The Industrial Revolution and the Great Divergence: Recent Findings from Historical National Accounting

Recent work in historical national accounting is surveyed, focusing on the Industrial Revolution and the Great Divergence. Eighteenth century Britain was the first economy to make the transition to modern economic growth, but this breakthrough built on earlier episodes of per capita income growth with declining population in the fourteenth and seventeenth centuries. Between these two episodes, the economy remained on a plateau rather than shrinking back to Malthusian subsistence as population recovered. The crude idea of a modernising Europe forging ahead of a stagnating Asia needs to be modified to take account of regional variation within both continents. The Great Divergence can be dated to the eighteenth century when the leading European region forged ahead of the leading Chinese region. This can also be seen as the culmination of a dynamic process beginning in the fourteenth century, with a reduction in the frequency and rate of shrinking.