 1815-1913," CCSO Working Papers 200507, University of Groningen, CCSO Centre for Economic Research.
    6. Hölsgens, Rick, 2019. "Resource dependence and energy risks in the Netherlands since the mid-nineteenth century," Energy Policy, Elsevier, vol. 125(C), pages 45-54.
    7. Woltjer, P. & Smits, Jan-Pieter & Frankema, Ewout, 2010. "Comparing Productivity in the Netherlands, France, UK and US, ca. 1910:A new PPP benchmark and its implications for changing economic leadership," GGDC Research Memorandum GD-113, Groningen Growth and Development Centre, University of Groningen.

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