From Agriculture to Manufacture : How Does Geography Matter ?

This paper shows that the development from an agricultural regime through industrialization to a manufacturing regime occurs simultaneously to the demographic transition and the change in labor structure towards an increasing fraction of skilled labor due to technological progress. The manufacturing sector is economically viable when the technological level is sufficiently high. During the industrialization, the technological progress makes technology become more complementary to skilled labor than to unskilled labor, so that individuals tend to decrease the number of unskilled offspring in order to increase the number of skilled ones. This paper also shows that a geographical advantage for agriculture helps an economy to be more prosperous in the agricultural regime, but delays the timing of industrialization and the timing of demographic transition. Hence, an economy with more geographical advantage for agriculture may be overtaken in the development process by another with less geographical advantage for agriculture when the level of technology is high enough.