Lobbying for Industrialization

This paper develops a model of lobbying over industrialization policies and tests its predictions against the data on public petitions to the British Parliament and the US Congress in the 18th-19th centuries. Our theory integrates endogenous lobbying over industrial policies into the standard two-sector model of structural change, and predicts that the intensity of such lobbying first increases at the early stages of structural change, and then declines when the traditional sector contracts. This prediction finds support in the data on industrialization-related petitions in both Britain and the US. Moreover, the model predicts that places with historically more concentrated capital ownership are more successful in lobbying for industrialization. The opposite holds for the concentration of land ownership. We find support for these predictions in (i) data on petitions, (ii) counterfactual simulations, and (iii) historical examples from the 19th century Prussia and from the Middle East.