Innovation growth clusters : Lessons from the industrial revolution

Abstract

Over three centuries ago, a new technology suddenly increased the amount and frequency of available information. Might such «Big Data» have disrupted the causal relationships linking economic growth and innovation? Previous research has affirmed that a society’s economic success during the Industrial Revolution depended on its institutions. Here we examine the hypothesis that by allowing people to cooperate more easily with one another, language standardization raised a society’s rate of innovation. As a result, the region could attract the resources needed to grow more rapidly. Empirical tests with 117 innovations and 251 Western cities suggest that the presence of a standardized tongue helps to explain the burst of innovation and growth observed between 1700 and 1850. Moreover, once one has accounted for language standardization, institutional quality has little further power to explain economic progress.