Working Paper: CEPR ID: DP15936
Authors: Stephen Broadberry
Abstract: As a result of recent work on historical national accounting, it is now possible to establish more firmly the timing of the Great Divergence of living standards between Europe and Asia in the eighteenth century. There was a European Little Divergence as Britain and the Netherlands overtook Italy and Spain, and an Asian Little Divergence as Japan overtook China and India. The Great Divergence occurred because Japan grew more slowly than Britain and the Netherlands starting from a lower level, and because of a strong negative growth trend in Qing dynasty China. A growth accounting framework is used to assess the contributions of labour, human and physical capital, land and total factor productivity. In addition to these proximate sources, the roles of institutions and geography are examined as the ultimate sources of the divergent growth patterns.
Keywords: Great Divergence; Living Standards; Measurement; Explanation
JEL Codes: N10; N30; N35; O10; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor force growth (J21) | Economic growth (O49) |
| Total factor productivity (O49) | Economic growth (O49) |
| Labor inputs + Capital inputs (J24) | Economic growth (O00) |
| Japan's growth rate (O49) | Britain's growth rate (N14) |
| Japan's growth rate (O49) | Netherlands' growth rate (O52) |
| Negative growth trend in Qing Dynasty China (N13) | Great divergence (F12) |
| Institutions + Geography (D02) | Divergent growth patterns (O41) |