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Before the Great Divergence? Comparing the Yangzi Delta and the Netherlands at the Beginning of the Nineteenth Century

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  • Li, Bozhong
  • van Zanden, Jan Luiten

Abstract

The debate about the long-term economic development of China compared with Europe has taken a new turn with the publication of Kenneth Pomeranz’ book on ‘The Great Divergence’, in which he maintains that before the Industrial Revolution the most advanced parts of China (in particular the Yangzi Delta) was in terms of real incomes on par with the richest regions in Western Europe (Great Britain, the Netherlands). His tentative results were very different from the estimates produced by Maddison (2001) who concluded that there was already a large gap in real per capita GDP between these two extreme parts of Eurasia. Using the method of historical national accounting, this paper tests these ideas on the basis of a detailed comparison of the structure and level of GDP in part of the Yangzi Delta and the Netherlands in the 1820s, also taking into account differences of purchasing power of the two currencies involved. The results are that Dutch GDP per capita was already almost twice the level in the Yangzi Delta, which is more or less consistent with Maddison’s point of view. The level of agricultural productivity in this part of China was, however, at about the same level as in the Netherlands (and England), but large productivity gaps existed in industry and services (with the exception of government services). We also attempt to explain the patterns found, and conclude that differences in factor costs may have been behind the observed differences in labour productivity.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8023.

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Date of creation: Sep 2010
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Handle: RePEc:cpr:ceprdp:8023

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Keywords: economic development; labour productivity; real incomes;

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  1. Robert Allen & Robert C. Allen, 2007. "Wages, Prices, and Living Standards in China, Japan, and Europe, 1738-1925," Economics Series Working Papers 316, University of Oxford, Department of Economics.
  2. Astrid Kander & Paul Warde, 2011. "Energy availability from livestock and agricultural productivity in Europe, 1815–1913: a new comparison," Economic History Review, Economic History Society, vol. 64(1), pages 1-29, February.
  3. Robert C. Allen, 2009. "Agricultural productivity and rural incomes in England and the Yangtze Delta, c.1620-c.1820 -super-1," Economic History Review, Economic History Society, vol. 62(3), pages 525-550, 08.
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Cited by:
  1. Stephen Broadberry, 2013. "Accounting for the great divergence," Economic History Working Papers 54573, London School of Economics and Political Science, Department of Economic History.
  2. Rafael Dobado-González & Alfredo García-Hiernaux & David Guerrero-Burbano, 2013. "West versus East: Early globalization and thr great divergence
    [Oeste frente a Este: Globalización temprana y gran divergencia]
    ," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 13-08, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
  3. Branko Milanovic, 2012. "Global Inequality: From Class to Location, from Proletarians to Migrants," Global Policy, London School of Economics and Political Science, vol. 3(2), pages 125-134, 05.

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