Prices and the impact of the industry in the economic growth: the cases of England (1770-1840) and Colombia (1923-1998)

The industrial development could be an engine of economic growth through several mechanisms. In this essay we analyzed only one of them: the decline of the industrial prices because of the technical change. We designed an equilibrium model of economic growth, and look at the theoretical predictions of this model for the case of a technical change in the manufacturing (one of the two sectors) leading a process of industrial price reductions and accelerated economic growth. The empirical evidence from the English Industrial Revolution (1770-1840) is pretty well interpreted with our model. In the Colombian case (1923-1998), by contrast, the evidence does not support the hypothesis that the mentioned mechanism was an important, and always in motion, engine of growth