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EC104 (The World Economy History & Theory) - Lectures
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All detailed lecture notes for a successful examination in EC104 (The World Economy History & Theory).
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EC104 (The World Economy: History & Theory) - LecturesLecture 1 (introduction & Quantitative Economic History) - Before IR: countries = developing in individual ways (gradual but slow in output/capita)
// people began to live above subsistence
1. Introduction: - After IR: more rapid (Europe = more rich and developed for ages)
- A. Madison in “Growth and Interaction in the World Economy” (2001): “World economic
performance was very much better in the second millennium of our era than in the first” (0- 3. Economic convergence? (since 19thC)
1000: pop x6 // ¯GPD/capita ® 1000-1998: popx22 // GDP/capitax13) - 2 epochs of the 2nd millennium increase income gaps of GDP/capita:
a. Divergence:
- W.Europe (W. World and Japan moved from others), Asian Tigers (20th century: catching-
up), BRICS (fell behind but catching-up), Africa (diverged some done better)
- 21C: Globalisat° (increased market integration ®price convergence)
b. Periods of economic change:
- Pre-15thC: Empires (Phoenicians, Persians, Greeks, Romans, Ottomans, Italian States…)
- 15thC: Great Discoveries (Portugal & Spain)
- 19thC: Transport Revolut° & British Liberalism
- 20thC: Global Trade Liberalisation
- trade = insufficient for the 21C (need = price convergence): early trade = little price
convergence, luxury goods (no-competition // living standards stagnat°)
c. 19C = convergence?
1. Theory: integrated world (commodity prices = determined by global factors NOT
domestic endowments (R/L)) // market integration ® international trade effects on factor
2. World Economy: 2 views prices will occur)
a. Malthusian (Rostow, Kuznets, Clark): 2. Changes in several factors:
- agriculture & industry trade → Relative commodity prices (PA/PM)
1. Clark in “A Farewell to Aims“ (2008): “Before 1800 income per person…varied across - Wage-Rental Ratio → Relative Factor Prices (w/r)
societies and epochs. But there was no upward trend” - Land-Labour Ratio → Relative Endowments (R/L)
- Before IR: countries = same (no in output/capita) // people lived near subsistence
- After IR: “take-offs” staggered throughout the 19thC (Britain ® W.Europe ® Europe) 4. Model to pin down 1st period of integration:
b. Gradualist (Smith, Landes, Maddison): 1. O’Rourke and J. Williamson in “When did globalisation begin”? (2002):
- Closed economy:
1. David Landes in “The Unbound Prometheus” (1969): “western Europe was already rich 1. ¯R/L ® PA/PM
before the Industrial Revolution” (product = slow acc° based on invest., tech. progress and 2. ¯R/L ® ¯w/r
appropriat° of extra-European resources and L) - Global economy:
1. ¯ R/L ̸⇒ PA/PM
2. IR: 2. ¯ R/L ̸⇒ ¯w/r
, EC104 (The World Economy: History & Theory) - Lectures
2. Before the1820s (↓R/L while ↑PA/PM & ↓w/r) – Closed economy:
R/L = strongly positively correlated with w/r
R/L = strongly negatively correlated with PA/PM
3. After the 1820s: ↓R/L while PA/PM fluctuates & ↑w/r – Global economy:
R/L = negatively correlated with w/r
R/L = uncorrelated with PA/PM
® conclusion: 19C = new integrated world system (divergence accelerated) ® new
epoch of world history (Modern Economic Growth)
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