Why understanding the timing of divergence matters

Abstract

What is divergence and why does it matter? The question motivating all of us is to understand what led up to modern economic growth. Malanima is correct that I follow Kuznets and describe this as rapid and sustained growth in both population and output per head, but I would now add a third qualifier, to levels beyond the pre-industrial peak. All three qualifiers are necessary because history has many examples of sustained growth in population and output per head: as van Zanden and Bolt show in their comment, both Britain and Holland had positive trend growth in real GDP/capita all the way from the late Middle Ages to the eighteenth century. It seems clear that classical Greece and Rome each had at least three centuries of sustained growth in population and GDP/cap as well, and China likely did also before achieving the heights reached in the Northern Song.1 But all of these sustained growth episodes were very slow, as van Zanden and Bolt show in their regressions for Holland and England, where real income growth averaged not more than 0.2% per year. There were shorter periods of much more rapid growth, which I have labelled ‘efflorescences.’ In these cases, a combination of technical innovations in farming or transport or other production allows higher output that supports urbanisation and more extensive trade, which in turn leads to greater specialisation, greater monetary circulation and profits that feed further investment to boost productivity, in a virtuous cycle.2 In post-classical Europe, the High Middle Ages in the north, Renaissance Italy and Golden Age Holland are examples; outside Europe, the peaks of the Song and Qing dynasties in China, the early Baghdad Caliphate and perhaps the Mughal Empire under Akbar are likely others. But over time, population continues to grow, trade patterns change, climate shifts, administrative inefficiency, wars and diseases take their toll and after a century or less, rapid growth in GDP/cap comes to an end. Finally, past episodes of rapid and/or sustained growth, as beautifully shown by Broadberry’s Figure 5 above, showing GDP/cap in the leading regions of China and Europe, often approached but never reached beyond an apparent limit in GDP/cap of about $1800.3 Instead, from classical times up to 1750, as Malanima makes clear, GDP/cap fluctuated in a relatively narrow band under