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Supervision 5: Growth in late Victorian Britain British Economic History, Paper 5, Part I Essay 'There is no sign of failure in the late Victorian economy; all we observe is other countries, predictably, catching up with Britain.' Discuss.
In the late 19th century, Britain's industrial superiority was increasingly challenged. The share of world exports for the UK dropped from 20.2% in 1872 to 13.6.The relative fall in manufacturing exports was even more pronounced, as the world share of the UK in this category fell from 45.5% to 26.8% in the same period.At the same time, the shares of competitors such as the USA and Germany rose steadily. These two countries attained labour productivity levels in manufacturing which were 22% (Germany) and 93% (USA) higher than in the UK in 1911.Furthermore, Britain attained lower growth rates in real GDP: The average growth rate from 1870 - 1913 was 1.9% in Britain, whereas Germany had a growth rate of 2.8% and the US attained 4.2% in the same period.Not only did Britain compare unfavourably with its contemporary competitors, but its performance also lagged behind its own benchmarks from earlier periods. Real GDP growth was higher from 1856
1873, where the average figure was 2.2% p.a.This seems to be a small gap, but can lead to big differences over a longer period of time. The question whether this relative decline of British industrial and economic performance can be seen as failure of the late Victorian economy, or whether there was unrealized potential for the British economy has been the topic of much debate. In 1970, Donald McCloskey wrote an article regarding this question with the title "Did Victorian Britain fail?".6 In this article, he reached the conclusion that Victorian Britain did not fail, but grew as fast as its labour and capital constraints would allow. McCloskey undertakes his analysis by using the neoclassical growth model with the following equation for the sources of growth:
dQ/Q = a*dK/K + b*dL/L + r*
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