The Cambridge Economic History of Modern Britain

INTRODUCTION

Economic growth can be driven in the short run by factor accumulation or by utilising factors more efficiently, but permanent increases can result only from technological innovation, including, within this, term improvements in products and processes in manufacturing, services and indeed agriculture. This chapter will focus on machines and innovations in mechanical processes, while Chapter 13 discusses innovation in services.

Given Britain's loss of industrial pre-eminence from the late nineteenth century, an absence in new technology formation is as natural an explanation for British failure as cultural interpretations that emphasise a weakness of the industrial spirit (Wiener 1981). While Britain was the first ‘workshop of the world’, its lagging position behind the technology frontier during the drive to industrial maturity is a topic of some debate in economic history. Accounts of technological progress during industrialisation emphasise that Britain's rise was defined by capabilities in a broad array of industries and by a culturally enlightened and technically competent stock of human capital that could translate new ideas from home, or abroad, into commercially viable innovations (Mokyr 1990, 2002, 2010). What changed the trajectory of technological change in Britain from this high point of early economic development?

This chapter examines the hypothesis that Britain has failed technologically. It provides a statistical portrait of innovation over the last 140 years and it then focuses on three main areas of explanation for Britain's historical innovation performance. First, it analyses incentives for technological development, specifically British patent law and efforts to induce innovators using inducement prizes as an alternative or complementary mechanism. Second, it explores the organisational structure of innovation in Britain and R&D performance. Finally, it examines public policy efforts to promote industrial science and innovation clusters.

The data strongly support the argument that Britain's technological performance was lacklustre during the late nineteenth and early twentieth centuries, when other industrial nations began to catch up on Britain's early technological lead.