Accounting for the great divergence
The economic divergence we observe today was existent even a thousand years ago. Thanks to recent work on historical data, we can now trace the economic development of different countries centuries back in the past. This column discusses the roots of the Great Divergence between European and Asian economies. The column argues that divergence is due to the differential impact of shocks that hit economies with different structural features
As a result of recent work, economic historians have produced historical national accounts reaching back to the early years of the second millennium (derived from data collected at the time). For the major European economies, at least, data are now available on an annual basis back to 1300.
Measuring the Great Divergence: Maddison revised
This new work presents quite a different picture of the development of European and Asian nations from that surmised by Angus Maddison in his widely used book, The World Economy: A Millennial Perspective, where pre-1820 estimates of per capita GDP were based largely on conjecture, and provided only for a small number of benchmark years.
As it turns out, medieval and early modern European and Asian nations were much more literate and numerate than is often thought. They left behind a wealth of data in documents such as government accounts, customs accounts, poll tax returns, Parish registers, city records, trading company records, hospital and educational establishment records, manorial accounts, probate inventories, farm accounts, tithe files. With a national accounting framework and careful cross-checking, it is possible to reconstruct population and GDP back to the medieval period. The picture that emerges is of reversals of fortune within both Europe and Asia, as well as between the two continents.
Figure 1. Real GDP per capita in European countries, 1270-1870 (1990 international dollars, log scale)
Sources: see Table 1.
Table 1. GDP per capita levels in Europe and Asia (1990 international dollars)
Sources: Broadberry et al. 2011, Broadberry and van Leeuwen 2011, van Zanden and van Leeuwen 2012, Malanima 2011, Álvarez-Nogal and Prados de la Escosura 2013, Bassino et al. 2012, Broadberry et al 2013a, Broadberry et al 2013b;
Notes: The British data refer to the territory of England before 1700 and Great Britain thereafter; the Dutch data refer to the territory of Holland before 1800 and the Netherlands thereafter. Data for all countries except Japan and India are for ten-year averages starting in the year stated (e.g. 1300= 1300-09).
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