Global Economy Lecture 1 - Introduction to Quantitative Economic History*

Question 1

State the quote by Maddison that summarises the history of the world’s economy

Answer 1

“Over the past millennium, world population rose 22−fold, per capita income increased 13−fold, world GDP nearly 300−fold. This contrasts sharply with the preceding millennium, when world population grew by only a sixth, and there was no advance in per capita income. From the year 1000 to 1820 the advance in per capita income was a slow crawl − the world average rose about 50 per cent. Most of the growth went to accommodate a fourfold increase in population. Since 1820, world development has been much more dynamic. Per capita income rose more than eightfold, population more than
fivefold.” (Maddison, 2006)

Question 2

Does it make sense to view the world according to Maddison’s quote?

Answer 2

• We need to consider the evidence:
  1. Population and output
  2. Wages and employment
  3. Trade and investment
  4. Development indicators
• Per capita income is not the only indicator of welfare
• Life expectancy has risen dramatically - average infant in 1000
  would die at 24 - now 66

Question 3

Describe the recent history of the world’s economy

Answer 3

The growth process was uneven in space and time
* The rise in life expectancy and income has been most rapid in
Western Europe, North America, Australasia and Japan
* By 1820, this group had forged ahead to achieve an income
level twice that in the rest of the world. By 1998, the gap was
a ratio of 7:1
* Between the US (present world leader) and Africa (poorest
region) the gap is now 20:1 and still widening
* Divergence is dominant but not inexorable
* In the past half century, resurgent Asian countries have
demonstrated that an important degree of catchup is feasible
* Nevertheless, world economic growth has slowed substantially
since 1973, and the Asian advance has been offset by
stagnation or retrogression elsewhere
* Advances in income and population have been sustained by
three interactive processes
1. Conquest or settlement of relatively empty areas which had
fertile land, new biological resources, or a potential to
accommodate transfers of population, crops and livestock
2. International trade and capital movements
3. Technological and institutional innovation