The great escape: Modelling the Industrial Revolution

The world economic history simply consists of three major events: the Malthusian stagnation, the Industrial Revolution, and the Great Divergence. As the landmark to the modern economic growth, the Industrial Revolution has been studied extensively by growth economists and economic historians. Conclusions on the real causes of the Industrial Revolution, however, have not been reached among scholars. Big questions such as 'Why England' are still begging answers. This dissertation attempts to explain the Industrial Revolution by comparing Britain with other industrialization candidates under the same framework, trying to infer the reason why Britain successfully escaped, while others remained in the Malthusian trap.;The first chapter introduces the long run economic growth in a chronicle way. Rather than detailing every historical aspects, we focus on several interesting and important issues of the economic growth history centering around the Industrial Revolution. At the end, we put forward with the logical bases of our theory.;Why did early industrializations such as in medieval China and Italy die out, and not lead to sustained growth? The second chapter models the role of uncertainties such as productivity or demographic shocks in a formal growth model promoting sustained growth through learning-by-doing and human capital accumulation. It shows the conditions in which early industrializations produce sustained growth. It outlines further how trade openness could help sustain growth from early industrializations, which partly explains the success of the British in the eighteenth century.;The third chapter studies the role of trade in the Industrial Revolution further. We documents the British trade pattern and its impacts during the Industrial Revolution. We construct an open growth model to show that international trade is conducive to industrialization, in that trade can keep the manufacturing industry profitable and provide food supplies, which could be the bottleneck for the industrializations in a closed economy. The chance of industrialization increases with the size of the country's trading partner, but decreases with the foreign industrial productivities. Although trade improves consumers' welfare in both the industrializing countries and its trading partner, trade can cause de-industrialization and stagnation for the latter. The model also illustrates the possibility that comparative advantage in manufacturing, which maybe non-existent in the beginning, can be gained via learning-by-doing over time. Trade between Britain and India during the Industrial Revolution provides us good historical supports.