Working Paper: CEPR ID: DP15889
Authors: Stephen Broadberry; Alexandra de Pleijt
Abstract: Estimates of capital formation and the stock of capital in Britain are provided for the period 1270-1870 and used to analyse economic growth. (1) We chart the growing importance of fixed relative to working capital, the declining importance of land and the growth of net overseas assets. (2) Kaldor’s stylised facts of a rising capital-labour ratio and a stationary capital-output ratio are broadly confirmed, but only if attention is confined to fixed capital. (3) Extensive form growth accounts suggest that output growth was driven largely by factor input growth, while intensive form growth accounts suggest that TFP growth was more important than capital deepening in explaining the growth of output per head. (4) The investment share of GDP increased substantially during the transition from pre-industrial to modern economic growth.
Keywords: capital; economic growth; Britain; long run
JEL Codes: N13; N33; O10; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fixed capital (E22) | economic growth (O49) |
| growing importance of fixed capital (E22) | economic growth (O49) |
| capital-labour ratio (J24) | economic growth (O49) |
| output growth (O40) | growth of factor inputs (E23) |
| TFP growth (O49) | growth of output per head (O47) |
| rising investments (E22) | economic transformation (P27) |