TheGreat Divergence orEuropean miracle is thesocioeconomic shift in which theWestern world (i.e.Western Europe along with its settler offshoots inNorthern America andAustralasia[2]) overcamepre-modern growth constraints and emerged during the 19th century as the most powerful and wealthy worldcivilizations, eclipsing previously dominant or comparable civilizations fromAsia such asQing China,Mughal India, theOttoman Empire,Safavid Iran, andTokugawa Japan, among others.[3]
Scholars have proposed a wide variety of theories to explain why the Great Divergence happened, includinggeography,culture,institutions, andluck.[4] There is disagreement over the nomenclature of the "great" divergence, as a clear point of beginning of a divergence is traditionally held to be the 16th or even the 15th century, with theCommercial Revolution and the origins ofmercantilism andcapitalism during theRenaissance and theAge of Discovery, the rise of the Europeancolonial empires,proto-globalization, theScientific Revolution, or theAge of Enlightenment.[5][6][7][8] Yet the largest jump in the divergence happened in the late 18th and 19th centuries with theIndustrial Revolution andTechnological Revolution. For this reason, the "California school" considers only this to be thegreat divergence.[9][10][11][12]
Technological advances, in areas such astransportation,mining, andagriculture, were embraced to a higher degree in westernEurasia than the east during the Great Divergence. Technology led to increased industrialization and economic complexity in the areas of agriculture, trade, fuel, and resources, further separating east and west. Western Europe's use ofcoal as an energy substitute forwood in the mid-19th century gave it a major head start in modern energy production. In the twentieth century, the Great Divergence peaked before theFirst World War and continued until the early 1970s; then, after two decades of indeterminate fluctuations, in the late 1980s it was replaced by theGreat Convergence as the majority ofdeveloping countries reached economic growth rates significantly higher than those in mostdeveloped countries.[13]
The term "Great Divergence" was coined bySamuel P. Huntington[14] in 1996 and used byKenneth Pomeranz in his bookThe Great Divergence: China, Europe, and the Making of the Modern World Economy (2000). The same phenomenon was discussed byEric Jones, whose 1981 bookThe European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia popularized the alternative term "European Miracle".[15] Broadly, both terms signify asocioeconomic shift in which European countries advanced ahead of others during themodern period.[16]
The timing of the Great Divergence is in dispute among historians. The traditional dating is as early as the 16th (or even 15th[17]) century, with scholars arguing that Europe had been on a trajectory of higher growth since that date.[18] Pomeranz and others of the California school argue that the period of most rapid divergence was during the 19th century.[9][10] Citing nutrition data and chronic European trade deficits as evidence, these scholars argue that before that date the most developed parts ofAsia, in terms of grain wage, had comparable economic development to Europe, especiallyQing China in theYangtze Delta[19][10] andSouth Asia in theBengal Subah.[20][21][22] Economic historian Prasannan Parthasarathi argued that wages in parts ofSouth India, particularlyMysore,[when?] could have been on par with Britain, but noted his research on the matter was not conclusive.[20]
Some argue that the cultural factors behind the divergence can be traced to earlier periods and institutions such as theRenaissance and the Chineseimperial examination system.[23][24][25] Broadberry asserts that in terms of silver wages even the richest areas of Asia were behind Western Europe as early as the 16th century. He cites statistics comparing England to the Yangzi Delta (the most developed part of China by a good margin) showing that by 1600 the former had three times the latter's average wages when measured in silver, 15% greater wages when measured in wheat equivalent (the latter being used to approximate buying power for basic subsistence goods and the former to approximate buying power for craft goods, especially traded ones), and higher urbanization.[26] England's silver wages were also five times higher than those of India in the late 16th century. Grain wages started to diverge more sharply from the early 18th century, with English wages being two and a half times higher than India or China's in wheat equivalent while remaining about five times higher in silver at that time.[27] However, this disparity only applied toWestern Europe; Broadberry states that silver wages inCentral andEastern Europe did not surpass advanced parts of Asia until 1800.[28]
"Why do the Christian nations, which were so weak in the past compared with Muslim nations begin to dominate so many lands in modern times and even defeat the once victorious Ottoman armies?" ... "Because they have laws and rules invented by reason."
Although core regions in Eurasia had achieved a relatively high standard of living by the 18th century, shortages of land,soil degradation, deforestation, lack of dependable energy sources, and other ecological constraints limited growth in per capita incomes.[30] Rapid rates of depreciation on capital meant that a great part of savings in pre-modern economies were spent on replacing depleted capital, hamperingcapital accumulation.[31] Massive windfalls of fuel, land, food and other resources were necessary for continued growth and capital accumulation, leading tocolonialism.[32] The Industrial Revolution overcame these restraints, allowing rapid, sustained growth in per capita incomes for the first time in human history.
After theViking,Muslim, andMagyar invasions waned in the 10th century,Western Christian Europe entered a period of prosperity, population growth and territorial expansion known as theHigh Middle Ages. Trade and commerce revived, with increased specialization between areas and between the countryside and artisans in towns. By the 13th century, the best land had been occupied and agricultural income began to fall, though trade and commerce continued to expand, especially inVenice and othernorthern Italian cities. The 14th century, then, brought aseries of calamities: famines, wars, theBlack Death and other epidemics.
Koyama and Rubin suppose that the Black Death had some moments that might have positively affected development. The labor scarcity that resulted from the Black Death led women to enter the workforce and drove active markets for agricultural labor.[33] The resulting drop in the population led to falling rents and rising wages, undermining thefeudal andmanorial relationships that had characterized medieval Europe.[34]
According to a 2014 study, "there was a 'little divergence' within Europe between 1300 and 1800: realwages in theNorth Sea Region more or less stabilized at the level attained after the Black Death, and remained relatively high (above subsistence) throughout the early modern period (and into the nineteenth century), whereas real wages in the 'periphery' (inGermany,Italy, andSpain) began to fall after the fifteenth century and returned to some kind of subsistence minimum during the 1500–1800 period. This 'little divergence' in real wages mirrors a similar divergence inGDP per capita: in the 'periphery' of Europe there was almost no per capita growth (or even a decline) between 1500 and 1800, whereas inHolland andEngland real income continued to rise and more or less doubled in this period".[35]
In theAge of Discovery, navigators discovered new routes to theAmericas andAsia.Commerce expanded, together with innovations such asjoint stock companies and various financial institutions. New military technologies favored larger units, leading to a concentration of power in states whose finances relied on trade. TheDutch Republic was controlled by merchants, whileParliament gained control of theKingdom of England after a long struggle culminating in theGlorious Revolution. These arrangements proved more hospitable to economic development.[36] At the end of the 16th century,London andAntwerp began pulling away from other European cities, as illustrated in the following graph of real wages in several European cities:[37]
According to a 2021 review of existing evidence byJack Goldstone, the Great Divergence only arose after 1750 (or even 1800) in northwestern Europe. Prior to that, economic growth rates in northwestern Europe were neither sustained nor remarkable, and income per capita was similar to "peak levels achieved hundreds of years earlier in the most developed regions of Italy and China".[38]
The West had a series of unique advantages compared to Asia, such as the proximity of coal mines; the discovery of theNew World, which alleviated ecological restraints on economic growth (land shortages etc.); and the profits from colonization.[39]
China has had a larger population than Europe throughout the last two millennia.[40] Unlike Europe, it was politically united for long periods during that time. During theSong dynasty (960–1279), the country experienced a revolution in agriculture, water transport, finance, urbanization, science and technology, which made the Chinese economy the most advanced in the world from about 1100.[41][42] Mastery ofwet-field rice cultivation opened up the hitherto underdeveloped south of the country, while later northern China was devastated byJurchen andMongol invasions, floods and epidemics. The result was a dramatic shift in the center of population and industry from the home of Chinese civilization around theYellow River to the south of the country, a trend only partially reversed by the re-population of the north from the 15th century.[43] By 1300, China as a whole had fallen behind Italy in living standards and by 1400, England had also caught up with it but its wealthiest regions, especially the Yangtze Delta, may have remained on par with those of Europe until the early 18th century.[42][44]
In thelate imperial period (1368–1911), comprising theMing andQing dynasties,taxation was low, and the economy and population grew significantly, though without substantial increases in productivity.[45] Chinese goods such assilk,tea, andceramics were in great demand in Europe, leading to an inflow of silver, expanding the money supply and facilitating the growth of competitive and stable markets.[46] By the end of the 18th century, population density levels exceeded those in Europe.[47] China had more large cities but far fewer small ones than in contemporary Europe.[48][49] Kenneth Pomeranz originally claimed that Great Divergence did not begin until the 19th century.[9][10][11] Later he revisited his position and now sees the date between 1700 and 1750.[50][51]
According to a 2020 study and dataset, the Great Divergence betweennorthern India (fromGujarat toBengal) and Britain began in the late 17th century. It widened after the 1720s and exploded after the 1800s.[53] The study found that it was "primarily England's spurt and India's stagnation in the first half of the nineteenth century that brought about most serious differences in the standard of living".[54]
Throughout its history, India, especially theBengal Sultanate, has been a major trading nation[55] that benefited from extensive external and internal trade. Its agriculture was highly efficient as well as its industry. Unlike China, Japan and western and central Europe, India did not experience extensivedeforestation until the 19th and 20th centuries. It thus had no pressure to move to coal as a source of energy.[56] From the 17th century,cottontextiles fromMughal India became popular in Europe, with some governments banning them to protect their wool industries.[57]Mughal Bengal, the most developed region, in particular, was globally prominent in industries such astextile manufacturing andshipbuilding.[58]
Inearly modern Europe, there was significant demand for products fromMughal India, particularly in cotton textiles, as well as goods such asspices,peppers,indigo,silks, andsaltpeter (for use inmunitions).[59]European fashion, for example, became increasingly dependent on Indian textiles and silks. In the 17th and 18th centuries, India accounted for 95% ofBritish imports fromAsia.[60]Amiya Kumar Bagchi estimates 10.3% of Bihar's populace were involved in hand spinning thread, 2.3% weaving, and 9% in other manufacturing trades, in 1809–1813, to satisfy this demand.[61][62] In contrast, there was very little demand for European goods in India, which was largely self-sufficient, thus Europeans had very little to offer, except for somewoolen textiles, unprocessedmetals and a few luxury items. The trade imbalance caused Europeans to export large quantities of gold and silver to India in order to pay for Indian imports.[59]
TheMiddle East was more advanced than Western Europe in 1000, on par by the middle of the 16th century, but by 1750, leading Middle Eastern states had fallen behind Western European states such as Britain and the Netherlands.[63][64]
An example of a Middle Eastern country that had an advanced economy in the early 19th century wasOttoman Egypt, which had a highly productive industrialmanufacturing sector, andper-capita income that was comparable to Western European countries such asFrance and higher than that ofJapan andEastern Europe.[65] In 1819,Egypt under Muhammad Ali began programs of state-sponsoredindustrialization, which included setting up factories for weapons production, anironfoundry, large-scale cotton cultivation, mills forginning,spinning andweaving of cotton, and enterprises for agricultural processing. By the early 1830s, Egypt had 30cotton mills, employing about 30,000 workers.[66] UnderMuhammad Ali of Egypt in the early 19th century,steam engines were introduced to Egyptian industrial manufacturing.[67]Boilers were manufactured and installed in Egyptian industries such asironworks, textile manufacturing,paper mills, andhulling mills. Compared to Western Europe, Egypt also had superior agriculture and an efficient transport network through theNile. Economic historian Jean Batou argues that the necessary economic conditions for rapid industrialization existed in Egypt during the 1820s–1830s.[67]
After the death ofMuhammad Ali in 1849, his industrialization programs fell into decline, after which, according to historian Zachary Lockman, "Egypt was well on its way to full integration into a European-dominated world market as supplier of a single raw material, cotton." Lockman argues that, had Egypt succeeded in its industrialization programs, "it might have shared with Japan [or the United States] the distinction of achieving autonomous capitalist development and preserving its independence."[66]
Japanese society was governed by theTokugawa shogunate, which divided Japanese society into a strict hierarchy and intervened considerably in the economy through state monopolies[68] andrestrictions on foreign trade; however, in practice, the Shogunate's rule was often circumvented.[69] From 725 to 1974, Japan experienced GDP per capita growth at an annual rate of 0.04%, with major periods of positive per capita GDP growth occurring during 1150–1280, 1450–1600 and after 1730.[70] There were no significant periods of sustained growth reversals.[70] Relative to the United Kingdom, GDP per capita was at roughly similar levels until the middle of the 17th century.[8][71] By 1850, per capita incomes in Japan were approximately a quarter of the British level.[8]
Pre-colonial sub-Saharan Africa was politically fragmented, just as early modern Europe was.[72] Africa was home to numerous wealthy empires which grew around coastal areas or large rivers that served as part of important trade routes. Africa was however far more sparsely populated than Europe.[72] According to University of Michigan political scientist Mark Dincecco, "the high land/labor ratio may have made it less likely that historical institutional centralization at the 'national level' would occur in sub-Saharan Africa, thwarting further state development".[72] The transatlantic slave trade may have further weakened state power in Africa.[72]
A series of states developed in theSahel on the southern edge of the Sahara which made immense profits from trading across the Sahara, trading heavily in gold and slaves for thetrans-Saharan slave trade. Kingdoms in the heavily forested regions of West Africa were also part of trade networks. The growth of trade in this area was driven by theYoruba civilization, which was supported by cities surrounded by farmed land and made wealthy by extensive trade development.
For most of the first millennium AD, theAxumite Kingdom in East Africa had a powerful navy and trading links reaching as far as the Byzantine Empire and India. Between the 14th and 17th centuries, theAjuran Sultanate in modern-day Somalia practicedhydraulic engineering and developed new systems for agriculture and taxation, which continued to be used in parts of the Horn of Africa as late as the 19th century.
On the east coast of Africa,Swahili kingdoms had a prosperous trading empire. Swahili cities were important trading ports along theIndian Ocean, engaging in trade with the Middle East and Far East.[73] Kingdoms in southeast Africa also developed extensive trade links with other civilizations as far away as China and India.[74] The institutional framework for long-distance trade across political and cultural boundaries had long been strengthened by the adoption of Islam as a cultural and moral foundation for trust among and with traders.[75]
Scholars have proposed numerous theories to explain why the Great Divergence occurred.
In metallurgy and steam engines theIndustrial Revolution made extensive use of coal andcoke – as cheaper, more plentiful and more efficient than wood andcharcoal. Coal-fired steam engines also operated in the railways and in shipping, revolutionizing transport in the early 19th century. Kenneth Pomeranz drew attention to differences in the availability of coal between West and East. Due to regional climate, European coal mines were wetter, and deep mines did not become practical until the introduction of theNewcomen steam engine to pump out groundwater. In mines in the arid northwest of China, ventilation to prevent explosions was much more difficult.[76]
Another difference involved geographic distance; although China and Europe had comparable mining technologies, the distances between the economically developed regions and coal deposits differed vastly. The largest coal deposits in China are located in the northwest, within reach of the Chinese industrial core during theNorthern Song (960–1127). During the 11th century China developed sophisticated technologies to extract and use coal for energy, leading to soaring iron production.[10] The southward population shift between the 12th and 14th centuries resulted in new centers of Chinese industry far from the major coal deposits. Some small coal deposits were available locally, though their use was sometimes hampered by government regulations. In contrast, Britain contained some of the largest coal deposits in Europe[77] – all within a relatively compact island.
The centrality of coal to Industrial revolution was criticized by Gregory Clark and David Jacks, who show that coal could be substituted without much loss of national income.[78] Similarly Deirdre N. McCloskey says that coal could easily have been imported to Britain from other countries. Moreover, the Chinese could move their industries closer to coal reserves.[79]
A variety of theories posit Europe's unique relationship with theNew World as a major cause of the Great Divergence. The high profits earned from the colonies and the slave trade constituted 7 percent a year, a relatively high rate of return considering the high rate of depreciation on pre–industrial capital stocks, which limited the amount of savings and capital accumulation.[31] Early European colonization was sustained by profits through selling New World goods to Asia, especially silver to China.[80] According to Pomeranz, the most important advantage for Europe was the vast amount of fertile, uncultivated land in the Americas which could be used to grow large quantities of farm products required to sustain European economic growth and allowed labor and land to be freed up in Europe for industrialization.[81] New World exports of wood, cotton, and wool are estimated to have saved England the need for 23 to 25 million acres (100,000 km2) of cultivated land (by comparison, the total amount of cultivated land in England was just 17 million acres), freeing up immense amounts of resources. The New World also served as a market for European manufactures.[82]
Chen (2012) also suggested that the New World as a necessary factor for industrialization, and trade as a supporting factor causing less developed areas to concentrate on agriculture supporting industrialized regions in Europe.[24]
In his bookCapitalism and Slavery (1944),Eric Williams argued that the profits from slavery "provided one of the main streams of thataccumulation of capital in England which financed the industrial revolution". This line of argument was not taken up by most economic historians in subsequent decades, but some of Williams' arguments have been revived in the twenty-first century.[83][84][85] Historian James Walvin argues that slavery was "fundamental to the way the West emerged".[86]
Jared Diamond and Peter Watson argue that a notable feature ofEurope's geography was that it encouraged politicalbalkanization, such as having several large peninsulas[87] and natural barriers such as mountains and straits that provided defensible borders. By contrast,China's geography encouraged political unity, with a much smoothercoastline and a heartland dominated by two river valleys (Yellow andYangtze).
Thanks to the topographical structure with "its mountain chains, coasts, and major marches, formed boundaries at which states expanding from the core areas could meet and pause".[33] Hence, this helps European countries feel "in the same boat". Due to the location of mountain ranges, there were several distinct geographical cores that could provide the nuclei for future states.[33] Another point in Europe's political fragmentation in comparison to, for example, China is the location of the Eurasian steppe. After horse domestication, steppe nomads (for instance, Genghis Khan and the Mongols) posed a threat to the sedentary population until the 18th century. The reason for the threat is "the fragile ecology of the steppe meant that during periods of drought or cold weather, steppe nomads were more likely to invade neighboring populations".[88] Hence, this stimulated China, which is near the steppe, to build a strong, unified state.[89]
In his bookGuns, Germs, and Steel, Diamond argues that advanced cultures outside Europe had developed in areas whosegeography was conducive to large, monolithic, isolated empires. In these conditions policies of technological and social stagnation could persist. He gives the example of China in 1432, when theXuande Emperor outlawed the building of ocean-going ships, in which China was the world leader at the time. On the other hand,Christopher Columbus obtained sponsorship fromQueen Isabella I ofCastile for his expedition even though three other European rulers turned it down. As a result, governments that suppressed economic and technological progress soon corrected their mistakes or were out-competed relatively quickly. He argues that these factors created the conditions for more rapid internal superpower change (Spain succeeded by France and then by the United Kingdom) than was possible elsewhere in Eurasia.
Justin Yifu Lin argued that China's large population size proved beneficial in technological advancements prior to the 14th century, but that the large population size was not an important factor in the kind of technological advancements that resulted in the Industrial Revolution.[90] Early technological advancements depended on "learning by doing" (where population size was an important factor, as advances could spread over a large political unit), whereas the Industrial Revolution was the result of experimentation and theory (where population size is less important).[90] Before Europe took some steps towards technology and trade, there was an issue with the importance of education. By 1800, literacy rates were 68% in the Netherlands and 50% in Britain and Belgium, whereas in non-European societies, literacy rates started to rise in the 20th century. At the early stages of the Industrial Revolution, there was no demand for skilled labor. However, during the next phases of the Industrial Revolution, factors that influence worker productivity—education, training, skills, and health—were the primary purpose.[91]
Economic historianJoel Mokyr has argued that political fragmentation (the presence of a large number of European states) made it possible for heterodox ideas to thrive, as entrepreneurs, innovators, ideologues and heretics could easily flee to a neighboring state in the event that the one state would try to suppress their ideas and activities. This is what set Europe apart from the technologically advanced, large unitary empires such as China. China had both a printing press and movable type, yet the industrial revolution would occur in Europe. In Europe, political fragmentation was coupled with an "integrated market for ideas" where Europe's intellectuals used the lingua franca of Latin, had a shared intellectual basis in Europe's classical heritage and the pan-European institution of theRepublic of Letters.[92] The historianNiall Ferguson attributes this divergence to the West's development of six "killer apps", which he finds were largely missing elsewhere in the world in 1500 – "competition, the scientific method, the rule of law, modern medicine, consumerism and the work ethic".[93]
Economic historian Tuan-Hwee Sng has argued that the large size of the Chinese state contributed to its relative decline in the 19th century:[94]
The vast size of the Chinese empire created a severeprincipal–agent problem and constrained how the country was governed. In particular, taxes had to be kept low due to the emperor's weak oversight of his agents and the need to keep corruption in check. The Chinese state's fiscal weaknesses were long masked by its huge tax base. However, economic and demographic expansion in the eighteenth century exacerbated the problems of administrative control. This put a further squeeze on the nation's finances and left China ill-prepared for the challenges of the nineteenth century.
One reason why Japan was able to modernize and adopt the technologies of the West was due to its much smaller size relative to China.[95]
Stanford political scientist Gary W. Cox argues in a 2017 study,[96]
that Europe's political fragmentation interacted with her institutional innovations to foster substantial areas of "economic liberty", where European merchants could organize production freer of central regulation, faced fewer central restrictions on their shipping and pricing decisions, and paid lower tariffs and tolls than their counterparts elsewhere in Eurasia. When fragmentation afforded merchants multiple politically independent routes on which to ship their goods, European rulers refrained from imposing onerous regulations and levying arbitrary tolls, lest they lose mercantile traffic to competing realms. Fragmented control of trade routes magnified the spillover effects of political reforms. If parliament curbed arbitrary regulations and tolls in one realm, then neighboring rulers might have to respond in kind, even if they themselves remained without a parliament. Greater economic liberty, fostered by the interaction of fragmentation and reform, unleashed faster and more inter-connected urban growth.
Fernand Braudel of theAnnales school of historians argued that theMediterranean Sea was poor for fishing due to its depth, therefore encouraging long-distance trade.[97] Furthermore, theAlps and other parts of theAlpide belt supplied the coastal regions with fresh migrants from the uplands.[97] This helped the spread of ideas, as did the east–west axis of the Mediterranean which lined up with theprevailing winds and its manyarchipelagos which together aided navigation, as was also done by the great rivers which brought inland access, all of which further increased immigration.[87] Thepeninsulas of the Mediterranean also promoted politicalnationalism which brought international competition.[87] One of the geographical issues that affected the economies of Europe and the Middle East is the discovery of the Americas and the Cape Route around Africa.[33] The old trade routes became useless, which led to the economic decline of cities both in Central Asia and the Middle East and, moreover, in Italy.[98]
Testing theories related to geographic endowments economistsWilliam Easterly andRoss Levine find evidence that tropics, germs, and crops affect development through institutions. They find no evidence that tropics, germs, and crops affect country incomes directly other than through institutions, nor did they find any effect of policies on development once controls for institutions were implemented.[99] However, there is the opposite argument to the abovementioned statement. In the 16th century in Ireland, potato cultivation became popular as this crop was perfectly suited to the Irish soil and climate. Hence, it raised farmers' incomes in the short run, and the peasants' quality of life rose with the increase in their calorie consumption. The majority of the population was dependent on potatoes. In the 19th century, a new fungus,late blight, was ravaging potato crops in the U.S. and then Europe. In 1845, half of the potatoes were blighted; in 1845, three-quarters were. The result was theGreat Famine (1845–1849).[33]
A common argument is that Europe had more free and efficient markets than other civilizations, which has been cited as a reason for the Great Divergence.[100] In Europe, market efficiency was disrupted by the prevalence offeudalism andmercantilism. Practices such asentail, which restricted land ownership, hampered the free flow of labor and buying and selling of land. These feudal restrictions on land ownership were especially strong in continental Europe.[clarification needed] China had a relatively more liberal land market, hampered only by weak customary traditions.[101] Bound labor, such asserfdom andslavery were more prevalent in Europe than in China, even during theManchu conquest.[102] Urban industry in the West was more restrained byguilds and state-enforced monopolies than in China, where in the 18th century the principal monopolies governed salt and foreign trade throughGuangzhou.[103] Pomeranz rejects the view that market institutions were the cause of the Great Divergence, and concludes that China was closer to the ideal of a market economy than Europe.[101]
Economic historianPaul Bairoch presents a contrary argument, that Western countries such as the United States, Britain and Spain did not initially havefree trade, but hadprotectionist policies in the early 19th century, as did China and Japan. In contrast, he cites theOttoman Empire as an example of a state that did have free trade, which he argues had a negative economic impact and contributed to itsdeindustrialization. The Ottoman Empire had aliberal trade policy, open to foreign imports, which has origins incapitulations of the Ottoman Empire, dating back to the first commercial treaties signed with France in 1536 and taken further withcapitulations in 1673 and 1740, which loweredduties to only 3% for imports and exports. The liberal Ottoman policies were praised by British economists advocating free trade, such asJ. R. McCulloch in hisDictionary of Commerce (1834), but later criticized by British politicians opposing free trade, such asprime ministerBenjamin Disraeli, who cited the Ottoman Empire as "an instance of the injury done by unrestrained competition" in the 1846Corn Laws debate:[104]
There has been free trade in Turkey, and what has it produced? It has destroyed some of the finest manufactures of the world. As late as 1812 these manufactures existed; but they have been destroyed. That was the consequences of competition in Turkey, and its effects have been as pernicious as the effects of the contrary principle in Spain.
Classical economists, beginning withAdam Smith andThomas Malthus, argued that high wages in the West stimulated labor-saving technological advancements.[105][106]
Revisionist studies in the mid to late 20th century have depictedliving standards in 18th century China and pre–Industrial Revolution Europe as comparable.[10][107] According to Pomeranz, life expectancy in China and Japan was comparable to the advanced parts of Europe.[108] Similarly, Chinese consumption per capita in calories intake is comparable to England.[109] According to Pomeranz and others, there was modest per capita growth in both regions,[110] the Chinese economy was not stagnant, and in many areas, especially agriculture, was ahead of Western Europe.[111] Chinese cities were also ahead in public health.[112] Economic historianPaul Bairoch estimated that China's GNP per capita in 1800 was $228 in 1960US dollars ($1,007 in 1990 dollars), higher than Western Europe's $213 ($941 in 1990 dollars) at the time.[113]
Similarly forOttoman Egypt, its per-capita income in 1800 was comparable to that of Western European countries such asFrance, and higher than the overall average income of Eastern Europe and Japan.[65] Economic historian Jean Barou estimated that, in terms of 1960 dollars,Egypt in 1800 had a per-capita income of $232 ($1,025 in 1990 dollars). In comparison, per-capita income in terms of 1960 dollars for France in 1800 was $240 ($1,060 in 1990 dollars), forEastern Europe in 1800 was $177 ($782 in 1990 dollars), and for Japan in 1800 was $180 ($795 in 1990 dollars).[114][115]
According to Paul Bairoch, in the mid-18th century, "the averagestandard of living in Europe was a little bit lower than that of the rest of the world."[22] He estimated that, in 1750, the averageGNP per capita in theEastern world (particularly China, India and the Middle East) was $188 in 1960 dollars ($830 in 1990 dollars), higher than the West's $182 ($804 in 1990 dollars).[116] He argues that it was after 1800 that Western European per-capita income pulled ahead.[117] However, the average incomes of China[113] and Egypt[114] were still higher than the overall average income of Europe.[113][114]
According to Jan Luiten van Zanden, the relationship between GDP per capita with wages and standards of living is very complex. He givesNetherlands economic history as an example. Real wages in Netherlands declined during the early modern period between 1450 and 1800. The decline was fastest between 1450/75 and the middle of the sixteenth century, after which real wages stabilized, meaning that even during theDutch Golden Age purchasing power did not grow. The stability remained until the middle of 18th century, after which wages declined again. Similarly citing studies of the average height of Dutch men, van Zaden shows that it declined from theLate Middle Ages. During 17th and 18th centuries, at the height of Dutch Golden Age, the average height was 166 centimeters, about 4 centimeters lower than in 14th and early 15th century. This most likely indicates consumption declines during the early modern period, and average height would not equal medieval heights until the 20th century. Meanwhile, GDP per capita increased by 35 to 55% between 1510/1514 and the 1820s. Hence it is possible that standards of living in advanced parts of Asia were comparable with Western Europe in the late 18th century, while Asian GDP per capita was about 70% lower.[21]
Şevket Pamuk and Jan-Luiten van Zanden also show that during the Industrial Revolution, living standards in Western Europe increased little before the 1870s, as the increase in nominal wages was undermined by rising food prices. The substantial rise in living standards only started after 1870, with the arrival of cheap food from the Americas. Western European GDP grew rapidly after 1820, but real wages and the standard of living lagged behind.[118]
According to Robert Allen, at the end of the Middle Ages, real wages were similar across Europe and at a very high level. In the 16th and 17th century wages collapsed everywhere, except in theLow Countries andLondon. These were the most dynamic regions of the early modern economy, and their living standards returned to the high level of the late fifteenth century. The dynamism of London spread to the rest of England in 18th century. Although there was fluctuation in real wages in England between 1500 and 1850, there was no long term rise until the last third of 19th century. And it was only after 1870 that real wages begin to rise in other cities of Europe, and only then they finally surpassed the level of late 15th century. Hence while the Industrial Revolution raised GDP per capita, it was only a century later before a substantial raise in standard of living.[119]
However, responding to the work of Bairoch, Pomeranz, Parthasarathi and others, more subsequent research has found that parts of 18th century Western Europe did have higher wages and levels of per capita income than in much of India, Ottoman Turkey, Japan and China. However, the views of Adam Smith were found to have overgeneralized Chinese poverty.[120][121][122][123][124][125][126] Between 1725 and 1825 laborers in Beijing and Delhi were only able to purchase a basket of goods at a subsistence level, while laborers in London and Amsterdam were able to purchase goods at between 4 and 6 times a subsistence level.[127] As early as 1600 Indian GDP per capita was about 60% the British level. A real decline in per capita income did occur in both China and India, but in India began during theMughal period, before British colonialism. Outside of Europe much of this decline and stagnation has been attributed to population growth in rural areas outstripping growth in cultivated land as well asinternal political turmoil.[123][120] Free colonials inBritish North America were considered by historians and economists in a survey of academics to be amongst the most well off people in the world on the eve of theAmerican Revolution.[128] The earliest evidence of a major health transition leading to increasedlife expectancy began in Europe in the 1770s, approximately one century before Asia's.[129] Robert Allen argues that the relatively high wages in eighteenth century Britain both encouraged the adoption of labour-saving technology and worker training and education, leading to industrialisation.[130]
Luxury consumption is regarded by many scholars to have stimulated the development ofcapitalism and thus contributed to the Great Divergence.[131] Proponents of this view argue that workshops, which manufactured luxury articles for the wealthy, gradually amassed capital to expand their production and then emerged as large firms producing for a mass market; they believe that Western Europe's unique tastes for luxury stimulated this development further than other cultures. However, others counter that luxury workshops were not unique to Europe; large cities in China and Japan also possessed many luxury workshops for the wealthy,[132] and that luxury workshops do not necessarily stimulate the development of "capitalistic firms".[133]
Differences inproperty rights have been cited as a possible cause of the Great Divergence.[134][135] This view states that Asian merchants could not develop and accumulate capital because of the risk of state expropriation and claims from fellow kinsmen, which made property rights very insecure compared to those of Europe.[136] However, others counter that many European merchants were de facto expropriated throughdefaults on government debt, and that the threat of expropriation by Asian states was not much greater than in Europe, except in Japan.[137]
Government and policies are seen as an integral part of modern societies and have played a major role in how different economies have been formed. The Eastern societies had governments which were controlled by the ruling dynasties and thus, were not a separate entity. Their governments at the time lacked policies that fostered innovation and thus resulted in slow advancements. As explained by Cohen, the east had a restrictive system of trade that went against the free world market theory; there was no political liberty or policies that encouraged the capitalist market (Cohen, 1993). This was in contrast to the western society that developed commercial laws and property rights which allowed for the protection and liberty of the marketplace. Their capitalist ideals and market structures encouraged innovation.[138][90][139][140]
Pomeranz (2000) argues that much of the land market in China was free, with many supposedly hereditary tenants and landlords being frequently removed or forced to sell their land. Although Chinese customary law specified that people within the village were to be offered the land first, Pomeranz states that most of the time the land was offered to more capable outsiders, and argues that China actually had a freer land market than Europe.[101]
However,Robert Brenner and Chris Isett emphasize differences in land tenancy rights. They argue that in the lower Yangtze, most farmers either owned land or held secure tenancy at fixed rates of rent, so that neither farmers nor landlords were exposed to competition. In 15th century England, lords had lost their serfs, but were able to assert control over almost all of the land, creating a rental market for tenant farmers. This created competitive pressures against subdividing plots, and the fact that plots could not be directly passed on to sons forced them to delay marriage until they had accumulated their own possessions. Thus in England both agricultural productivity and population growth were subject to market pressures throughout the early modern period.[141]
A 2017 study found that the presence of secure property rights in Europe and their absence in large parts of the Middle-East contributed to the increase of expensive labour-saving capital goods, such as water-mills, windmills, and cranes, in medieval Europe and their decrease in the Middle-East.[142]
Thehigh-level equilibrium trap theory argues that China did not undergo an indigenous industrial revolution since its economy was in a stable equilibrium, where supply and demand for labor were equal, disincentivizing the development of labor-saving capital.
A number of economic historians have argued thatEuropean colonialism played a major role in thedeindustrialization of non-Western societies.Paul Bairoch, for example, citesBritish colonialism in India as a primary example, but also argues that Europeancolonialism played a major role in the deindustrialization of other countries in Asia, the Middle East, andLatin America, and contributed to a sharp economic decline inAfrica.[143] Other moderneconomic historians have blamedBritish colonial rule for India's deindustrialization in particular.[144][145][146][147] The colonization of India is seen as a major factor behind both India's deindustrialization and Britain's Industrial Revolution.[145][146][147]
The historianJeffrey G. Williamson has argued that India went through a period of deindustrialization in the latter half of the 18th century as an indirect outcome of the collapse of theMughal Empire, withBritish rule later causing further deindustrialization.[61] According to Williamson, the decline of the Mughal Empire led to a decline in agricultural productivity, which drove up food prices, thennominal wages, and then textile prices, which led to India losing a share of the world textile market to Britain even before it had superiorfactory technology,[148] though Indian textiles still maintained a competitive advantage over British textiles up until the 19th century.[149] Economic historian Prasannan Parthasarathi, however, has argued that there wasn't any such economic decline for several post-Mughal states, notablyBengal Subah and theKingdom of Mysore, which were comparable to Britain in the late 18th century, until British colonial policies caused deindustrialization.[144]
Up until the 19th century, India was the world's leading cotton textile manufacturer,[149] withBengal andMysore the centers of cotton production.[144] In order to compete with Indian imports, Britons invested in labour-savingtextile manufacturing technologies during their Industrial Revolution. Following political pressure from the new industrial manufacturers, in 1813, Parliament abolished the two-centuries-old,protectionistEast India Company monopoly on trade with Asia and introduced importtariffs on Indian textiles. Until then, the monopoly had restricted exports of British manufactured goods to India.[150] Exposing the Proto-industrial hand spinners and weavers in the territories the British East India Companyadministered in India to competition from machine spun threads, and woven fabrics, resulting inDe-Proto-Industrialization,[151] with the decline of native manufacturing opening up new markets for British goods.[149] British colonization forced open the large Indian market to British goods while restricting Indian imports to Britain, and raw cotton was imported from India without taxes or tariffs to British factories which manufactured textiles from Indian cotton and sold them back to the Indian market.[152] India thus served as both an important supplier of raw goods such as cotton to British factories and a largecaptive market for British manufactured goods.[153] In addition, the capital amassed fromBengal following its conquest after theBattle of Plassey in 1757 was used to invest in British industries such as textile manufacturing and greatly increase British wealth.[145][146][147] Britain eventually surpassed India as the world's leading cotton textile manufacturer in the 19th century.[149] British colonial rule has been blamed for the subsequently dismal state ofBritish India's economy, with investment in Indian industries limited since it was a colony.[154]
Economic decline in India has been traced to before British colonial rule and was largely a result of increased output in other parts of the world and Mughal disintegration. India's share of world output (24.9%) was largely a function of its share of the world population around 1600.[123][61] Between 1880 and 1930 total Indian cotton textile production increased from 1200 million yards to 3700 million yards.[155] The introduction of railways into India have been a source of controversy regarding their overall impact, but evidence points to a number of positive outcomes such as higher incomes, economic integration, and famine relief.[156][157][158][159] Per capita GDP decreased from $550 (in 1990 dollars) per person in 1700 under Mughal rule to $533 (in 1990 dollars) in 1820 under British rule, then increased to $618 (in 1990 dollars) in 1947 uponindependence. Coal production increased in Bengal, largely to satisfy the demand of the railroads.[120] Life expectancy increased by about 10 years between 1870 and independence.[129]
Recent research on colonialism has been more favorable regarding its long-term impacts on growth and development.[160] A2001 paper byDaren Acemoglu, Simon Johnson, andJames Robinson found that nations with temperate climates and low levels of mortality were more popular with settlers and were subjected to greater degrees of colonial rule. Those nations benefited from Europeans creating more inclusive institutions that lead to higher rates of long term growth.[161] Subsequent research has confirmed that both how long a nation was a colony or how many Europeans settlers migrated there are positively correlated with economic development and institutional quality, although the relationships becomes stronger after 1700 and vary depending on the colonial power, with British colonies typically faring best.[162][163] Acemoglu et al. also suggest that colonial profits were too small a percentage of GNP to account for the divergence directly but could account for it indirectly due to the effects it had on institutions by reducing the power of absolutist monarchies and securing property rights.[164]
It has been argued the attitude of theEast towards innovation is one of the other factors that might have played a big role in the West's advancements over the East. According toDavid Landes, after a few centuries of innovations and inventions, it seemed like the East stopped trying to innovate and began to sustain what they had. They kept nurturing their pre-modern inventions and did not move forward with the modern times. China decided to continue a self-sustaining process of scientific and technological advancement on the basis of their indigenous traditions and achievements.[165] The East's attitude towards innovation showed that they focused more on experience, while the West focused on experimentation. The East did not see the need to improve on their inventions, so they focused on their past successes. While they did this, the West was focused more on experimentation and trial by error, which led them to come up with new and different ways to improve on existing innovations and create new ones.[166]
Rosenberg and Birdzell claim that the so-calledEastern culture of respect and unquestionable devotion to the ruling dynasty was as a result of a culture where the control of the dynasty led to a silent society that "did not ask questions or experiment without the approval or order from the ruling class". On the other hand, they claimed that the West of the late medieval era did not have a central authority or absolute state, which allowed for a free flow of ideas (Rosenberg, Birdzell, 1986). Moreover, there is another researcher who wrote that Christianity considered to be a critical issue to the emergence of liberal societies.[167] This eastern culture also supposedly showed a dismissal of change due to their "fear of failure" and disregard for the imitation of outside inventions and science; this was different from the "Western culture" which they claimed to be willing to experiment and imitate others to benefit their society. They claimed that this was a culture where change was encouraged, and sense of anxiety and disregard for comfort led them to be more innovative.Max Weber argued inThe Protestant Ethic and the Spirit of Capitalism that capitalism in northern Europe evolved when theProtestant work ethic (particularlyCalvinist) influenced large numbers of people to engage in work in the secular world, developing their own enterprises and engaging in trade and the accumulation of wealth for investment. In his bookThe Religion of China: Confucianism and Taoism he blamesChinese culture for the non-emergence of capitalism in China. Chen (2012) similarly claims that cultural differences were the most fundamental cause for the divergence, arguing that thehumanism of the Renaissance followed bythe Enlightenment (including revolutionary changes in attitude towards religion) enabled a mercantile, innovative, individualistic, and capitalistic spirit. ForMing China, he claims there existed repressive measures which stifled dissenting opinions and nonconformity. He claimed thatConfucianism taught that disobedience to one's superiors was supposedly tantamount to "sin". In addition Chen claimed that merchants and artificers had less prestige than they did in Western Europe.[24]Wen-yuan Qian pointed out intellectuals passing through theimperial examination system were limited to neo-Confucian texts well into theYuan dynasty.[168]: 91 Justin Yifu Lin argued for the role of the imperial examination system in removing the incentives for Chinese intellectuals to learn mathematics or to conduct experimentation.[23]Yasheng Huang argued that the imperial examination system monopolized the most capable intellectuals in service of the state, sustained the propagation of Confucianism, and preempted the emergence of ideas that could challenge it.[25]
However, some scholars who have studied Confucian teachings have criticized the claim that the philosophy promoted unquestionable loyalty to one's superiors and the state. The core of Confucian philosophy itself was alreadyhumanist andrationalist; it "[does] not share a belief in divine law and [does] not exalt faithfulness to a higher law as a manifestation of divine will."[169]
One of the central teachings of Confucianism is that one should remonstrate with authority. Many Confucians throughout history disputed their superiors in order to not only prevent the superiors and the rulers from wrongdoing, but also to maintain the independent spirits of the Confucians.[170]
Furthermore, the merchant class of China throughout all of Chinese history were usually wealthy and held considerable influence above their supposed social standing.[171] Historians like Yu Yingshi and Billy So have shown that as Chinese society became increasingly commercialized from theSong dynasty onward, Confucianism had gradually begun to accept and even support business and trade as legitimate and viable professions, as long as merchants stayed away from unethical actions. Merchants in the meantime had also benefited from and utilized Confucian ethics in their business practices. By the Song period, thescholar-officials themselves were using intermediary agents to participate in trading.[171] This is true especially in the Ming and Qing dynasties, when the social status of merchants had risen to such significance[172][173][174] that by the late Ming period, many scholar-officials were unabashed to declare publicly in their official family histories that they had family members who were merchants.[175] Consequently, while Confucianism did not actively promote profit seeking, it did not hinder China's commercial development either.
Of the developed cores of theOld World, India was distinguished by itscaste system of bound labor, which hampered economic and population growth and resulted in relative underdevelopment compared to other core regions. Compared with other developed regions, India still possessed large amounts of unused resources. India's caste system gave an incentive to elites to drive theirunfree laborers harder when faced with increased demand, rather than invest in new capital projects and technology. The Indian economy was characterized by vassal-lord relationships, which weakened the motive of financial profit and the development of markets; a talented artisan or merchant could not hope to gain much personal reward. Pomeranz argues that India was not a very likely site for an industrial breakthrough, despite its sophisticated commerce and technologies.[176]
Aspects ofIslamic law have been proposed as an argument for the divergence for theMuslim world. EconomistTimur Kuran argues that Islamic institutions which had at earlier stages promoted development later started preventing more advanced development by hampering formation of corporations, capital accumulation, mass production, and impersonal transactions.[177] Other similar arguments proposed include the gradual prohibition of independent religious judgements (Ijtihad) and a strong communalism which limited contacts with outside groups and the development of institutions dealing with more temporary interactions of various kinds, according to Kuran.[178] Economic historian Paul Bairoch noted, however, thatOttoman law promotedliberalfree trade earlier than Britain and the United States, arguing that free trade had a negative economic impact on the Ottoman Empire and contributed to its deindustrialization, in contrast to the moreprotectionist policies of Britain and the United States in the early 19th century.[104]
A number of economists have argued that representative government was a factor in the Great Divergence.[4][134] They argue that absolutist governments, where rulers are not broadly accountable, are prone to corruption andrent-seeking while hurting property rights and innovation.[4][179] Representative governments however were accountable to broader segments of the population and thus had to protect property rights and not rule in arbitrary ways, which caused economic prosperity.[4] Discussed effects betweendemocratization and economic growth during Great Divergence include increasing elite competition incentivizing economic growth.[180]
A 2017 study inThe American Economic Review found that "globalization was the major driver of the economic divergence between the rich and the poor portions of the world in the years 1850–1900."[181][182] The states that benefited from globalization were "characterised by strong constraints on executive power, a distinct feature of the institutional environment that has been demonstrated to favour private investment."[182] According to the economic historiansKevin O'Rourke,Leandro Prados de la Escosura andGuillaume Daudin, there were several factors which led to the rapid increase in globalization between 1815 and 1870, including the end of theNapoleonic Wars ushering in a period of relative peace in Europe, innovations in transportation and military technologies and the gradual liberalization of European governments.[183]
A number of economic historians have posited that the Industrial Revolution may have partly occurred where and when it did due toluck andchance.[184][185][186]
HistorianJames Belich has argued that theBlack Death, a bubonic plague pandemic occurring in Afro-Eurasia from 1346 to 1353, set the conditions that made the Great Divergence possible. He argues that the pandemic, which caused mass death in Europe, doubled the per capita endowment of everything. A labor scarcity led to expanded use of waterpower, wind power, and gunpowder, as well as fast-tracked innovations in water-powered blast furnaces, heavily gunned galleons, and musketry.[187]
AnthropologistJoseph Henrich argues in his bookThe WEIRDest People in the World (where "WEIRD" is an acronym and the "I" stands for "industrialized") that theCatholic Church's increasingly strict, and increasingly harshly enforced, prohibition of cousin marriage in the Middle Ages (until theFourth Council of the Lateran in 1215 began to loosen the Church's rules) forced people to move around extensively to find mates. According to Henrich, this religious restriction meant people had to marry strangers and move away from theirkin. As kinship networks in Western Europe began to dissolve under relentless religious pressure, newvoluntary associations based on shared interests and abstract rules (e.g.charter towns,professional guilds, anduniversities) instead of blood relationships grew as replacements.[188] The growth of these new institutions caused theUrban,Commercial andLegal revolutions of the High Middle Ages, provided acolossal market for mass produced books when the printing press appeared in the 15th century, and created the necessary cultural scaffolding for the even more transformativeScientific andIndustrial revolutions.
The Old World methods of agriculture and production could only sustain certain lifestyles. Industrialization dramatically changed the European and American economy and allowed it to attain much higher levels of wealth and productivity than the other Old World cores. Although Western technology later spread to the East, differences in uses preserved the Western lead and accelerated the Great Divergence.[189]
When analyzing comparative use-efficiency, the economic concept oftotal factor productivity (TFP) is applied to quantify differences between countries.[189] TFP analysis controls for differences in energy and raw material inputs across countries and is then used to calculateproductivity. The difference in productivity levels, therefore, reflects efficiency of energy and raw materials use rather than the raw materials themselves.[190] TFP analysis has shown that Western countries had higher TFP levels on average in the 19th century than Eastern countries such asIndia orChina, showing that Western productivity had surpassed the East.[189]
Some of the most striking evidence for the Great Divergence comes from data onper capita income.[189] The West's rise to power directly coincides with per capita income in the West surpassing that in the East. This change can be attributed largely to the mass transit technologies, such asrailroads andsteamboats, that the West developed in the 19th century.[189] The construction of large ships, trains, and railroads greatly increased productivity. These modes of transport made moving large quantities of coal, corn, grain, livestock and other goods across countries more efficient, greatly reducing transportation costs. These differences allowed Western productivity to exceed that of other regions.[189]
Economic historianPaul Bairoch has estimated the GDP per capita of several major countries in 1960 US dollars after the Industrial Revolution in the early 19th century, as shown below.[191] His estimates show that the GDP per capita of Western European countries rose rapidly after industrialization.
For the 18th century, and in comparison to non-European regions, Bairoch in 1995 stated that, in the mid-18th century, "the averagestandard of living in Europe was a little bit lower than that of the rest of the world."[22]
Before and during the early 19th century, much of continental European agriculture was underdeveloped compared to Asian Cores and England.[citation needed] This left Europe with abundant idle natural resources.England, on the other hand, had reached the limit of its agricultural productivity well before the beginning of the 19th century. Rather than taking the costly route of improving soil fertility, the English increased labor productivity by industrializing agriculture. From 1750 to 1850, European nations experienced population booms; however, European agriculture was barely able to keep pace with the dietary needs. Imports from the Americas, and the reduced caloric intake required byindustrial workers compared to farmers allowed England to cope with the food shortages.[192] By the turn of the 19th century, much European farmland had been eroded and depleted of nutrients. Fortunately, through improved farming techniques, the import offertilizers, andreforestation, Europeans were able to recondition their soil and prevent food shortages from hampering industrialization. Meanwhile, many other formerlyhegemonic areas of the world were struggling to feed themselves – notably China.[193]
The global demand for wood, a major resource required for industrial growth and development, was increasing in the first half of the 19th century. A lack of interest ofsilviculture in Western Europe, and a lack of forested land, caused wood shortages. By the mid-19th century, forests accounted for less than 15% of land use in most Western European countries. Fuel costs rose sharply in these countries throughout the 18th century and many households and factories were forced to ration their usage, and eventually adoptforest conservation policies. It was not until the 19th century thatcoal began providing much needed relief to the European energy shortage. China had not begun to use coal on a large scale until around 1900, giving Europe a huge lead on modern energy production.[194]
Through the 19th century, Europe had vast amounts of unusedarable land with adequate water sources. However, this was not the case in China; most idle lands suffered from a lack of water supply, so forests had to be cultivated. Since the mid-19th century,northern China's water supplies have been declining, reducing its agricultural output. By growingcotton fortextiles, rather than importing, China exacerbated its water shortage.[195]During the 19th century, supplies of wood and land decreased considerably, greatly slowing growth of Chinese per capita incomes.[196]
During the era of European imperialism,periphery countries were often set up as specialized producers of specific resources. Although these specializations brought the periphery countries temporary economic benefit, the overall effect inhibited the industrial development of periphery territories. Cheaper resources forcore countries through trade deals with specialized periphery countries allowed the core countries to advance at a much greater pace, both economically and industrially, than the rest of the world.[197]
Europe's access to a larger quantity of raw materials and a larger market to sell its manufactured goods gave it a distinct advantage through the 19th century. In order to further industrialize, it was imperative for the developing core areas to acquire resources from less densely populated areas, since they lacked the lands required to supply these resources themselves. Europe was able to trade manufactured goods to theircolonies, including the Americas, for raw materials. The same sort of trading could be seen throughout regions in China and Asia, but colonization brought a distinct advantage to the West. As these sources of raw materials began toproto-industrialize, they would turn toimport substitution, depriving the hegemonic nations of a market for their manufactured goods. Since European nations had control over their colonies, they were able to prevent this from happening.[198] Britain was able to use import substitution to its benefit when dealing with textiles fromIndia. Through industrialization, Britain was able to increase cotton productivity enough to make it lucrative for domestic production, and overtake India as the world's leading cotton supplier.[149] Although Britain had limited cotton imports to protect its own industries, they allowed cheap British products into colonial India from the early 19th century.[199] The colonial administration failed to promote Indian industry, preferring to export raw materials.[200]
Western Europe was also able to establish profitable trade with Eastern Europe. Countries such asPrussia,Bohemia andPoland had very little freedom in comparison to the West;[vague] forced labor left much of Eastern Europe with little time to work towards proto-industrialization and ample manpower to generate raw materials.[201]
A 2017 study in theQuarterly Journal of Economics argued, "medieval European institutions such as guilds, and specific features such asjourneymanship, can explain the rise of Europe relative to regions that relied on the transmission of knowledge within closed kinship systems (extended families or clans)".[202] Guilds and journeymanship were superior for creating and disseminating knowledge, which contributed to the occurrence of the Industrial Revolution in Europe.[202]
Why has the world become increasingly unequal? Both 'fundamentals' like geography, institutions, or culture and 'accidents of history' played a role.
Bengal [...] was rich in the production and export of grain, salt, fruit, liquors and wines, precious metals and ornaments besides the output of its handlooms in silk and cotton. Europe referred to Bengal as the richest country to trade with.
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