Post on 29-Jan-2016
European Economic History
Economics 343:01
Professor Eugene N. WhiteFall 2010
Lecture 1Why is this course important?
• We are going to examine the central question of long-term economic growth: Why do some countries/economies “succeed.”
• Why did some countries first escape poverty?• Why did/have some countries gain sustained
economic growth and rising standards of living?• What are the policies or conditions that encourage
economic growth?• Can rapid growth be taken for granted?• Focus on Western Europe—source of modern
growth
Measuring Modern Growth (Success)
• GDP– Total Real Output/Annual real growth (Who is #1?
#2? #3?.....)– Real Output per capita/Real growth per capita
• Distribution of Income and Wealth• Quality of Life (affected by distribution, pollution,
environment) – Life Expectancy– Infant Mortality– Height– Literacy
China is everyone’s mind…NYTimes 8/16/2010• China Passes Japan as Second-Largest Economy• SHANGHAI — After three decades of spectacular growth, China
passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday. The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.
• Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.
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1990
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$ Pe
r Cap
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Western Europe
First Industrial Revolution
Second Industrial Revolution
Third Industrial Revolution
2003: Haiti $740, Burundi $477, Afghanistan $668, Zaire $212
$425
The Big Picture in One Slide!
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1600 1700 1820 1870 1913 1950 1970 2003 2008
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Western Europe USA Former USSR China Japan India
PULLING AWAY FROM THE PACK?
More Details
Another way to look at
the facts
So!……Why do some countries succeed? Many candidates.
• Culture/Religion• Natural Resources• Climate (Geography)• Genetics• Political-Economic Regime
• A Lot to Sort Out!
One Suggestive ComparisonSouth Korea and North Korea
• Culture/Religion
• Natural Resources
• Climate (Geography)
• Genetics
• Political-Economic Regime
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1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
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South Korea North Korea
Or, electric lights from a satellite
What is Western Europe?
Economic Growth?
• The basic model• Y = f (K, L, N)• We will cover period 1200 to
present.• Huge Change---Institutions and
Markets---Both Essential for Growth
Some Big Issues• How do economies make the transition from
stationary to growth economies? What is the role of institutions and government?
• What is the role of technology? Can technological change be promoted?
• What is the role of industrialization? What effects does it have on the standards of living and on the distribution of income and wealth? What is the proper role of government?
• How did the modern state arise? What are its effects on growth?
• How did financial markets arise---what do they contribute to growth?
Some Big Issues• What is the role of market integration?
Nationally? Internationally? Exports/Imports? Globalization?
• What monetary/exchange rate regime should be adopted? (gold or paper money standard /fixed or floating exchange rate).
• Can depressions/financial crises be avoided?• Why did the “nation-state” flourish, then begin to
retreat in Europe?• Why did the Europeans feel that a European
Union was needed?• How successful is the EU? What are its
prospects?