European Miracle Flashcards
What is the European Miracle?
The view that Europe overtook Asia vs Asia falling behind.
Key features of the EU miracle (4) and what they enabled.
State involvement - decentralised
Private-order institutions e.g independent legal, religious, merchant class systems
Commercial revolution - increased trade & finance
Agricultural revolution - structural change
Key players of the EU miracle (4) and why?
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
Italian city states (3)
Venice Genoa and Florence
3 reasons for success for the Italian States
Shipping and commerce
Agriculture and industry
Finance
Shipping and commerce points- Italy (3)
Highly urbanised
Venice reopened EU trade after Roman Empire fall
Genoa’s navel victorious over Morocco in 1291 opened up straits of Gibraltar
Agriculture and industry- Italy
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.
Finance- Italy (3)
Trade required a system of payment, introduced gold florins (Florence) and ducats (Venice)
Banking emerged
Overdrafts and marine insurance emerged (to ensure shipping)
Factors for Italian success (2)
Good policy/state involvement
Good institutions
Good policy/state involvement- Italy (3)
State directly involved in shipbuilding
And rented out to private enterprise.
State had military ships with trade convoys to ensure delivery
Good institutions- Italy (3)
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.
Portugal success drivers (2) and 1 hindrance
Shipping and commerce
Slavery and sugar
Agriculture and industry held back GDP
(No finance like Italy )
Portugal shipping and commerce (2)
Overtook Italy in shipbuilding during 15C.
Made the ‘great discoveries’ and established trading ports.
What were the great discoveries Portugal found? (4)
Cape of Good Hope (South Africa)
India
Canton
Japan
Slavery and sugar- Portugal (2)
4.5m slaves shipped by Portugal to America
1500-1870 - 50% of slaves shipped.
Also overtook Venice as main producer of sugar
Agriculture and industry
Institutions were poor, poor domestic investment. GDP held back
Factors for Portugal’s success (2)
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)
Good state involvement- Portugal (2)
Prince Henry was devoted to exploring Africa
Had School of Sagres, had most advanced tools for discovery.
Good Geography/luck for Portugal (4)
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.
The Dutch “Golden Age” features (3)
(Start of phase 2)
Shipping and commerce
Agriculture and industry
Finance
Shipping and commerce- Dutch (3)
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)
Agriculture and industry- Holland (3)
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!
Finance- Holland (3)
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)
Factors for Dutch/British success (3)
Good state involvement
Good institutions
Good geography and luck
Good state involvement- Holland/England (2)
Established monopoly trading company (VOC) for Dutch and (EIC) for England.
Used taxes to fund drainage and engineering (needed for flat land)
Good institutions (4) - Dutch
Tolerant state- freer peasants, freedom of religion.
Good universities
Low tariffs
Good geography/luck- Dutch
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)
However how did British take over Dutch in GDP/capita?
Spanish wars crippled Antwerp.
How did the British exceptionalism occur (3)
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.
Reason for success of British (exceptionalism) (5)
Large structural change
Good institutions
Good human capital
Good credit markets (BoE)
Early use of factory system and steam technology (TFP growth)
Large structural change - British
Agriculture to proto-industry to industry
Good institutions- British (2)
Strong property rights
Constrained executive (Glorious revolution as in earlier topic 1688, William and Mary and Parliament)
Critical junctures (3)
Pivotal shocks that effected the economies. (some were curses, some were blessings to others)
- Mediterranean response to plague
- NW EU (Holland/England) respond to Great Discoveries
- Modern Economic Growth
Phase 1 of critical junctures (2)
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.
Phase 2 of critical junctures NW EU (Dutch/English)
NW EU (Dutch/England) Respond to great discoveries
Holland breaks Portuguese monopoly via Atlantic
English break Dutch monopoly.
Phase 3
Modern economic growth
British took opportunity to sustain economic development.
Italy and 1st critical juncture
Maghribi vs Genoese traders
(Collectivist v individualist)
Genoese system was a step towards institutions
Characteristics comparison (2) of Maghribi (collectivist) and Genoese traders (individualist)
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.
China and their 1st critical juncture
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)
NW Europe and 2nd critical junctures- How did Atlantic trade spark NWE and Eval (3)
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
Role of Atlantic trade (Acemoglu)
And Eval:
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)
Who were less absolutist and what does this mean?
More tolerant state. Playing a role in growth.
(Remember we said Dutch had freer peasants, freer religion, low tariffs and good universities)
Britain and 3rd critical juncture- When did they overtake Netherlands, how did they launch into sustained growth and the issue
Britain conquered Dutch trading empire giving a virtual monopoly. Overtook around 19C
Causation issue- MEG causing trade or trade causing MEG
Modern Economic Growth (MEG) is defined by who? And what characteristics (6)
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
Why did Holland not have MEG (2)
Not sustained growth.
No Schumpeterian growth, more Smithian growth (remember ag being v productive leading to spillovers to industry and specialisation)
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
Market integration
Agricultural productivity-Smithian growth (spillover into industry)
Governance (state capacity)
Technological change
Remember MAGT
