A quantitative model of the British industrial revolution, 1780–1850

A simple aggregative model is calibrated to data from Great Britain in 1850 and used to study the role of growing foreign trade, the declining cost of power, and technical change in manufacturing over the period 1780–1850. The model shows that growth in trade played an important role in redistributing income away from land and toward labor, as it reduced the share of agriculture and increased the share of manufactured goods in aggregate output. Both types of technical change contributed significantly to growth, but the change in manufacturing was about three times as important as that in the energy sector.