EC120 week 11, topic 10, slide 0 The Great Divergence between Europe and Asia Topics: The issues: questions and hypotheses Dimensions of measurement Evidence for divergence: wages Wage comparisons within Europe, India and China Wage comparisons between Europe and India Wage comparisons between Europe and China Explaining the discrepancies Globalisation before the 1820s? Little Divergences and Big Shocks The Great Divergence: Asia compared with Europe

EC120 week 11, topic 10, slide 1 The Issues: Questions & Hypotheses When did the `Great Divergence’ begin? What is the evidence for economic `globalisation’ ? Two hypotheses: Great Divergence became evident c1820 Globalisation became evident soon after c1820 Contrary views: Great Divergence & globalisation began much earlier

EC120 week 11, topic 10, slide 2 Dimensions of measurement Indices of economic `well-being’: GDP per capita Real wage rates Various indirect and/or qualitative measures Indices of `globalisation’ Volume of traffic in outputs or inputs Market integration: “commodity price convergence”

EC120 week 11, topic 10, slide 3 Evidence for divergence: wages Broadberry and Gupta (BG) compare wages in Europe with those in Asia (India and China) Time period: c1500 to mid-1800s Take account of: –Location differences: within Europe, India and China –Wages in units of grain or silver

EC120 week 11, topic 10, slide 4 Wages within Europe, India and China Comparisons within Europe Comparisons within India Comparisons within China (very limited data)

EC120 week 11, topic 10, slide 5 Comparisons between Europe and India England and India, unskilled labour, (BG table 6): –Silver wages higher in Europe compared with India throughout –Grain wages roughly comparable in 1600 but lower in India by 1800s.

EC120 week 11, topic 10, slide 6 Comparisons between Europe and China England and China, unskilled labour, (BG, table 8): –Wages in silver: lower in China and falling relative to Europe –Wages in grain: smaller discrepancy than for silver wages Urbanization: –Increasing in Europe relative to China

EC120 week 11, topic 10, slide 7 Explaining the discrepancies Grain is just one component of consumption. Tradable goods also included in consumption Wages similar across sectors in any one country Higher silver wages in Europe Tradable goods’ prices in Europe compared with Asia?

EC120 week 11, topic 10, slide 8 Globalisation before 1820s? BG claim that tradable goods’ prices were globally similar –Evidence is mixed Silver was traded internationally throughout but prices in silver may not reflect cost-of-living differences What evidence for `globalisation’ in 16th century?

Little Divergences and Big Shocks Within Europe and Asia there were divergences European Little Divergence –Italy and Spain slowed relative to the “North-Sea” states Asian Little Divergence –China and India slowed relative to Japan Two Big Shocks and the Great Divergence –The Black Death –New European Trade Routes And a third shock –The Industrial Revolution EC120 week 11, topic 10, slide 9

EC120 week 11, topic 10, slide 10 The Great Divergence: Summing up Physical environment: Europe fairly stable; access to sea Culture and religion: Asia favoured obedience Political and social institutions: Asia more authoritarian; Europe: rival states, rule of law, property rights Markets: well developed in both Asia and Europe Technology: Asia’s early advantage not maintained