Working Paper: CEPR ID: DP9626
Authors: Nicholas Crafts; Nikolaus Wolf
Abstract: We examine the geography of UK cotton textiles in 1838 to test claims about why the industry came to be so heavily concentrated in Lancashire. Our analysis considers both first and second nature geography including the availability of water power, humidity, coal prices, market access and sunk costs. We show that some of these characteristics have substantial explanatory power. Moreover, we exploit the change from water to steam power to show that the persistent effect of first nature characteristics on industry location can be explained by a combination of sunk costs and agglomeration effects.
Keywords: Agglomeration; Cotton Textiles; Geography; Industry Location
JEL Codes: N63; N93; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| availability of water power (L94) | likelihood of having cotton mills (L67) |
| terrain ruggedness (R14) | likelihood of having cotton mills (L67) |
| historical textile inventiveness (N60) | likelihood of having cotton mills (L67) |
| proximity to ports (L91) | likelihood of having cotton mills (L67) |
| market access (L17) | likelihood of having cotton mills (L67) |
| lower coal prices (L71) | employment levels (J23) |
| lower coal prices (L71) | mill size (L25) |
| higher average humidity levels (Q54) | attractiveness for the cotton industry (L67) |
| agglomeration benefits (R32) | location dynamics of the industry (R32) |
| historical advantages (N93) | mill location decisions (R32) |