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January 15, 2008

Readings for Econ 210a, Spring 2008

Jan 23: What is economic history? [de Vries]

Jan 30: Modes of production [DeLong]

Feb 6: Malthus and the demographic transition [de Vries]

  • Gregory Clark (2005), "The Logic of the Malthusian Economy," chapter 2 of A Farewell to Alms http://www.j-bradford-delong.net/2008_pdf/Clark-2.pdf
  • Ronald Lee (2003), "The Demographic Transition: Three Centuries of Fundamental Change," Journal of Economic Perspectives 17(4), pages 167-190, Fall http://ideas.repec.org/a/aea/jecper/v17y2003i4p167-190.html
  • Peter Passell and Jeremy Atack (1997), "Population Growth and Redistribution," in A New Economic View of American History (2nd ed., W. W. Norton, 1997), pp. 212-37 [ONLINE REFERENCE MISSING]
  • Optional: Thomas Malthus, An Essay on the Principle of Population

Feb 13: The industrious revolution [de Vries]

Feb 20: Early modern institutions [de Vries]

Feb 27: Early modern globalization [de Vries]

* Jan de Vries, "The Limits to Globalization in the Early Modern World," Economic History Review (forthcoming) http://www.j-bradford-delong.net/2008_pdf/devries_limits_of_globalization.pdf

Mar 5: Wars, colonies, canals, finance, and northwest European divergence [de Vries]

  • Ralph Austen and Woodruf D. Smith (1992), "Private Tooth Decay as Public Economic Virtue: The Slave-Sugar Triangle, Consumerism, and European Industrialization," in Joseph E. Imkori and Stanely L. Engerman, eds., The Atlantic Slave Trade (Durham, Duke Univ. Press, 1992), pp. 183-203 [ONLINE REFERENCE MISSING]
  • Daron Acemoglu, Simon Johnson, and James A. Robinson (2005), "The Rise of Europe," American Economic Review 95 (2005) http://www.nber.org/papers/w9378
  • Larry Neal, Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Cambridge, Cambidge, Univ Press, 1990), pp. 1-43, 118-40  [ONLINE REFERENCE MISSING]
  • Jan de Vries, "Dutch Economic Growth in Comparative-Historical Perspective, 1500-2000,"  De Economist 148 (2000): 443-467 http://www.springerlink.com/content/l4qp2l551l7t7361/

Mar 12: Technology, investment, and the industrial revolution [DeLong]

Mar 19: Marx and urbanization and industrialization and marketization [DeLong]

Apr 2: Imperialism and colonialism [de Vries]

Apr 9: Why did the European settler colonies industrialize? [DeLong]

Apr 16: Gold standard and pre-WWI globalization [DeLong]

Apr 23: WWI and the Great Depression [DeLong]

Apr 30: WWII and the thirty glorious years [DeLong]

May 7: The twentieth-century experience: half empty or half full?

January 15, 2008 at 02:13 PM in 210a 2008 Readings |

Comments

Mitchell Hoffman

The articles this week provide several different explanations for the phenomenon of divergence. It is not difficult to show that there are serious problems and uncertainties with all of these explanations. I believe it would be interesting to focus on the phenomena of war/conflict and corruption in explaining divergence in a ‘flattened,’ more integrated world.

Divergence is documented in the article by Ritchett. His observation is straightforward: Among one group of countries, growth rates have been inversely related to GDP per capita at the start of the modern era (around 1870). These countries called, developed, have seen convergence. In contrast, outside of these countries, the pattern is absent. Many of these developing countries, despite their low initial incomes, have grown slower than developed countries, making their relative position to developed countries far worse than it was 140 years ago. I think it would be worth positing some statistical distributions where these phenomena are simply the outcome of a random process, but overall, in spite of some difficulties in showing divergence (e.g. assuming a lower bound for GDP per capita in developing countries and imputing pre-1950 GDP values) the divergence phenomena appears present. Maddison presents a challenge to Ritchett by arguing that Europe was already rich before the Industrial Revolution, so that there are fewer facts to be explained. Picking a side in this debate requires some understanding of the quality of past GDP data (which I do not have), so for this memo I will assume the existence of divergence.

Easterlin argues that divergence is caused by difference in the education level of different workforces; more educated populations can absorb and imitate technologies invented in other countries. His argument is primarily anecdotal instead of empirical. Though schooling is usually significant in cross-country growth regressions, the issue of causality is difficulty: Does schooling cause higher growth, or is schooling a luxury good that wealthier countries can afford? There are many highly educated countries that have had less than optimal growth records. I spent last summer in the Philippines, where I was told that around two thirds of college-age students are currently attending college (in the Barro-Lee schooling data the Philippines is very high, higher than many developed countries). However, the country as a whole is still relatively poor (and growth has been uneven). Instead of helping start new manufacturing firms at home, many educated Filipinos go to work abroad (this is a way that globalization may actually promote divergence by giving high-talent workers opportunities to leave their home countries).

Rodrik argues that Korea and Taiwan grew rich because of government policies that helped eliminate coordination failures. Challenging the export orientation argument in past literature on East Asian growth, Rodrik asserts that the strong central governments in Korea and China steered businessmen away from rent-seeking into socially-efficient forms of enterprise. His argument is both unorthodox and very interesting. However, it is difficult to extrapolate it relevance for understanding global divergence, as (notes Rodrik) many economies led by strong central governments have failed.

One casual observation in understanding divergence is that while North America and Western/Central Europe have enjoyed almost 60 years of tranquility, other parts of the world, particularly Africa, have seen years and years of war and conflict. Even if a country does not experience a war itself, having trading partners at war, and having foreign investors view one’s neighbors as being at war, is likely very detrimental for development. In a separate explanation, corruption is also much less significant in North America and Europe than in the developing world. In the Philippines, local people I talked to about the economy almost uniformly emphasized corruption as the source of their economic woes. Although much recent work in economics has analyzed both war and corruption, I would like to see both explanations used specifically to address the question of divergence.

Posted by: Mitchell Hoffman | May 07, 2008 at 12:43 AM

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