Natural resources, electrification and economic growth from the end of the nineteenth century until World War II

The impact that the new energy source, electricity, had on the economic growth of a number of countries –USA, UK, France, Italy, Spain and Canada– characterised by their different coal endowments is the principal objective of this article. The new energy, amongst its other advantages, reduced the dependence on natural resources of coal as it could be generated out of different primary energies: namely water or coal. In order to assess the importance of this reduced dependence, a coal-and-electricity energy database is presented for all six countries. We show that the relative prices electricity-coal were low in countries with poor coal endowments, and we find that there was a negative relationship between relative prices electricity-coal and economic growth. Moreover, there was a relationship between the industrial electrification process in countries with no coal deposits and their investment process, their labour productivity increase, their economic and manufacturing industry growth, and the structural change they underwent.