How did UK, from the first nation to industralize, fall behind in economic growth?

[Denkt]

Looking at various economic charts, it seems England and later UK was quite rich compared to most other European countries and well ahead of other nations like Sweden. It was also the first nation to industrialize. But now it seems to be poorer than countries like Sweden which industrialized much later and had basically forever Before been poorer.

Is there a good reason why UK could not keep up, did it actually hurt in the long term to be the first to industrialize, like could it have missed some key industries or gotten too dependent on its Colonial empire?

 

[Herbert West]

Because your question is a rambly mess, without any clear timeframe in mind, or what metric you base this on, I am not going to do you the courtesy of explaining my answer, so:

Tatcher the milk snatcher.

 

[ConjurerDragon]

Looking at various economic charts, it seems England and later UK was quite rich compared to most other European countries and well ahead of other nations like Sweden. It was also the first nation to industrialize. But now it seems to be poorer than countries like Sweden which industrialized much later and had basically forever Before been poorer.

Is there a good reason why UK could not keep up, did it actually hurt in the long term to be the first to industrialize, like could it have missed some key industries or gotten too dependent on its Colonial empire?

The UK had a headstart to industrialization because it had lots of coal that was the main resource in the steamage, lots of ports and waterways with some canals added later and being replaced by railroads a bit later and nothing too far from the sea. Perfect to industrialize and to export the excess goods.
When coal became less important and the industry and traffic changed to oil/gasoline they no longer had that advantage, just like nowadays poor parts of Belgium or northern France.

But the main disaster that broke the neck of british economy were the two worldwars and the enourmous credits taken during wartime that had to be paid back and nearly lead to state bancruptcy.

Sweden on the other hand started poor with lots of land that was not arable due to climate and only later with changes in climate and fertilizer became usable for farms. And Sweden is not poor in resources, e.g. Copper and excellent iron ore from Kiruna.

 

[Denkt]

But the main disaster that broke the neck of british economy were the two worldwars and the enourmous credits taken during wartime that had to be paid back and nearly lead to state bancruptcy.

On other hand it avoided much of the wars destruction since it did not take place on UK soil, but now some of these countries that was occupied as well as Germany seems to have a stronger economy, so Im not super sure about what happened here. UK can't also be the only country that lost alot of wealth due to WW2, but still other countries have managed to do better in the aftermath even with perhaps a worse starting position?

Sweden on the other hand started poor with lots of land that was not arable due to climate and only later with changes in climate and fertilizer became usable for farms. And Sweden is not poor in resources, e.g. Copper and excellent iron ore from Kiruna.

Obviously Sweden had more to benefit from industalization than souther countries with better land for agriculture, but seems more like turning an drawback into an advantage because the other countries don't have as much to gain from industalization as something like Sweden.

Tatcher the milk snatcher.

My guess is that this is far more complex and giving an perfect answer is basically impossible, blaming a single event or person wont explain Everything.​

 

[mccarty.geoff]

I think a country is rich if it has a superior population. Swedes are fine people but, there are 66 millions crammed into Britain and Northern Ireland. There is no parity there. As far as GDP/PPP Sweden is to NASDAQ as Ireland is to Euronext. Ireland is by far the "richer" country. The United Kingdom has an independent national based economy in comparison. UK does rely on raw material imports and so has been wrecked economically since the dollar took over world trade. The Great British Pound will return but nothing like before the depression, war, and collapse of the empire.

 

[Pyoro]

Why should being first be to your longterm advantage in the first place? It means you need to spend a lot of resources into figuring everything out while everyone else can just look at what you did, steal the best ideas, ignore the worst, improve and adapt ...

If you are clever about it I'd say coming late is no disadvantage. Look at how Japan industrialized once they realized it'd be a great idea to do so. They had plenty of examples to look at, and their jump from pre-industrial to industrial was even larger, seemingly giving them an even bigger boost quicker.

And if we're talking about nowadays, well, it's the post-industrial age, what matters there is how you transitioned from an industrial country to a service industry country. Apparently Britain wasn't as good as that as some other countries. No point being good at digging up coal if it's worth nothing compared to the ability to design web pages

 

[AjayAlcos]

Its not so much that Britain, and by extension its empire, fell behind in its industrial & economic capacity compared to other nations. Rather the reverse is true. In the 19th Century other nations, particularly the United States, Germany & France began catching up technologically, industrially and economically with the UK - diminishing the aforementioned advantage the British had in being the first nation to have mass industrialized. The same parallel can be seen as repeating itself, specifically among emerging economies in Asia (China & India in particular) compared with the so-called "declining" economies in the developed world.

As a rule, economies that start from a lower-base have an easier time attaining economic development at a more rapid rate, as they are able to utilise the innovations and discoveries already made by developed countries and applying those methods within their own economic contexts and further; by studying the history of developed economies grew to where they are -replicating the successes found on their roads of development, avoiding the mistakes, flaws & pitfalls on their path to economic development whilst also creating their own innovations and economic ideas to further speed up economic growth within their nations at the same time. The efficacy of these processes (i.e. how fast and how effectively the grow) varies depending on the nature of the country in question. Things such as an abundance of natural resources and geographic location help greatly though more importantly - the strength and efficacy of said country's institutions, both political and economic, play a large part in determining how efficiently those countries are able use existing resources and focussing them towards attaining economic growth.

A good analogy for this can by found in muscle hypertrophy. When a beginner starts out in working a muscle group they will after a two weeks have achieved some rapid gains in muscular development. As the muscle group continues to become more developed however, the returns from working out those muscles will begin to diminish; requiring more effort in resistance training (e.g greater weight loads, higher sets/repetitions) to continue to develop and maintain those gains. Hence one can make a parallel between this aspect of fitness hypertrophy with the economic theory of diminishing returns.

Quite a simplification I know, but it should give an allegorical idea of why Britain's economic clout diminished compared to other nations (esp. America & Germany) by the 1890's.

 

[bz249]

Its not so much that Britain, and by extension its empire, fell behind in its industrial & economic capacity compared to other nations. Rather the reverse is true. In the 19th Century other nations, particularly the United States, Germany & France began catching up technologically, industrially and economically with the UK - diminishing the aforementioned advantage the British had in being the first nation to have mass industrialized. The same parallel can be seen as repeating itself, specifically among emerging economies in Asia (China & India in particular) compared with the so-called "declining" economies in the developed world.

As a rule, economies that start from a lower-base have an easier time attaining economic development at a more rapid rate, as they are able to utilise the innovations and discoveries already made by developed countries and applying those methods within their own economic contexts and further; by studying the history of developed economies grew to where they are -replicating the successes found on their roads of development, avoiding the mistakes, flaws & pitfalls on their path to economic development whilst also creating their own innovations and economic ideas to further speed up economic growth within their nations at the same time. The efficacy of these processes (i.e. how fast and how effectively the grow) varies depending on the nature of the country in question. Things such as an abundance of natural resources and geographic location help greatly though more importantly - the strength and efficacy of said country's institutions, both political and economic, play a large part in determining how efficiently those countries are able use existing resources and focussing them towards attaining economic growth.

A good analogy for this can by found in muscle hypertrophy. When a beginner starts out in working a muscle group they will after a two weeks have achieved some rapid gains in muscular development. As the muscle group continues to become more developed however, the returns from working out those muscles will begin to diminish; requiring more effort in resistance training (e.g greater weight loads, higher sets/repetitions) to continue to develop and maintain those gains. Hence one can make a parallel between this aspect of fitness hypertrophy with the economic theory of diminishing returns.

Quite a simplification I know, but it should give an allegorical idea of why Britain's economic clout diminished compared to other nations (esp. America & Germany) by the 1890's.

Though the US, later Germany later France and briefly even Italy did surpass the UK.

 

[Jopa79]

On other hand it avoided much of the wars destruction since it did not take place on UK soil, but now some of these countries that was occupied as well as Germany seems to have a stronger economy, so Im not super sure about what happened here. UK can't also be the only country that lost alot of wealth due to WW2, but still other countries have managed to do better in the aftermath even with perhaps a worse starting position?

Although the war didn't take place on UK soil, the British international position dramatically changed after the WWII compared to the pre-war status as a creditor country to a post-war debtor country. One significant factor was the heavy losses of the British merchant shipping during the WWII - Britain lost two-thirds of her pre-war export trade due to the WWII and this caused a serious shortage of US dollars.

Another actuality is the usage of the Marshal Plan. This should be considered as "extra money" provided by the US. However, unlike France and Germany, Britain failed to modernize its industry or stimulate the economy, because the British share of the Marshal Plan was used mainly to cover the British debts they had to take in order to maintain the war effort during the WWII. Without having an active part in the WWII, Sweden received a huge economic support package in the form of the Marshal Plan and was capable to focus it in any sector desired. Also, the post-war British Labor Governments favored collectivism which included nationalisation, the state ownership of the industries and the economy. The initial hopes of the nationalisation failed due to the nuanced understandings in economy management - rather than state ownership it was more like state direction.

On the other hand, Finland was left without the Marshal Plan and had to pay war reparations to the Soviet Union. The war ravaged the Finnish soil, losing 13% of the 1939 land area, the second largest city, losing all the industry in its former eastern regions, access to the Arctic Ocean, inhabiting 500 000 of people. However, there are estimates, that paying the war reparations created the Finnish economy and industry. The benefits are often seen like as in the forced development of the metal industry as the Soviets demanded the payments in the products of metal industry (for instance merchant shipping, locomotives) - already in 1949 Finland had the most modern shipyards, foundries and engineering works (Wärtsilä, Valmet) in the Nordic Countries. However, without the war and paying the war reparations Finland probably would have done even better.

 

[Sunforged General]

Looking at various economic charts, it seems England and later UK was quite rich compared to most other European countries and well ahead of other nations like Sweden. It was also the first nation to industrialize. But now it seems to be poorer than countries like Sweden which industrialized much later and had basically forever Before been poorer.

Is there a good reason why UK could not keep up, did it actually hurt in the long term to be the first to industrialize, like could it have missed some key industries or gotten too dependent on its Colonial empire?

The UK is actually projected to surpass Germany by 2030 in GDP, making it the largest economy in Europe.

https://www.thelocal.de/20131227/uk-economy-to-overtake-germany-in-2030

 

[bz249]

The UK is actually projected to surpass Germany by 2030 in GDP, making it the largest economy in Europe.

https://www.thelocal.de/20131227/uk-economy-to-overtake-germany-in-2030

I am pretty convinced that what happened between 2013 and 2020 (that the gap widened) has also been predicted by that paper.

 

[bz249]

On the other hand Germany provides a nice example why a headstart is irrelevant, since it has is nice obsolete automotive industry... so at the start you have a quasi-monopoly and you can sell your stuff way above your break-even price. The new industry will accumulate capital in a stunning tempo.
However, unless the product is very difficult to replicate others will also see the gap and sooner or later the marge will shrink.

And at the of the line you have companies which have their names (like Daimler or BMW... previously Ford/GM) but highly indebted and unable to produce any reasonable return on capital (the above ones has 2-4%). At that stage a new cash cow is needed or the country will fall behind.

 

[JodelDiplom]

Economic success follows investment

But investment is something that comes at the cost of consumption.

And consumption follows economic success.

High rates of investment require a high degree of frugality from a society... Saving instead of spending, living in austere homes ideas of ostentatious one, and so on. It does not come easily, and the natural tendency for a society that has become affluent, is to reduce saving in favor of consumption.

These days (and perhaps even in the days of post ww2 Britain) it is also politically difficult to argue for policies that encourage high investments. Since capital is a globally mobile thing, and people have come to agree that governments just don't have the know how to create sound investment outside of the area of common goods (like roads and canals and infrastructure), policies that attract capital are invariably policies that reduce state control over markets and reduce taxes on investments. So, basically, these policies are anathema to leftists and at best "meh" to centrists. Unless there's a wide consensus on society that these policies are needed, it's hard to actually successfully promote them.

 

[Geriander]

Economic success follows investment

But investment is something that comes at the cost of consumption.

And consumption follows economic success.

High rates of investment require a high degree of frugality from a society... Saving instead of spending, living in austere homes ideas of ostentatious one, and so on. It does not come easily, and the natural tendency for a society that has become affluent, is to reduce saving in favor of consumption.

These days (and perhaps even in the days of post ww2 Britain) it is also politically difficult to argue for policies that encourage high investments. Since capital is a globally mobile thing, and people have come to agree that governments just don't have the know how to create sound investment outside of the area of common goods (like roads and canals and infrastructure), policies that attract capital are invariably policies that reduce state control over markets and reduce taxes on investments. So, basically, these policies are anathema to leftists and at best "meh" to centrists. Unless there's a wide consensus on society that these policies are needed, it's hard to actually successfully promote them.

Economic success only follows profitable investment. For investment to be profitable requires innovation. Britain's original success in the 1st Industrial Revolution came from a combination of capital for investment and innovations to invest in. In the 2nd Industrial Revolution Britain lost ground, not due to a lack of capital and investment, but because the investments were made in old industries. "Leftist" only gained power in Britain long after it had already been overtaken as the leading industrial nation.

 

[Cavalry]

Looking at various economic charts, it seems England and later UK was quite rich compared to most other European countries and well ahead of other nations like Sweden. It was also the first nation to industrialize. But now it seems to be poorer than countries like Sweden which industrialized much later and had basically forever Before been poorer.

Is there a good reason why UK could not keep up, did it actually hurt in the long term to be the first to industrialize, like could it have missed some key industries or gotten too dependent on its Colonial empire?

Economic alone will not explain that. You need to seek anwers from gun!

The UK has less population than other countries and not rich in resource, they depended on hundred millions of Indians to work for them, and unequal treaties with China and Ottoman and many others. But now the Indians and Chinese work for other country and for themselves, the UK no longer has a monopoly.

Take a look at the current largest economic power, the US. They will not just do the economy and hope no other will surpass them. If oil price increase can damage their economy, they send troop to where it needs. If Japanese good is too competitive? They had Plaza Accord. If Chinese good is too competitive? They have Huawei banned!

 

[Cavalry]

On the other hand, it is a good question how a country keep advance in economy ahead of others, without making war.

Education of the poor is an easy answer but often not easy to do. Because education of the poor will need money from the State, but the rich control the state and often will not want to pay for it.

Another thing is to make people have more children, more than two children if you want to grow! In history some states paid to encourage this.

 

[Sanny]

One thing people never talk about is how a large portion of the Elite society (who owned world-class British companies and firms) were wiped out in the Titanic disaster, this combined with WW1 mixed with the general economic stagnation of the 20s and following 1929 Crash just ended it for Britain. A lot of families and businesses were ruined. The Empire was in a state afterwards and would never return to its previous highs.

 

[Geriander]

One thing people never talk about is how a large portion of the Elite society (who owned world-class British companies and firms) were wiped out in the Titanic disaster,

Do you have a source regarding the economic impact of this? I tried a search and only came up with the more direct effects.

My first thought was that there would almost always be an heir ready to take over family firms and shares in companies. With the higher chance of First class passengers surviving, I am also interested in how large a portion of British Elite Society died.

Edit: Looking at the richest people that died, the US seems to have been hit harder than Britain. This of course doesn't cover the large numbers from British Society who were poorer than John Jacob Astor or Benjamin Guggenheim but whose deaths could still have large impacts on the economy.

Second Edit: If these numbers are correct there were only 25 British First Class passengers who died on the Titanic, compared to 71 Americans. I seriously doubt that the impact on the British Elite Society was as devastating as you seem to imply.

 

[JodelDiplom]

One thing people never talk about is how a large portion of the Elite society (who owned world-class British companies and firms) were wiped out in the Titanic disaster, this combined with WW1 mixed with the general economic stagnation of the 20s and following 1929 Crash just ended it for Britain. A lot of families and businesses were ruined. The Empire was in a state afterwards and would never return to its previous highs.

Sorry but changes in ownership from one generation to the next do not ruin a society, that's just bollocks.

 

[Denkt]

Interesting, I looked at a chart about the regions about the EU countries and the wealth of their regions and here are some interesting stuff:

• If you remove the London region, UK would be under average, UK is pretty on the EU average with London to get an idea.
• In France only the Île de France is really above average, it is like London well above average, the rest of the regions is under average, like UK it is pretty much on the averag line.
• North Italy is separated from the south would be richer than UK/France average, however the southern part is much poorer, the difference seems to be absolute huge.
• Sweden's regions is pretty on the line with EU average, it is Stockholm which is again well above average
• Germany seems to have alot of very well doing regions, not just one region that pull up the whole country, but it also have some underperforming ones.

Basically it seems in order to do above average, your regions need to perform above average instead of having one super rich region like France and UK with the rest being mostly under the average line. Germany seems to have been much more able to keep a high average, maybe because it was a bunch of small nations in the 1800s? Italy also seems to be similar, the North part seems to be doing very well, better than France and UK, why the south is doing so much poorly is a another question.