Lecture notes
Ec104: topic 1 notes
- Module
- EC104. World Economy (EC104)
- Institution
- The University Of Warwick (UoW)
- Book
- Power and Plenty
Lecture and seminar notes for all of EC104 (World History) at Warwick Uni
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Pre-modern growthOverview of World Economic History
● World economic performance was better in the 2nd millennium
○ 1000-1998, income pc rose 13x and the population rose 22x
○ More dynamic growth after 1820
■ W. Europe - 0.14% before vs 1.51% after
○ Global extreme poverty decreased from 80% to 22% (1800-2000)
○ UK life expectancy increased from 22-80 (1550-2015)
● Regional differences
○ W. Europe, Japan and USA grew faster
○ Asian tigers catching up post-1950
○ BRICS fell behind but are catching up and Africa diverged
○ Inequality increased since the 19th century (1820 saw divergence)
● 19th century - greater globalisation
○ 1400s - little price convergence. Majority of trade in non-competing
goods. Little impact on growth / SoL
○ Market integration and price convergence increased trade
○ Roman empires created trade relationships - empires in Persia,
Greece, Rome…
○ Portugal and Spanish discoveries (15th c) started overseas trade
○ 19th c transport revolution decreased costs
○ 20th c saw global trade liberalisation
○ All periods increased trade (but did not bring price convergence)
● O’Rourke and Williamson’s model - first globalisation
○ Closed economy - lower land:labour ratio increases the price of
agricultural goods to commodities (increased demand for food) and
decreases relative wages (higher supply of labour)
○ Global economy - lower land: labour ratio increases the relative price of
agricultural goods and does not decrease wages - global economy
allows trade
○ Data no longer correlates post 1800 - open economy
■ Trading relationships formed
■ Started the integrated world system and great divergence
Determinants of growth
● Y = A K α L1−α
○ A affects the accumulation of capital (affected by country conditions)
● Growth of output = residual TFP growth + growth of K + growth of L
● Proximate growth sources are L/K and human capital accumulation
● Deep growth determinants are institutions and geography
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