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What does it take for a society to be able to innovate? The question is crucial today when an increasing share of world patents are taken out by countries such as Japan, South Korea and China, which have limited energy resources and cultures very different from those in the West. However, most previous studies of the beginnings of industrialization have focused on the resources and institutions of Britain alone. As a result, they have missed the lessons to be learned from casting the net more.

Did breakthroughs in core processes during the Industrial Revolution tend to generate further innovations in downstream technologies? Here a theoretical model examines the effect of a political shock on a non-innovating society in which there is high potential willingness to cooperate. The result is regional specialization in the innovation process by degree of cooperation. Tests with a zero-inflated Poisson specification indicate that 116 important innovations between 1700 and 1849 may be grouped into three categories: (1) General Purpose Technologies (GPTs) tended to be generated in large states with standardized languages following transition to pluralistic political systems; (2) GPTs in turn generated spillovers for their regions in technologies where cooperation was necessary to integrate distinct fields of expertise; (3) however, GPTs discouraged downstream innovation in their regions where such direct cooperation was not required.

Did breakthroughs in core processes during the Industrial Revolution tend to generate further innovations in downstream technologies? Here a theoretical model examines the effect of a political shock on a non-innovating society in which there is high potential willingness to cooperate. The result is regional specialization in the innovation process by degree of cooperation. Tests with a zero-inflated Poisson specification indicate that 116 important innovations between 1700 and 1849 may be grouped into three categories: (1) General Purpose Technologies (GPTs) tended to be generated in large states with standardized languages following transition to pluralistic political systems; (2) GPTs in turn generated spillovers for their regions in technologies where cooperation was necessary to integrate distinct fields of expertise; (3) however, GPTs discouraged downstream innovation in their regions where such direct cooperation was not required.

SUMMARYWhy did peacetime government shares of total spending double in a number of Western economies between 1910 and 1938? The widely separated dates for the introduction of universal manhood suffrage and the evidence of a rise in protection during the inter‐war period indicate that neither democracy nor globalization can explain this development. This paper reexamines two other explanations, namely, (1) a shift in the demand for public goods and (2) a war‐induced willingness to share with one's fellow citizens. By introducing into Schelling's (1978) Multi‐Person Dilemma a learning game whose payoffs change endogenously, we provide theoretical explanations for this transformation. We then test the resulting propositions with data on public spending as a share of GNP for the U.S., Canada, the U.K., Germany and Denmark, from the 1870s to the 1930s. In each case, we find no unit root but a break in trend, a result shown to favor explanation (2) over (1).

Previous studies explain the extension of royal power in fifteenth-century France by the professionalization of military combat or by the commercialization of economic activity. Neither approach can account for the turnaround in Charles VII's fortunes between 1435 and 1445. Using Lösch's model of spatial competition to examine the determinants of state borders, we suggest that the key factor in the formation of the French hexagon was an innovation in artillery projectiles that increased military scale economies. A reduction in state economic intervention apparently accompanied this development rather than the increase suggested elsewhere.