European Miracle

Question 1

What is the European Miracle?

Answer 1

The view that Europe overtook Asia vs Asia falling behind.

Question 2

Key features of the EU miracle (4) and what they enabled.

Answer 2

State involvement - decentralised
Private-order institutions e.g independent legal, religious, merchant class systems
Commercial revolution - increased trade & finance
Agricultural revolution - structural change

Question 3

Key players of the EU miracle (4) and why?

Answer 3

Italian city states- revival of trade
Portugal- the great discoveries
Holland/England- merchant capitalism e.g first stock market, central banks etc
Britain- modern economic growth

Question 4

Italian city states (3)

Answer 4

Venice Genoa and Florence

Question 5

3 reasons for success for the Italian States

Answer 5

Shipping and commerce
Agriculture and industry
Finance

Question 6

Shipping and commerce points- Italy (3)

Answer 6

Highly urbanised

Venice reopened EU trade after Roman Empire fall

Genoa’s navel victorious over Morocco in 1291 opened up straits of Gibraltar

Question 7

Agriculture and industry- Italy

Answer 7

Trade-related industries were key e.g shipbuilding, timber trades etc

Import substitution

Food productivity- countryside produce food, so cities can focus on manufacturing goods, allowing for specialisation.

Question 8

Finance- Italy (3)

Answer 8

Trade required a system of payment, introduced gold florins (Florence) and ducats (Venice)

Banking emerged

Overdrafts and marine insurance emerged (to ensure shipping)

Question 9

Factors for Italian success (2)

Answer 9

Good policy/state involvement
Good institutions

Question 10

Good policy/state involvement- Italy (3)

Answer 10

State directly involved in shipbuilding

And rented out to private enterprise.

State had military ships with trade convoys to ensure delivery

Question 11

Good institutions- Italy (3)

Answer 11

Government bond market-borrow money to build more ships

Tolerant state- lots of migration, lots of religions etc

Good organisation of agriculture, e.g food in countryside, manufacturing in cities.

Question 12

Portugal success drivers (2) and 1 hindrance

Answer 12

Shipping and commerce
Slavery and sugar

Agriculture and industry held back GDP

(No finance like Italy )

Question 13

Portugal shipping and commerce (2)

Answer 13

Overtook Italy in shipbuilding during 15C.

Made the ‘great discoveries’ and established trading ports.

Question 14

What were the great discoveries Portugal found? (4)

Answer 14

Cape of Good Hope (South Africa)
India
Canton
Japan

Question 15

Slavery and sugar- Portugal (2)

Answer 15

4.5m slaves shipped by Portugal to America
1500-1870 - 50% of slaves shipped.

Also overtook Venice as main producer of sugar

Question 16

Agriculture and industry

Answer 16

Institutions were poor, poor domestic investment. GDP held back

Question 17

Factors for Portugal’s success (2)

Answer 17

Good state involvement
Geography/luck

(State like Italy, but not institutions like Italy. Institutions were poor in Portugal which is why agriculture and industry held them back)

Question 18

Good state involvement- Portugal (2)

Answer 18

Prince Henry was devoted to exploring Africa

Had School of Sagres, had most advanced tools for discovery.

Question 19

Good Geography/luck for Portugal (4)

Answer 19

Located on Atlantic with access to Mediterranean

Ottoman-Venetian wars crippled Venice (good for Portugal as overtook Venice in sugar producing)

Great discoveries broke Venetian trade monopoly too!

Treaty of Tordseillas gave Brazil to Portugal, (luck by the dividing line of 1493) HENCE WHY THEY ALL SPEAK PORTUGUESE.

Question 20

The Dutch “Golden Age” features (3)

(Start of phase 2)

Answer 20

Shipping and commerce
Agriculture and industry
Finance

Question 21

Shipping and commerce- Dutch (3)

Answer 21

Amsterdam became entrepôt in NW EU (centre of import/export distribution)

Dutch fleet became biggest in EU by 16C

Replaced Portugal as the dominant EU traders in Asia by 17C (why a lot of Indonesian restaurants in Holland)

Question 22

Agriculture and industry- Holland (3)

Answer 22

Agriculture highly productive, spillover into industry (very productive so workers could instead work in cities)

Spillovers lead to agriculture being 40% of employment, lower than rest of EU

Industry less productive than agriculture in general tho!

Question 23

Finance- Holland (3)

Answer 23

Developed bills of exchange (internal and external)

Developed Amsterdam exchange

Issued perpetual annuities by government free of risk of default. (Risk-free, buyers of the bonds guaranteed to be paid a yield each year)

Question 24

Factors for Dutch/British success (3)

Answer 24

Good state involvement
Good institutions
Good geography and luck

Question 25

Good state involvement- Holland/England (2)

Answer 25

Established monopoly trading company (VOC) for Dutch and (EIC) for England.

Used taxes to fund drainage and engineering (needed for flat land)

Question 26

Good institutions (4) - Dutch

Answer 26

Tolerant state- freer peasants, freedom of religion.

Good universities

Low tariffs

Question 27

Good geography/luck- Dutch

Answer 27

Used wind power to drain low lands and prevent flooding

Spanish Netherlands provided defensive buffer from France. (Small part of NL was Spanish, so France would have to fight Spain)

Question 28

However how did British take over Dutch in GDP/capita?

Answer 28

Spanish wars crippled Antwerp.

Question 29

How did the British exceptionalism occur (3)

Answer 29

Britain acquired a massive trade empire from its rivals, (beat them all in war) allowing:

Gaining access to materials, and allowed us to export our manufactured goods

Undertook agricultural revolution-produced food cheaper, e.g enclose, new crop rotations etc.

Question 30

Reason for success of British (exceptionalism) (5)

Answer 30

Large structural change

Good institutions

Good human capital

Good credit markets (BoE)

Early use of factory system and steam technology (TFP growth)

Question 31

Large structural change - British

Answer 31

Agriculture to proto-industry to industry

Question 32

Good institutions- British (2)

Answer 32

Strong property rights

Constrained executive (Glorious revolution as in earlier topic 1688, William and Mary and Parliament)

Question 33

Critical junctures (3)

Answer 33

Pivotal shocks that effected the economies. (some were curses, some were blessings to others)

1. Mediterranean response to plague
2. NW EU (Holland/England) respond to Great Discoveries
3. Modern Economic Growth

Question 34

Phase 1 of critical junctures (2)

Answer 34

Mediterranean respond to Black Death.

Italy took opportunity to trade overland and via Med with Asia

Iberia took opportunity to break the Med monopoly via the Atlantic.

Question 35

Phase 2 of critical junctures NW EU (Dutch/English)

Answer 35

NW EU (Dutch/England) Respond to great discoveries

Holland breaks Portuguese monopoly via Atlantic

English break Dutch monopoly.

Question 36

Phase 3

Answer 36

Modern economic growth

British took opportunity to sustain economic development.

Question 37

Italy and 1st critical juncture

Answer 37

Maghribi vs Genoese traders
(Collectivist v individualist)

Genoese system was a step towards institutions

Question 38

Characteristics comparison (2) of Maghribi (collectivist) and Genoese traders (individualist)

Answer 38

Maghribi
-fear of collective punishment kept agents honest
-no formal procedure (based on trust)

Genoese
-punishment by loss of profit
-formal procedures (from trust to a law based system)

Genoese was move towards institutions.

Question 39

China and their 1st critical juncture

Answer 39

Internal conflict- change in government led to “turn-inwards”

Turn inwards involved burning of fleet, turning away from western advances, creating gap in market for Europeans (Italy took advantage to trade via med with Asia)

Question 40

NW Europe and 2nd critical junctures- How did Atlantic trade spark NWE and Eval (3)

Answer 40

Atlantic traders more urbanised
Atlantic traders had higher per capita incomes
More voyages and volumes

Eval: Reverse causality? while this lead to success, institutions still mattered. Difficult to determine causation whether trade caused growth or growth caused trade

Question 41

Role of Atlantic trade (Acemoglu)

And Eval:

Answer 41

Created Smithian growth, allowing EU to increase population and urbanisation.

Atlantic trade only provided SR growth (Portugal overtaking Italy) if without good institutions (shown by Portugal having poor institutions and fell behind Netherlands and Spain)

Question 42

Who were less absolutist and what does this mean?

Answer 42

More tolerant state. Playing a role in growth.

(Remember we said Dutch had freer peasants, freer religion, low tariffs and good universities)

Question 43

Britain and 3rd critical juncture- When did they overtake Netherlands, how did they launch into sustained growth and the issue

Answer 43

Britain conquered Dutch trading empire giving a virtual monopoly. Overtook around 19C

Causation issue- MEG causing trade or trade causing MEG

Question 44

Modern Economic Growth (MEG) is defined by who? And what characteristics (6)

Answer 44

Kuznets

Sustained population growth and GDP per capita growth
Structural change
Urbanisation and secularisation
Rapid transport and communications
Wide gap between rich and poor countries
High TFP growth

Question 45

Why did Holland not have MEG (2)

Answer 45

Not sustained growth.

No Schumpeterian growth, more Smithian growth (remember ag being v productive leading to spillovers to industry and specialisation)

Question 46

Netherlands and 3rd critical juncture.

Argues if Holland was the first modern economy?

Looks at an alternative definition of modern growth (with 4 characteristics) by Dr Vries and Van der Wounde

Answer 46

Market integration
Agricultural productivity-Smithian growth (spillover into industry)
Governance (state capacity)
Technological change

Remember MAGT