Before the Great Divergence? Comparing the Yangzi Delta and the Netherlands at the Beginning of the Nineteenth Century
AbstractThe 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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Date of creation: Sep 2010
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Find related papers by JEL classification:
- N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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- 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.
- Branko Milanovic, 2012.
"Global Inequality: From Class to Location, from Proletarians to Migrants,"
London School of Economics and Political Science, vol. 3(2), pages 125-134, 05.
- Milanovic, Branko, 2011. "Global inequality : from class to location, from proletarians to migrants," Policy Research Working Paper Series 5820, The World Bank.
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