I have blogged here and here exploring the origins of the Industrial Revolution (IR) citing Joel Mokyr’s work. He has written about the sudden and miraculous explosion of science and technology in one part of the world and the creation of conditions for long-term economic growth, a development that cannot be explained by institutions alone. He points to the importance of culture - beliefs, values, and preferences that can change behaviour - in laying the foundations (in the 1500-1700 period) for the scientific advances and pioneering inventions that would instigate explosive technological and economic development.
In an excellent new paper, Réka Juhász, Shogo Sakabe, and David Weinstein highlight the importance of codification of technical knowledge in the vernacular was necessary for countries to absorb the technologies of the IR. They construct and use several novel datasets to study the diffusion of technical knowledge in the late nineteenth century.
We find that comparative advantage shifted to industries that could benefit from patents only in countries and colonies that had access to codified technical knowledge but not in other regions. Using the rapid and unprecedented codification of technical knowledge in Meiji Japan as a natural experiment, we show that this pattern appeared in Japan only after the Japanese government codified as much technical knowledge as what was available in Germany in 1870. Our findings shed new light on the frictions associated with technology diffusion and offer a novel take on why Meiji Japan was unique among non-Western countries in successfully industrializing during the first wave of globalization.
The paper tests one of the main theories proposed by Joel Mokyr on why the IR happened in the UK and not elsewhere, the codification of engineering, commercial, and industrial practices (or “technical literacy”).
It mines libraries and publications across the major languages to document such codification in the vernacular and how it changed over time in 39 countries between the late nineteenth and early twentieth centuries. It’s a truly impressive achievement.
We build this dataset by scraping the catalogs of libraries for every major language, digitizing technical books for every major tradable industry, digitizing the synopses of all British patents issued between 1617 and 1852, digitizing bi- lateral industry-level trade data for Japan and the U.S., merging these trade data with extant trade datasets to create the first multicountry, bilateral, industry-level, trade dataset for the nineteenth century.
The authors establish four stylised facts about the global spread of the IR and the uniqueness of Japan’s nineteenth-century industrialisation, the Meiji Miracle. The first three are as follows:
The first stylized fact is that technology codification is extremely rare. After scraping thousands of libraries containing books in 33 languages, including the twenty most spoken ones, we find that in 1870, 84 percent of all technical books were written in just four languages: English, French, German, and Italian. People who could not read these four languages were likely technically illiterate because they had very few technical books in their vernaculars to read. For example, a person who could only read Arabic would only have been able to read 72 technical books in 1870. Libraries for other major non-European languages, such as Chinese, Hindi, and Turkish, have extensive collections of books but contain similarly small numbers of technical books. By contrast, speakers of major European languages would have had access to thousands of technical books. Put simply, for most of the world at this time, literacy in the vernacular was a ticket to reading social science and humanities, not reading science.
The second stylized fact is that the Japanese language is unique in starting at a low base of codified knowledge in 1870 and catching up with the West by 1887. By 1890, there were more technical books in the Japanese National Diet Library (NDL) than in either Deutsche Nationalbibliotek or in Italian, as reported by WorldCat. By 1910, there were more technical books written in Japanese in our sample than in any other language in our sample except French. How did Japan achieve such a remarkable growth in the supply of technical books? We show that the Japanese government was instrumental in overcoming a complex public goods problem, which enabled Japanese speakers to achieve technical literacy in the 1880s. We document that Japanese publishers, translators, and entrepreneurs initially could not translate Western scientific works because Japanese words describing the technologies of the Industrial Revolution did not exist. The Japanese government solved the problem by creating a large dictionary that contained Japanese jargon for many technical words… Beyond producing technical dictionaries, the Meiji government made substantial investments in codifying knowledge by paying for the large-scale translation of technical knowledge from the West. Our analysis of the institutional affiliations of these translators reveals that 74 percent of them were government employees, indicating the relative importance of the government in funding this public good…
The third stylized fact is that per capita income in the nineteenth century fell with linguistic distance from English. We document that even after controlling for physical distance, countries that spoke languages that were linguistically close to English had significantly higher per capita incomes in 1870… it establishes the plausibility of the theory that interactions with England, either through physical distance-related activities like trade or linguistic distance-related activities like reading English or a close-cognate language, mattered for development in the nineteenth century.
The fourth stylized fact points to a very striking conclusion - Japan’s spectacular ascension as a manufacturing powerhouse in a short period of around 15 years - and the importance of technical literacy in the diffusion of the IR!
The fourth stylized fact is that Japanese manufacturing grew suddenly and very fast after Japan succeeded in codifying knowledge. In 1868, the first year of the Meiji Restoration, less than 30 percent of Japanese exports were manufactured products; seventeen years later, in 1885, the share of manufactured exports had fallen to 20 percent. In other words, there is no evidence that the Japanese industrial structure shifted towards manufacturing almost three decades after Japan opened to the West and nearly two decades after the Meiji Restoration. However, ten years after Japanese authors and translators created substantial amounts of codified knowledge—publishing over a thousand technical books—the share of manufactured exports grew to 60 percent and stayed at this level for the next 40 years… this sudden increase in codified knowledge and the sudden increase in manufacturing specialization was unique to Japan in the 19th century. Thus, Meiji development didn’t gradually increase growth rates as institutions improved; rather, a very rapid increase in manufacturing happened only after Japan succeeded in codifying about as much knowledge as Germany had in 1870.
… we provide empirical evidence that late nineteenth-century Japan had high country-level productivity growth rates in international comparison, which were concentrated in manufacturing sectors. We thus show that the Meiji Miracle is indeed “miraculous” in comparative perspective… we find that Japanese productivity growth was higher in industries where the supply of technical knowledge was greater, but importantly, only after Japan became technically literate. Indeed, until 1890, Japan looked remarkably similar to the rest of the global periphery, and Asia in particular, in which comparative advantage shifted away from industries that heavily used British technology.
Furthermore, we only find a relationship between productivity growth and the supply of technical knowledge in countries that codified technical knowledge, consistent with our mechanism. This lends support to the idea that broad access to technical knowledge, which at the time usually meant access in the vernacular if people spoke a vernacular that was linguistically distant from English, was a necessary condition for the diffusion of Industrial Revolution technologies and manufacturing growth more broadly. Moreover, our results suggest that for regions outside of Western Europe, the codification of technical knowledge was a complex public good that required state provision… Japan succeeded in producing many technical translations.
Together, we interpret these four stylized facts as presenting evidence that access to technical knowledge may have been a necessary (although not sufficient) condition for the spread of the Industrial Revolution… our results show that codified technical knowledge was almost non-existent outside of Europe. Thus, moving outside of the European culture of Enlightenment, the provision of technical knowledge required the state’s involvement due to its public good-like attributes.
The paper uses the example of Japan to illustrate the problems with the conventional wisdom about the diffusion of industrialisation. In Japan’s case, research has been focused on institutions, modern banking, railroads, subsidised firms, government facilitation, and trade.
This careful work has not found large positive impacts of these policies on economic outcomes and sometimes finds the policies were counterproductive. For example, Sussman and Yafeh conclude that “the great majority of the Meiji reforms—including the establishment of the Bank of Japan and the introduction of ‘modern monetary policy, the promulgation of the Meiji Constitution, and the introduction of parliamentary elections—produced no quantitatively significant market response.” In the end, they conclude that only land tax reform and Japan’s adoption of the gold standard mattered to investors. Our findings thus offer a resolution to the puzzle of what drove the Meiji Miracle.
Our results point to the importance of certain public goods necessary for industrialization. These results are particularly helpful in placing the “Meiji Miracle” in a comparative perspective. That is, while the more standard modernization efforts of the Meiji government, such as the introduction of banking and railroads, certainly contributed to industrialization, given their fairly widespread adoption in other parts of the global periphery, which were characterized by more modest growth, it is unlikely they can give a full account. In contrast, our paper provides empirical support for the long strand of Japanese economic history that has emphasized the more unique aspects of the Japanese government’s efforts to adopt Western technology. In fact, our results suggest that the Japanese state may have been uniquely successful in relaxing key constraints to adopting Western technology…
Our reading of the historical record suggests that it was the severe, existential threat to the Japanese regime caused by the arrival of Western powers, which aligned the elite in support of a strategy of aggressive defensive modernization. Importantly, Japan did not discover the policy tools themselves. State support of technology adoption, particularly the translation of technical books, was a common strategy for regions hoping to emulate Britain. This has been observed from Bourbon France in the late eighteenth century to the Self-Strengthening Movement in China in the nineteenth century. Meiji Japan thus took the state-led technology adoption playbook developed elsewhere and deployed it at an unprecedented scale.
This is a powerful insight, one with great relevance even today. Imagine the countless students in polytechnics and ITIs, managers and workers in formal and informal enterprises, and entrepreneurs and tinkerers in general across India, most of whose learning happens in the vernacular language and who do not have access to their relevant technical literature.
In this context, digital technologies can have a truly transformative impact like translating and having the latest technical literature made available in the vernacular. Here too government has an important role to play in co-ordinating and making available in a universally accessible manner the appropriate technical literature in the vernacular. There’s a compelling public policy case for the government playing an important role in enabling access to technical literacy.
This insight is one more addition to the vast literature on the importance of knowledge documentation and its diffusion in social and economic development. This is an important but less discussed aspect in interpreting the history of India’s development. With its Vedic shruti tradition of verbal transmission of literature, India stands out as the only major civilisation with limited locally documented history and literature. This coupled with the exclusions imposed by the caste system evidently played an important role in restricting documentation and diffusion of knowledge. And this impact is manifest in the country’s industrial development and endures to this day.
It also underlines the important role of governments in industrial development. It contradicts the widely held views among influential people that the best way to promote industrial development is to get the government out of the way. A more accurate description would be that governments have to proactively facilitate industrial development. Instead of getting out of the way, governments have to show the way! All history, including the recent experiences of East Asian countries, shows the critical and central role played by capable governments in bringing about industrial transformations. The widely varying roles of the government during the Meiji era is one more exhibit.
To avoid the risk of reductionism with the interpretation of such research, I’ll argue that the diffusion of technical literacy allowed the Japanese to make good use of the investments made during the Meiji reform period in the development of institutions, infrastructure, financial markets, and in the promotion of domestic firms and trade facilitation. Without the latter, technical literacy alone would have achieved little. Technical literacy built on the foundations laid by the main Meiji era investments and reforms and delivered Japan’s spectacular industrial transformation in a short period.
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