Skills, Franchise and Industrialization

In this paper the skill distribution is proposed as being fundamental for technological transitions, besides the economic and political variables normally considered. The setting is an endogenous growth model with non-overlapping generations, where agents are heterogeneous with respect to wealth, skills and political power. It is shown that the skill distributionis as imporant as the initial wealth distribution and the type of political regime in determining the subsequent economic development of a country. The results indicate that the time horizon matters when judging which institutional framework has most potential to generate a technological transition. Moreover, it is shown that there is no setup of initial characteristics that most favors a country's development in all situations. The outcomes of the model are consistent with historical data from 1820 to 1913 for 23 countries.