From steam engines to silicon chips

The economic and social development of nations since the 19th century has been influenced by technological advancements, political governance, education, global trade, and social movements.

The Industrial Revolution of the 19th century transformed economies and societies through advancements in machinery, steam engines, and transportation. Beginning in Britain, industrialisation spread to Europe, the US, and Asia, enabling mass production, reducing costs, and increasing exports. Factories emerged, urbanisation accelerated, and labour dynamics changed significantly. Nations like Britain, Germany, and the US capitalised on industrialisation to dominate global trade and achieve economic prosperity.

In the late 19th and early 20th centuries, innovations like electricity, telecommunication (telegraph and telephone), and the internal combustion engine further revolutionised production, transportation, and communication, integrating economies and expanding markets. Technological advancement became a cornerstone for economic growth, enabling industrialised nations to increase productivity and global influence.

Political structures and governance systems have been central to economic and social development. The spread of democratic ideals in Western Europe and the US after the French and American Revolutions promoted individual rights, private property, and free markets. Stable legal frameworks protected contracts and property rights, creating environments conducive to business and economic growth.

Conversely, political instability, colonial exploitation, and autocratic regimes hindered development in many regions. Colonial powers imposed extractive systems that prioritised resource extraction over local industrialisation. Post-colonial nations often struggled to establish effective governance, limiting their economic progress.

In the 20th century, the rise of social welfare states, particularly in Scandinavia and parts of Western Europe, demonstrated the benefits of state intervention. Investments in education, healthcare, and social protections reduced inequality, improved social conditions, and raised living standards, proving that inclusive governance fosters sustainable development.

Education has played a fundamental role in driving economic and social development. The expansion of public schooling, compulsory education laws, and higher education investments fostered skilled workforces, innovation, and social mobility.

England: The Elementary Education Act of 1870 made education compulsory for children aged 5 to 10, marking a significant turning point. By the early 20th century, England achieved near-universal literacy, driven by public education reforms and post-World War II adult education programmes.

France: In the late 19th century, literacy rates were low, especially in rural areas. Reforms under the Third Republic, such as the 1881-1882 laws making education free and compulsory, significantly improved literacy rates. By the 20th century, France achieved universal literacy and became a leader in educational attainment.

Germany: Strong traditions of education under Prussian leadership led to early successes in literacy. By the late 19th century, nearly 90 per cent of Germans were literate. The country’s focus on universal primary education, coupled with post-World War II educational reconstruction, ensured near-universal literacy by the 1970s.

United States: The 19th-century expansion of public schooling and compulsory education laws raised literacy rates to around 90 per cent by 1900, though regional disparities persisted. Post-World War II reforms, such as the GI Bill, expanded access to higher education, improving literacy and workforce productivity.

South Korea: In the mid-20th century, South Korea had low literacy rates, but rapid educational reforms in the 1960s emphasised mass literacy and modernisation. By the 1980s, literacy rates neared 100 per cent, fuelling South Korea’s transformation into a global economic leader.

Nations that invested in education, like Germany, the US, and South Korea, reaped significant benefits in workforce productivity and innovation. Education also empowered individuals, fostering social mobility, political engagement, and societal cohesion, which were crucial for democratic governance and stability.

Global trade and economic integration have been powerful drivers of development since the 19th century. The opening of the Suez and Panama Canals expanded trade networks, while advances in transportation and communication technologies enabled nations to access new markets and resources. Specialisation in goods and services based on comparative advantage increased efficiency and wealth.

Countries like Japan and South Korea became industrial powerhouses in the 20th century by focusing on export-oriented manufacturing and technology. Similarly, globalisation facilitated the flow of capital and knowledge, enabling developing nations to integrate into global markets.

However, globalisation also exacerbated inequalities. While industrialised nations thrived, regions like Sub-Saharan Africa and parts of Latin America struggled to compete due to colonial legacies, unequal access to technology, and limited capital. The global economy's benefits were unevenly distributed, underscoring the importance of equitable policies for sustainable growth.

The 19th and 20th centuries witnessed transformative social movements advocating for workers’ rights, gender equality, and racial justice.

Labour movements: Industrialisation led to poor working conditions and income inequality. Labour movements secured better wages, reduced work hours, and social protections, contributing to economic equality and stability.

Feminist movements: Women’s suffrage and advocacy for educational and workplace rights advanced gender equality, enabling greater participation of women in economic and social spheres.

Civil rights movements: Campaigns in the US and globally dismantled discriminatory laws, promoting inclusion and equal opportunities for marginalised groups.

Socialist and communist ideologies: The Russian Revolution (1917) and Marxist movements in China and Cuba offered alternative models of economic organisation. While centralised planning achieved industrialisation in some cases, inefficiencies and the suppression of political freedoms limited long-term success.

East Asia's development trajectory – particularly in China, Japan and South Korea – highlights the role of state capacity, governance, and strategic policies in fostering economic growth. Political scientist Yuen Yuen Ang emphasises how state capacity enabled these nations to escape poverty through governance structures that combined central control with local autonomy and experimentation.

Japan: The Meiji Restoration (1868) modernised Japan through state-led industrialisation, technological adoption, and educational reforms. By the early 20th century, Japan emerged as an industrial and global power.

China: After a period of semi-colonialism and economic stagnation, China’s economic reforms under Deng Xiaoping (1978) combined state-led policies with market dynamics and decentralised experimentation. This approach lifted millions out of poverty and positioned China as a global economic leader.

South Korea: Colonised by Japan until 1945, South Korea industrialised rapidly through state-led policies, such as Five-Year Plans and collaboration with conglomerates (chaebols). Focus on education and export-oriented growth enabled South Korea to achieve economic prosperity by the late 20th century.

East Asian nations overcame colonial setbacks by prioritising education, technological innovation, and strong governance. State-led models, combined with integration into global markets, enabled rapid industrialisation and social development.

The economic and social development of nations since the 19th century has been shaped by technological advancements, political governance, education, global trade, and social movements. Industrialisation and technological innovation fuelled economic growth, while stable political systems and inclusive governance created environments conducive to progress. Investments in education fostered human capital, driving productivity and innovation.

Global trade enabled nations to access markets and resources, though its benefits were unevenly distributed. Social movements and ideological shifts played critical roles in advancing rights and reducing inequality. East Asia’s success – particularly in Japan, China, and South Korea – underscores the importance of state capacity, strategic governance, and long-term planning.

The experiences of these nations provide valuable lessons: sustainable development requires a combination of technological innovation, effective governance, investment in education, and equitable policies that foster social inclusion and economic opportunity.

The writer is former head of Citigroup’s emerging markets investments and author of ‘The Gathering Storm’.