The Transportation-Communication Revolution: 50 Years of Dramatic Change in Economic Development

The Industrial Revolution is a remarkable economic event in world history. It marked the dividing line between the old world of subsistence income levels and the new world of sustained economic growth. Beginning around 1800, technology, machines, and capital formation were finally able to outrun population growth, leading to sustained increases in both income levels and life expectancy.Currently, the world is in the midst of a second economic revolution that is both broader and stronger than the Industrial Revolution, but few are aware of it. During the past half century, expansion in international trade, increased entrepreneurial activities, improvements in economic institutions, and changes in demographics have triggered a remarkable increase in the living standards of people throughout the world. This article will explain the origins and impact of the current economic revolution-the Transportation-Communication Revolution-and compare it with the Industrial Revolution.For centuries prior to 1800, changes in lifestyles and living standards were minimal. Most people worked sunup to sundown trying to provide enough food, shelter, and clothing for survival. The child mortality rate was high and life expectancy was short, hovering around 25 years by 1800. Most everyone was poor and they spent their entire life within a few miles of where they were born. It was against this backdrop that the renowned English economist, Thomas Malthus (1798), argued that income could never rise much above subsistence level: if it did, population growth would expand rapidly and soon drive living standards back to subsistence levels.