Working Paper: CEPR ID: DP1343
Authors: Kevin H. O'Rourke; Jeffrey G. Williamson
Abstract: On average, the poor European periphery converged on the rich industrial core in the four or five decades prior to World War I. Some, like the three Scandinavian economies, used industrialization to achieve a spectacular convergence on the leaders, especially in real wages and living standards. Some, like Ireland, achieved convergence without industrialization. Some, like Italy, underwent a less spectacular catch-up, which was limited to the industrializing North. Some, like Iberia, actually fell back. What accounts for this variety? What role did trade and tariff policy play? What about emigration and capital flows? What about schooling? We offer a tentative assessment of these contending explanations and conclude that globalization was by far the dominant force accounting for convergence (and divergence) around the periphery. Some exploited it well, and some badly.
Keywords: convergence; education; globalization; history
JEL Codes: F20; N13; N33; N73
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Education Levels (I21) | Economic Convergence (F62) |
| Globalization (F60) | Economic Outcomes (P47) |
| Poor Education Levels (I24) | Economic Stagnation (N14) |
| Schooling (I21) | Growth Rates (O49) |
| Mass Migration (F22) | Real Wage Convergence (F62) |
| Capital Flows (F32) | Economic Performance (P17) |