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Accounting for the Reversal of Fortune: Spain and Britain, 1501-1800

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  • Prados de la Escosura, Leandro

Abstract

Spain's per capita income grew steadily through the sixteenth and eighteenth centuries, though it declined from 1570-1650, shaping Spain’s Reversal of Fortune, as confirmed by per capita GDP series for Spain and Britain expressed in PPP-adjusted £1790s. Labour productivity, the main driver of per capita GDP, grew in Spain due to factor intensity, but efficiency losses underpinned stagnation or decline. Spain's levels fell from similar to less than half of Britain's by 1800. Phases of TFP decline in Spain coincided with rising TFP in Britain. Efficiency explains the labour productivity growth differential. Ingenuity drove the Reversal of Fortune.

Suggested Citation

  • Prados de la Escosura, Leandro, 2026. "Accounting for the Reversal of Fortune: Spain and Britain, 1501-1800," CEPR Discussion Papers 21503, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21503
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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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