Did a feedback mechanism between propositional and prescriptive knowledge create modern growth?

TL;DR

This paper empirically tests Mokyr's hypothesis that a feedback loop between theoretical and applied knowledge spurred modern economic growth, using new text-based measures and historical data from England (1600-1800).

Contribution

It introduces novel text-based measures for innovativeness and knowledge spillovers, providing the first quantitative evidence supporting the feedback mechanism's role in economic growth.

Findings

Evidence of a positive feedback loop emerging in the late 18th century.

Knowledge spillovers significantly increased patenting activity.

The feedback mechanism contributed to economic growth during the Industrial Enlightenment.

Abstract

What was the origin of modern economic growth? Joel Mokyr has argued that self-sustained modern economic growth originated from a feedback loop between propositional (theoretical) and prescriptive (applied) knowledge, which turned positive in the eighteenth century during the "Industrial Enlightenment". While influential, this thesis has never been directly tested. This paper provides the first quantitative evidence by estimating the impact of knowledge spillovers between propositional and prescriptive knowledge on innovation in England, 1600-1800. For this, it introduces two new text-based measures for 1) the innovativeness of publications and 2) knowledge spillovers. The paper finds strong evidence that a feedback loop between propositional and prescriptive knowledge became positive during the second half of the eighteenth century. It also documents that this process had positive effects on the real economy as measured through patents. Overall, the findings provide empirical support for Mokyr's original hypothesis.