An annual index of Irish industrial production, 1800-1913

by Seán Kenny (University College Cork), Jason Lennard (LSE), and Kevin Hjortshøj O’Rourke (NYU Abu Dhabi)

This blog post is based upon the authors’ article forthcoming in the Economic History Review.

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The growth or stagnation of industry in Ireland was a major political issue during the union with Great Britain. To Arthur Griffith, founder of Sinn Féin, manufacturing was essential for prosperity, protection was required for Irish manufacturing to develop, and independence was needed to make protection possible. To unionists, Ireland, led by Ulster, was on its way to becoming a prosperous industrial society underpinned by the British connection.

The more data we have that can speak to these debates, the better. However, despite many significant advances in recent years, quantifying the nineteenth-century Irish economy remains a work in progress. We lack annual or even decennial national accounts of the sort now available for most Western European countries.

In new research forthcoming in the Economic History Review, we construct an annual index of industrial production in Ireland between 1800 and 1913. To do so, we collect data on the output of Ireland’s industries from a variety of primary and secondary sources, which we aggregate using shares of value added reported in the First census of production (1912).

The index is presented in figure 1. The results suggest that Irish industry expanded by 1.3 per cent per annum, on average, between 1800 and 1913, which implies that output doubled roughly every 54 years.

Figure 1.   New annual index of Irish industrial production, 1800-1913 (1907 = 1)

What accounted for the growth of industry? To answer this question, we decompose industrial production into terms measuring labour productivity, structural change, and population. The results, reported in table 1, suggest that there was a major tailwind to industrial growth: labour productivity, which rose by 3 per cent per annum, on average. This should not be a surprise, as Ireland was a major force in industries such as brewing, linen, and shipbuilding. Counterfactual exercises suggest that this productivity boom was due to capital accumulation and technological progress.

Table 1.   Growth accounting (1841 = 1)

There were, however, two significant headwinds. First, there was a decline in industrial labour force participation, as the share of the population working in industry declined from 13.4 per cent to 9.2 per cent, a fall of almost a third. Second, there was a large decrease in population, which fell by 47 per cent on account of the Famine and its aftermath.

These results have important implications for the debate on (de)industrialization. On one hand, focusing on employment suggests that industry was dwindling. On the other hand, studying output leads to the conclusion that industry was expanding. The decomposition reconciles these views. The output of Irish industry expanded despite a shrinking industrial labour force due to the productivity growth of those who remained.

Industrial output grew from 1800 on, but does this imply that Ireland’s industrial performance was satisfactory? How does it compare in an international context? Compared to neighbouring Britain, Denmark (another small, open economy), and the United States (a leader), Ireland’s performance was not very good. Between 1818 and 1913, when data are available for each country, Irish industrial growth of 1.4 per cent per annum was slow compared with growth of 2.8 per cent in Britain, 3.5 per cent in Denmark, and 5.3 per cent in the United States. Expanding the peer group to 20 countries for which we have data between 1870 and 1913, Ireland is bottom of the table.

Taking stock, impressive productivity growth was dampened by structural change away from industry and population decline, which resulted in modest growth of industrial production. As other countries did not suffer from such dire population pressures, and in many cases experienced growth-enhancing structural change into industry, Ireland fared dismally by international standards.

Looking ahead, we hope that this work will add to the small but growing statistical stock in Irish economic history. First, it may be possible to extend the index back and forward through time. Second, an index of industrial production is a crucial component of GDP, for which direct estimates are missing before the 1920s (Kenny, forthcoming).

To contact the author:

j.c.lennard@lse.ac.uk

References

Final report on the first census of production of the United Kingdom (1907) (London: His Majesty’s Stationery Office, 1912).

Kenny, S. ‘Irish GDP since independence’, Lund Papers in Economic History (forthcoming).

Kenny, S., Lennard, J., and O’Rourke, K. H., ‘An annual index of Irish industrial production, 1800-1913’, Economic History Review (forthcoming).