Leader-follower dynamics in real historical time: a Markovian test of non-linear causality between sail and steam (co-)development

ABSTRACT

The most dramatic changes in modern shipping occurred with the application of new industrial-age technologies to oceanic transportation. In metal-hulled and engine-powered trading platforms, industrial-age steamers (especially tramps and liners) lead to marked increases in the average tonnage of a typical vessel crossing the seas of an expanding global economy. Some of the most important developments had to do with the substitution of traditional wind-driven ships by successive cohorts of vessels exploiting the comparative advantages of mechanization. In this paper, we deploy a set of both established and less-orthodox quantitative approaches to historical commercial shipping time-series so as to model the (complex) relationship between steam and sail performance. We find that, indeed, there is evidence of leader-follower dynamics during the later part of 19th century. This process of ‘creative destruction’ was non-linear.

KEYWORDS:

• Economic history
• technological competition
• sailing ships
• steamships
• vector autoregression
• multivariate Markov chains

JEL CODES:

• N13
• N73
• O33
• C14
• C32

Acknowledgements

Bruno Damásio acknowledges the financial support provided by Fundação para a Ciência e a Tecnologia, Portugal (FCT) under the project UIDB/04152/2020 - Centro de Investigação em Gestão de Informação (MagIC). Sandro Mendonça acknowledges support by FCT, Portugal, by the Business Research Unit (BRU-IUL) and by UECE-REM (Research Unit on Complexity and Economics). BRU-IUL also benefited from grants UID/GES/00315/2013, UIDB/00315/2020; UIDB/05069/2020; PTDC/EGE-ECO/30690/2017 and is part of the project PTDC/EGE-ECO/30690/2017. Sandro Mendonça concluded the paper, while he was Visiting Professor at the Dept. of Economics of the University of Insumbria, Italy, and he thanks the institution for the research context and support. No source of support or funding source played any role in the design, analysis, interpretation, or writing of the article, or in the decision to submit it to publication.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ some improvements to this model have been proposed by Raftery and Tavaré (1994); Lèbre and Bourguignon (2008); Chen and Lio (2009).