Lecture 4 - The Great Divergence When PDF

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China was the world leader in GDP per capita at the turn of the first millennium and remained the largest and most advanced Asian economy until the Industrial Revolution.• The Revisionist view Divergence was a product of the 19th century Industrial Revolution. This was likely the result of coal, col...

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Lecture 4 - The Great Divergence: When • China was the world leader in GDP per capita at the turn of the first millennium and remained the largest and most advanced Asian economy until the Industrial Revolution. • The Revisionist view Divergence was a product of the 19th century Industrial Revolution. This was likely the result of coal, colonial policy and historical shocks, such as the Opium Wars 1840s and the Taiping & Nian rebellions 1851-1868. There is an emphasis on resource advantages and negative colonial rule. It is empirically based on nominal 'grain' wage comparisons between Europe and select Asian regions. • The Traditionalist view Northwest Europe was likely ahead at an early stage due to its institutions. There is an emphasis on commercial expansion, urbanisation and agricultural productivity. It is empirically based on real 'silver' wage comparisons between Europe and select Asian regions. • Real grain wages were low but comparable between England and India/China up to the 17th century. Asian grain wages diverged from Europe in the 18th century. Silver wages show very early divergence around 15th century. South Indian silver wages were one-fifth English level in 16th century. Nominal wage evidence supports an early Great Divergence whereas real grain wages do not. Allen calculated a European Respectability Basket and a European Barebones Basket. Both supplied 1940 kcal daily and the ERB was based on 18th century budgets and basic diets whilst the EBB was based on a smaller amount of 'luxury' items. Welfare ratios are calculated with the assumption that a man is a full-time worker, feeding himself, his wife and 2 children with an annual cost of subsistence equal to 3.15 times the basket. A welfare ratio of 1 implies that the family can adjust about afford to achieve this. Prosperity was high in 1400 but many died globally due to the plague. Northwest Europe remained rich after 1400 whereas the rest of Europe returned to subsistence. • Broader measures reveal deeper aspects of Great Divergence. Grain wages show that China was not behind in agriculture. Silver wages show that China was behind in manufacturing and services. • National Accounting methods can estimate income from production. China prospered during the Song dynasty but stagnated from the 14th century after hitting Malthusian constraints. China was relatively productive in agriculture but fell behind in industry and services. There were also little divergences within Europe. Southern Europe was ahead in 1400 but fell behind by 1600. The Netherlands was ahead by 1600 but fell behind by 1700. Britain was ahead by 1700 and remained so until the 20th century. This occurred within Asia too. China was ahead in 900 but fell behind in 1700. Japan was ahead in 1700 and remained so until the 20th century. India effectively caught up to China in the 17th century.

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