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Networks in Economic History

Paper Session

Saturday, Jan. 4, 2025 10:15 AM - 12:15 PM (PST)

Hilton San Francisco Union Square, Union Square 19 and 20
Hosted By: American Economic Association
  • Chair: Leander Heldring, Kellogg School of Management, Northwestern University

A Theory of the (Non)-Weberian State

Leander Heldring
,
Kellogg School of Management, Northwestern University
James Robinson
,
University of Chicago
Santiago Torres
,
University of Chicago

Abstract

This article develops a theoretical framework to understand the conditions under which countries can feasibly and advantageously construct a Weberian State. The classical perspective posits that a Weberian State emerges primarily in nations endowed with sufficient fiscal resources and minimal incentives for patronage. However, dense government-community networks, though central to patronage, that can also be leveraged to foster public good provision through what we term the ``Networked State''. We show that this alternative development strategy can be executed when the Weberian State is not politically rational and may even outperform the Weberian approach in societies that can effectively utilize their social networks. The model generates a typology of the circumstances under which Weberian, Network or Patrimonial states emerge in equilibrium. We illustrate the importance of the Network state with the developmental trajectories of South Korea, Rwanda, and the United Arab Emirates.

The Diffusion of Ideas

Caterina Chiopris
,
Harvard University

Abstract

The rise of knowledge and the flow of innovation have long been recognized as an important factor for economic development. How do increased spatial connections affect the generation and diffusion of ideas? Intuitively, a denser network should increase the number of novel ideas and augment their diffusion. I study knowledge production in Germany in the 19th century, relying on the universe of bibliographic records and novel railway statistics, among other original data, as well as cutting-edge machine learning and topology to measure ideas. I show that the railroad network increased the creation of new ideas, contributing to 11% of the increase in knowledge production. Scholars’ mobility led to the formation of specialized clusters, and thus to cities’ specialization. New ideas are formed by combining ideas coming from cities connected by the railroad. However, with a denser network, new ideas diffused less on average. This was a by-product of specialization: with the railroad, groups of scholars could focus on narrower topics and co-locate with similar professionals; they learnt more from similar groups, but became disconnected from dissimilar ones. The findings shed light on the causes for specialization in knowledge production, on the organization of modern science, and on the diffusion of information in dense networks.

The Scientific Content of Innovation

Matthew Lee Chen
,
Harvard University
Nathan Lazarus
,
Massachusetts Institute of Technology

Abstract

We study the changing scientific content of patented technologies throughout modern history. Drawing on two large-scale textual corpora consisting of scientific publications and technical specifications for the universe of British patents up to 1900, we trace scientific concepts derived from historical encyclopedias through our data to approximate networks of intellectual influence. We first show that concepts distinctive of the natural sciences increasingly appear in patent text relative to the arts and social sciences throughout the 18th-19th centuries, and that this is driven by concepts from the physical sciences. We then document a set of facts on the diffusion patterns of scientific concepts across time and technology category, showing that new scientific discoveries diffuse through this existing network. We also study the impact of innovations that combine two previously disparate concepts. Subsequently, we are exploring ways to measure how new science is conceptually synthesized with existing knowledge, and also investigating the underlying drivers of the spread of scientific knowledge into technology.

Social Network and Industrial Policy: Japan's Camphor Monopoly in Colonial Taiwan

Yi-Fan Chen
,
Department of Applied Economics, National University of Kaohsiung, Taiwan
Shao-Yu Jheng
,
Economic Department, Harvard University

Abstract

This paper inspects how firm-official connectivity impacts the policy treatments assigned to
firms in contexts of industrial policies. We digitalize the micro-level data from Japan’s Camphor
Monopoly System in Taiwan for 1902-1918, and compile firm-official connectivity from a social
network constructed from the data archive of the official gazette during 1896-1918. Using a shock
design based on shift-share approach, we then estimate the impact of connectivity on the production permit and compensation granted to the firm by the authority under the monopoly system.
Our estimation suggests that firm-official connectivity played a crucial role for the policy treat-
ments. We construct a model that mimics the ideally implemented monopoly system, such that
the authority aims to maximize its profit given its connection to firms, and perform simulations
to disentangle the roles of government’s financial objective and favoritism towards firms in shaping the performance of the industry based on our empirical results. Our simulation suggests that favoritism towards large, mainly Japanese, firms is at play as empirically these firms receive disproportionately more favorable policy treatments while being less productive than the other firms compared with model prediction.
JEL Classifications
  • N0 - General
  • O1 - Economic Development