This collection of articles is the result of a workshop organised to consider technology and productivity in historical perspective, drawing in particular on the evolutionary approach. The workshop was organised by the N.W. Posthumus Institute for Economic and Social History, the Netherlands Institute for Advanced Study in the Humanities and Social Sciences (NIAS) and the Groningen Growth and Development Centre. Economic historians with backgrounds in both evolutionary and neoclassical traditions came together in the pleasant surroundings of the NIAS at Wassenaar in May 1999, to re-examine technology and productivity experience in Europe since the Industrial Revolution. An important focus was provided by recent theoretical developments, which have seen the incorporation of many evolutionary ideas into mainstream economics. Until quite recently, there seemed to be little common ground between approaches to technology and growth based on Solow's (1956) neoclassical growth model and Nelson and Winter's (1982) evolutionary, neo-Schumpeterian model. Now, however, the evolutionary approach has entered the mainstream through the work of writers such as Grossman and Helpman (1991) and Aghion and Howitt (1998) on endogenous innovation, and David (1985) and Arthur (1994) on path dependence. This is a particularly welcome development from the perspective of the European Historical Economics Society, the sponsors of the European Review of Economic History, holding out the promise of a genuinely ‘historical economics’.

Technological change is often measured by economists and economic historians through productivity growth, but this article argues that technological change and productivity change are conceptually different. This proposition is demonstrated by considering the diffusion of technologies first within industries, and second across industries. In both cases, economic growth reaches higher levels when the technology becomes diffused, not when it is being generated via major technological breakthroughs. This emerges through high ratios of patents (as a measure of technological change) to industrial production when countries undergo their industrial revolutions. Finally I compare across countries, to show that leader countries developed the technologies before they developed education systems to extend them, whereas some catching-up countries probably drew on their depth of human capital to absorb new technologies from the leaders.

Since technology is localised and context-specific, the technological trajectories of large firms tend to lock-in to particular national configurations. This article examines evidence on the industrial patterns of technological development in the largest firms originating from the US, Germany, the UK, France, Switzerland and Sweden, through their corporate patenting in the US since 1920. It is shown that in each national group the profile of development is path-dependent, but with some selected convergence between groups leading to the formation of three clusters of groups (the US and UK, German and Swiss, and French and Swedish) that share common characteristics.

Electricity and electrotechnical industry have taken a central position in Swedish industrial development ever since the breakthrough of the high-voltage technique in the 1890s. Some reasons for the importance of electricity are quite obvious. Due to her natural resources, Sweden had at an early stage developed many energy intensive industries such as iron and steel works and pulp and paper mills. She lacked, however, deposits of fossil fuels while the supply of water power was abundant. Hence, early on there was a strong stimulus to develop a system of generation and transmission of electrical power as well as to invest in electrotechnical equipment. Similarly, there was a strong stimulus to the development of a domestic electrotechnical engineering industry. This industry became a backbone of the more sophisticated manufacturing that spurred Swedish industrialization from the 1890s onwards.

It took the British iron industry a hundred years to transform from a small producer at high cost in the early eighteenth century, to become the leading supplier of iron products for the world market by switching from charcoal fuel to coal fuel techniques. In a long-drawn transition, the coal-using techniques were transferred to Belgium, France and Germany, in part indirectly with British iron exports embodying the new technology. Behind protective walls in Belgium and France, new ironworks imitated the British model. Traditional ironworks succeeded in integrating only parts of the new technology (i.e. puddling) and increased their productivity by applying modern fuel-saving strategies. Thus old and new coexisted for a long time. The demand for low quality railway iron made most of the British-type ironworks on the continent profitable. From 1860 on, coal iron was produced in ever better qualities which left only niches for the high quality charcoal iron.

In this article time series on labour productivity in the manufacturing sector are the starting point of the analysis. Using a growth accounting framework (Cobb-Douglas production function) we try to assess to what extent increases in labour productivity are due to rises of total factor productivity or to a growth of capital intensity. The results of this accounting exercise seem to contradict the views expressed by a great number of historians who have written on this subject. By relaxing some of the strong assumptions regarding perfect competition, a new view on the determinants of long-term industrial growth can be developed. The increase in the capital/labour ratio – which undoubtedly has been the engine in the process of industrial growth – cannot be explained exclusively by changes in relative factor prices. Also changes in institutional arrangements as well as demand shocks (resulting in economies of scale) play an important role. By taking imperfect competition (and non-equilibrium prices) into consideration, the puzzling results of the Cobb-Douglas accounting experiment can be reconciled with traditional literature on this subject.