Leading Sectors

In volume II of Braudel's monumental Civilization and Capitalism there is a figure 21 that shows industrial production curves with the caption "Do industrial production curves always take the form of parabolas?"  Curves for textile production in Venice, Hondeshoote and Leyden are shown.  These curves show peaks in ca. 1600, 1565 and 1500/1660 (the Leyden curve two parabolas).  Production curves for English tin (~1545 peak) and silver production from the Potosi mines (~1595 peak)  are also shown. 

 

Modelski and Thompson characterize the process of the Kondratiev wave in terms of what they call leading sectors of the world economy.  They identify a number of "leading sectors" one of which is importation of Spanish silver, which peaked in the 1590's.  This "leading sector" is the same thing as the silver production curve shown by Braudel in his table 21.  Thus, the five curves shown by Braudel can be considered as "leading sector curves" in the Modelski and Thompson sense.  The latter analyze their leading sectors in terms of growth rates rather than production or trade volume curves.  But we can plot the curves themselves like Braudel shows.  We can also look at for other industrial production/trade volume curves and plot them too.  If we do this for a bunch of leading sectors you get a plot like this:

 

http://csf.colorado.edu/authors/Alexander.Mike/LeadingSectors.gif

 

This plot shows 13 successive "waves" of leading sectors spaced about 56±11 years apart, on average.  Some of these waves are a single industrial curve.  A few show twin peaks like Leyden textiles do.  Other of these waves are composites of several individual production/trade volume curves which cluster together.  The most recent curves are composites of a new of important industries that define a "new economy".  For example the "railroad industrial economy" is a composite of industrial production curves for coal, iron, steel, ton-miles of railroad traffic, and telegraph messages all normalized to GDP.  Normalization is necessary after about 1750 when secular growth in per-capita GDP begins.  This method defines a leading sector as an industry that is growing faster than the economy as a whole and show is measured by a rising ratio of sector output to total economic output.  Before 1750, raw production curves by themselves show the characteristic peaking that Braudel refers to a parabolas. 

 

Another way to look at leading sectors is to consider all 47 individual leading sector peaks individually and note their tendency to cluster into what Harry Dent calls "new economies".  We can plot the density of leading sector peaks over a centered moving period to measure this tendency for leading sectors to cluster.  This figure uses a 15-year (centered) moving sum to characterize clustering of leading sectors.  The same 56±11 year periodicity is seen.

 

http://csf.colorado.edu/authors/Alexander.Mike/LeadSec2.gif

 

This method for characterizing K-waves produces turning point estimates that align with those obtained from monetary variables (prices, interest rates etc.) in a statistically significant fashion.

 

Is this sort of thing of interest to users of  WSN?

 

Mike Alexander,  author of
Stock Cycles: Why stocks won't beat money markets over the next 20 years.
http://www.net-link.net/~malexan/STOCK_CYCLES.htm