FROM MAJOR POWER TO ECONOMIC BACKWATER:
PORTUGAL'S GDP, 1500-1850
Jaime Reis*
Conceição Andrade Martins*
Leonor Freire Costa**
Paper presented at the CAGE conference on Accounting for the Great Divergence
at the University of Warwick, 28 May, 2013.
*ICS-University of Lisbon
**ISEG-University of Lisbon
Preliminary version: please do not cite without authorization of authors
Contact: [email protected]
1
1. Introduction
At the beginning of the 16th century, it may not be too much to describe Portugal as a
“major power” in Europe. In economic terms it was highly placed on a rough ranking of
the per capita GDP of European nations, below Italy, of course, but ahead of Spain,
France, England, the Netherlands and Sweden.1 Although a small country, of only one
million inhabitants, it had demonstrated a capacity to mobilize resources – finance,
technology, human capital and knowhow – on such a scale and to such effect as to
enable it to establish a seaborne empire which reached out to India, China and South
America. At that time, few were able to replicate this feat. By the 1850s, on the other
hand, it had fallen to the last position in the same league table, and what was left of its
overseas empire was almost worthless.
In a recent paper, Costa et al. (2013) have argued that Portugal’s imperial venture,
which lasted for three centuries, was a fairly consistent economic success and by 1800
accounted for some 15 percent of GDP. Yet at this time, it was already some 35 per cent
behind England and some 27 percent behind the Netherlands, suggesting that internal
factors too had a significant impact in the country’s relative economic decline and
divergence vis-à-vis the core countries of the pre-industrial era. The present study uses a
freshly mined data set covering the years 1500-1850, as well as some preliminary
medieval evidence, to examine this proposition.
To do this, we assess Portugal’s overall economic performance during this period. This
involves quantifying appropriate aggregates, such as GDP and GDP per capita,
indicators of sectoral productivity, and measures of economic structure. The principal
conclusion is that between the initial and terminal dates considered aggregate GDP
increased substantially though when expressed in per capita terms, it suffered a
1
For evidence supporting this assertion, see below table 8.
2
moderate decline relative to the then two leading economies in the West - Britain and
Holland. A second finding is that structural change was on a modest scale, an
experience paralleled by most other nations in Europe as far as we can tell from the
currently available data. Thus, despite a weak showing, the economy can hardly be said
to have “failed”, as has often been thought. Rather, by the standards of Early Modern
Europe its performance was creditable, and this despite having one of the fastest
growing populations of this epoch and therefore being vulnerable to a likely Malthusian
constraints.
The present exercise is, obviously, hardly the first of its kind. Indeed, it is one of a
number of recent efforts to try and lay the foundations for a new stage in an economic
history of Europe which focuses on both intra and inter-continental comparisons, as
well as on finding answers to the riddles of the Great and the Little Divergences. At
present, the sample in question includes case studies of Britain, Holland, Germany,
Sweden, Spain and Italy, and a strong likelihood exists that this oil slick will soon
spread to other nations.2
The new Early Modern macroeconomic literature naturally draws on the findings and
lessons from the seminal work of Angus Maddison (2001, 2003 and 2007), which
preceded it, but improves on it in several respects. One of them is a stronger emphasis
not only on the aggregate, but also the sectoral dimensions of the economies which are
being quantified. A second one is the necessity this creates for a quantum leap in the
amount of new data collected and processed, thus significantly adding robustness to
historical conjecture. The third is that it has stimulated the emergence, informally, of a
vast and growing common data base, the greatest merit of which lies in its potential to
induce further systematic comparative analysis. Finally, the use in each case of
2
To our knowledge, there are projects currently under way for the Early Modern period which focus on
Denmark and Finland.
3
analogous research designs means that comparability is greatly enhanced, thus making
it easier to estimate multi-country models.
The reconstruction of Portugal’s macroeconomic aggregates during the pre-industrial
age contributes to our understanding of the economics of the West during the long runup to the Industrial Revolution in several ways. Most obviously, it enlarges the still far
too small a sample of countries which up till now have been the subject of intensive
quantification. In particular, it sheds much needed light on the less studied group of
nations which Allen (2003) has described as the “unsuccessful”, as opposed to the much
better understood cases of the two he rightly deemed as the “successful”. This is an for
the heuristic value of comparisons between them. Secondly, Portugal was one of the
two earliest cradles of European overseas expansion, yet, cannot be said to have
suffered a “reversal of fortune” as a result of this. In terms of this important debate, it
therefore deserves fuller consideration than it has met with to date. Finally, given the
attention received recently by Spain as an unusual case, in Europe, of early high
incomes and resource abundance (Alvarez-Nogal and Prados de la Escosura, 2007 and
2012), an obvious need now arises to test this challenging notion by means of a
complementary analysis of the only other Iberian country.
The structure of the paper is as follows. In the next section, an overview of Portuguese
economic history between 1500 and 1850 is presented. Recent efforts at macroeconomic
quantification are also discussed and assessed. The third section introduces the
methodology and the data base which are employed in the exercise. The fourth submits
the results and analyses their significance in terms both of the conventional wisdom
regarding Portugal within the context of its own historiography, and the long run
implications for the European economy as a whole. The fifth section concludes.
4
2. The Portuguese economy, 1500-1800
Few modern studies have focused explicitly on Portugal’s long-term economic growth
before the nineteenth century and even fewer on the possibility of measuring it with
standard indicators such as the real wage, GDP per capita or productivity. While the
absence of a coherent quantitative research strategy has been a serious obstacle to
assessing the country’s macroeconomic trends accurately, it has not prevented
conclusions from being pronounced on the subject of how the Early Modern economy
evolved. On the whole, the verdict has been on the pessimistic side.
Three factors have been put forward to explain this poor performance.3 One is
Portugal’s relegation, after 1500, to a semi-peripheral role in the international division
of labour of the Modern World-System (Wallerstein, 1974; 1980). This imposed an
excessive reliance on foreign capital, shipping and commercial services, and
manufacturing which inevitably stunted the development of its most dynamic sectors
(Magalhães, 2012). The second was an archaic, technically stagnant agricultural sector
which struggled in vain to overcome the Malthusian trap (Justino, 1981; Santos, 2003)
and kept the mass of the population permanently at the lowest levels of consumption.
An institutional framework which fostered incomplete property rights in land and
caused an excessive concentration of income in the hands of a rentier class was at the
root of this. Both features seriously distorted the incentives for increasing output and
productivity (Magalhães, 2010; Neto, 1997, Oliveira, 1980).
The third factor of long-term economic backwardness, and often considered to be the
most important, was the colonial system. This had several dimensions. One of them was
the succession of colonial booms which diverted resources and entrepreneurship from
home manufacturing and held back the diversification of country’s economy (Godinho,
3
For an up-to-date survey of Portuguese economic history, see Costa et al. (2011).
5
1955; Macedo, 1983). At the same time, agriculture languished because of the persistent
drain on its labor force caused by the attraction of better living conditions overseas or
from the major port cities which serviced the empire (Sergio, [1927] 1984). The riches
which flowed from the colonies have been identified by Pedreira (2004) as yet another
structural barrier. They made foreign foodstuffs easier to acquire and thus crowded out
agriculture and prevented its improvement. But the inflow of colonial wealth had yet
another deleterious effect: it promoted the emergence of a bloated, parasitic tertiary
sector. This discouraged the rise of the influential, development-minded national
bourgeoisie which might otherwise have spearheaded the thrust for structural change
(Godinho, 1978).
Recent revisions have suggested a somewhat rosier picture, at least as far as the 18th
century is concerned. Serrão (2010) has argued that during the seventeen and eighteenth
centuries the Portuguese farm sector expanded and became more market integrated,.
This led to increased specialization, internationalization and technical progress in some
areas. A similar view has been advanced by Santos (2003) for the large scale,
commercialized farming of southern Portugal. Meanwhile, according to Pedreira (2004),
there was significant expansion and technical change also in both the large scale and the
proto-industrial segments of industry, particularly from the 1770s when rising colonial
demand provided a significant impulse for manufactured products. 4
Thus far two attempts have been made to quantify long run Portuguese per capita GDP
and their results are close. Together, they have rejected the traditionally “pessimistic”
view depicted above and have come up with a moderately “optimistic” one instead. In
Madison’s case (2001), the estimate points to an increase between 1500 and 1820 of 52
per cent in this indicator, or an annual rate of 0.13 per cent. In that of Valerio (2010) the
4
This manufacturing surge has led Alexandre (1986) to argue that this was Portugal’s great “missed
opportunity” for industrial take-off, a leap which would have occurred had the breakdown of colonial ties
with Brazil not come about in the 1820s. For a contrary view, see Lains (1991).
6
figures are 72 per cent overall for the period 1500-1800, or an annual rate of 0.18 per
cent.
There are several reasons for doubting either finding. Maddison’s study assumes,
without any theoretical or practical justification, that an estimate of Castille’s long run
GDP by Yun (1994) is not only representative of Spain as a whole, but also of Portugal.
The Spanish trend is therefore used in both situations without any adjustment, a
simplification which calls for re-examination. Valério’s estimate is inferred directly
from a single indicator – urbanization – a procedure for obtaining GDP per capita
indirectly which others have favoured in the past (de Long and Shleifer, …; Acemoglu
et al., 2005). This ignores entirely, however, any impact on this variable that other
contemporary changes might have had, for example, in economic structure or in sectoral
productivity, particularly agriculture.
Two further objections, simply on empirical grounds, can be raised regarding these two
exercises. One is the contradiction implied by the fact that the per capita annual growth
rate for Holland, an economy universally considered as one of the most dynamic of this
era, was of the same order of magnitude, i.e. 0.17 per cent (van Zanden and van
Leeuwen, 2012). The other uses a comparison between the evolution over time of
Maddison’s and Valério’s estimates and the corresponding Portuguese welfare ratio.
The latter is calculated according to the methodology proposed by Allen (2001). This
represents real consumption standards welfare per wage earner and is securely anchored
in an extensive and reliable data base.5 The three variables are displayed in figure 1.
Over the three and a half centuries considered, it reveals a large and increasing
discrepancy between the welfare and the output measures which is too large to be
plausible. Even allowing that a certain divergence between the two concepts may to be
5
The data employed for calculation these ratios are described in section 3. below. The workers for which
this measure was estimated were large city unskilled workers.
7
expected over extended historical periods (Broadberry et al. 2011; Angeles, 2008), it is
difficult to conceive of a situation in which GDP per capita could by half, while the
welfare ratio fell in the same proportion. The distributional implications of this would
be too far fetched.
[figure 1 about here]
3.Methodology and data
3.1 Methodology
In a pre-statistical era such as we are considering, the choice of methodology for
estimating macroeconomic aggregates is strongly conditioned by the availability and
quality of the data required. In a case like Portugal’s, where quantitative history is still
in its infancy, these restrictions are bound to be severe. Adopting an income side
approach to GDP, as Clark (2010) has done, is out of the question in the present state of
the art. In addition to wage (agricultural and industrial) and land rent series, it calls for
an income from capital time series, which simply does not exist. The alternative of
estimating GDP from the output side using direct information regarding the different
sector outputs poses equally formidable problems for these countries. Those in which
this has recently been tried successfully – Britain, Holland and Sweden6 –are precisely
those where a large stock of relevant evidence has been built up over decades of focused
research. In the absence of such an infrastructure, the only possibility remaining is an
output approach which employs indirect sources to arrive at estimates of agricultural
and non-agricultural production, the two essential building blocks for the construction
of a GDP series. Not surprisingly, this has been the route followed for Spain, Italy and
Germany, and is inevitably that which will be pursued also in the present instance.7
6
7
Broadberry et al. (2011), van Zanden and van Leeuwen (2012) and Schon and Krantz (2012).
Alvarez-Nogal and Prados de la Escosura (2007 and 2013), Malanima (2011) and Pfister (2009).
8
The procedure entails two steps and is by now well known and plentifully discussed.
We therefore present it in a summary fashion. The first one is inspired by Wrigley
(1985) and Crafts (1985) and significantly revised by Allen (2000). It involves a
demand-for-food function to estimate gross agricultural output, which is considered
equal to food consumption. In other words, it assumes that exports and imports of food
were equal and/or negligibly different. Agricultural product (Qa) is given by the
expression
Qa = I P M N
(1)
in which P is the real price of agricultural products, I is real income per capita, M is the
real price of other consumer goods and N is total population. The coefficients ,  and
 are, respectively, the own price, income and cross elasticities of demand.
The equivalence between output and consumption, though widely accepted by the
literature, is one of the aspectsof this approach which has yet to be examined
thoroughly. Not only did agriculture also produce industrial raw materials besides
foodstuffs but also self-sufficiency in food is far from obvious in Europe at this time.
We have estimated this differential for Portugal insofar as foreign trade in food is
concerned and compared it to agricultural output. The result turns out to be very small.
Appendix 1 shows the data and calculates the respective impact. The general
supposition is thereby confirmed.8 Unfortunately, a possible raw material bias is beyond
our reach to assess and is not considered here, as happens indeed in the remaining
literature.
8
Non-marketed food production, which was important at this time, is presumed to form a part of our
estimate of total consumption given that although not bought or sold, its producers and consumers were in
contact with the market and adjusted their decisions to changes in the market’s parameters. Pfister
(2008:22) makes this point. For a different view, see Alvarez-Nogal and Prados de la Escosura (2012: 167). For an estimate of this component of agricultural output in eighteenth century France, see Morrison
and Sneider (…).
9
The food-consumption function described above takes into account the impact on food
consumption of fluctuations in real income, food prices and non-food prices, as well as
their respective elasticities. The principal difficulty posed by this approach lies in how
to estimate the real income variable, all the others being reasonably accessible. Ideally,
it should comprise all forms of factor remuneration (labour, land and capital), as well as
their year-to-year changes, but this information is not easily available. To circumvent
this problem, several solutions have been advanced. One is to use the real daily wage as
a proxy for annual real income (Allen, 2000; Malanima, 2011). A second is to assume
constancy in annual wage incomes, with the justification that labour’s effort would vary
in accordance with changes in day wage levels, and thus compensate for the latter’s
fluctuations.9 A third is to employ a weighted index of annual wages (0,75) and land
rents (0,25), as done by Alvarez-Nogal and Prados de la Escosura (2012: 9), which is
what we opt for here.
To obtain the index of wage income, the standard number of days of work per year is
set at 250 as is the current practice, to be multiplied by the daily rate. In a
predominantly rural economy, which is subject to pronounced seasonality, this seems
large, though less so for proto-industrial workers and perhaps not at all for city-dwelling
labour. Likewise, it seems unreasonable to consider that these three categories all enjoy
similar levels of pay. In our estimation, we have consequently experimented with three
scenarios which take these objections into account. The simplest one replicates Allen
(2000)’s formulation, i.e., unskilled wages times 250 days per year for the entire labour
force. Greater complexity is introduced by changing this to a weighted index of
unskilled labourers earning the corresponding wage and working 150 days a year;
skilled urban labourers, who worked 250 days and earned skilled wages; and rural non-
9
This is debated but not implemented by Alvarez-Nogal and Prados de la Escosura (2012).
10
agricultural workers, who are presumed to have been employed 180 days a year and
earned a rate equal to the mean of the unskilled and the skilled wages. The last
hypothesis and our preferred option is to add to the preceding situation an annual land
rent index, with an appropriate weight.10 As will be shown in the following section, the
different outcomes of these procedures do not show much divergence.
A fairly wide range of choices also exists with regard to the selection of demand and
income elasticities. In the absence of any empirical evidence in this matter, the literature
has resorted to emulating the present day elasticities of less developed economies with
presumed similar traits to those of Early Modern economies. The possibilities go, for
own-price elasticity, from -0.4 to –0.7, and for income elasticity, from 0.3 to 0.6. We
have found the arguments advanced by Alvarez-Nogal and Prados de la Escosura (2012)
convincing and have therefore opted here for the set they propose in which = -0.4 ,
=0.3 and =0.1.
The other major step in estimating GDP is the quantification of the non-agricultural part
of the economy. Various possibilities have been tried. Both Malanima (2011) and
Alvarez-Nogal and Prados de la Escosura (2012) have postulated a significantly stable
relation between the urban share of the population and that of the secondary and tertiary
sectors in the economy as a whole. The former has retropolated this link all the way
back to 1300 from a linear regression covering the years 1861- 1936 in which nonagricultural output was the dependent variable and aggregate trade and industry
industrial served as the covariate. The latter has simply used change over time in the
country’s “adjusted” urbanization rate to “proxy those in non-agricultural output per
capita” (2013: 14). Both approaches have disadvantages, the principal one being that
10
The third scenario affords us quite a reasonable coverage vis-à-vis total income, if we accept the same
distribution as Malanima (2011) has done for Early Modern Italy, namely 70 per cent for labour, 20 per
cent for rents and 10 percent for capital.
11
focusing on urban production alone entails implicitly ignoring the contribution of protoindustry to non-agricultural production. A second one is that this overlooks the more
than likely rise in productive efficiency which arose everywhere during the industrial
era.
To surmount these difficulties, we resort to the procedure proposed by Pfister (2009),
which presumes that the inter-sectoral productivity gap (p) between agriculture and total
output is time invariant over the period considered. The expression he uses is
GDPi = Qai / (p *Lai / Li)
(2)
in which Qai is agricultural output and Lai and Li are agricultural and total labour, all of
them at time i, and p is the productivity gap. All that is needed in order to derive the
GDP series is to determine this gap at a point in time for which this is possible and all
the other variables are known, and then retropolate the desired result back as far as
needed. An estimate of p for Portugal exists for the mid 19th century and is obtained
independently of the present exercise. Moreover, it is of a credible order of magnitude,
namely in the band 0.68-0.72,11 since it is similar to the value derived for Spain
(Alvarez-Nogal and Prados de la Escosura, 2007), which was 0.66. It is lower than
those for Italy (Malanima, 2011) and Germany (Pfister, 2009), which in both cases were
0.81, suggesting a higher level of economic development. The problem, however, is that
the underlying assumption, of constancy for p is a strong one and requires further
discussion.
In the estimations presented in the next section we display two versions of Portuguese
GDP. One is based on the procedure described an employs a constant value for p of 0.7.
11
. The p estimates for Portugal use occupational data from Reis (2000 and 2005) and sector output shares
from Lains (2003).
12
This is clearly less satisfactory, for reasons outlined above. The other follows the same
course but transforms this coefficient into a variable. This requires two modifications.
One is to alter the way in which the inter-sectoral productivity gap is defined. Instead of
making it the ratio of the productivities of* agriculture and the whole economy, it uses
for p the ratio of the productivities of the agricultural and the non-agricultural sectors.
This enables us to introduce a realistic method for adjusting over time p’s value to the
shifts in sector productivity.
A second modification therefore involves making p vary with the ratio of the TFPs,
respectively, of agriculture and industry.12 This is not ideal given, besides
manufacturing, the non-agricultural sector also comprises trade and other services, for
which we have no efficiency measure. It is a second best solution but allows us to gauge
the impact on the final result of changing the initial assumption about the constancy of
p. The expression for obtaining this coefficient now is
p = Qai / Lai / (Qnai / Lnai)
(2)
in which Qai is agricultural output, Qnai is non-agricultural output and Lai and Lnai are,
respectively, the total labour of these two sectors, at time i. P at time I is obtained by
multiplying its 1850 figure by the ratio of the TFPs of agriculture and manufacturing.
The change in the way in which p is now conceptualised means, of course, that its value
for the mid 19th century benchmark has to be also different. Figure 2 shows the result of
this calculation, alongside the inter-sectoral productivity gaps for various other
countries at roughly the same time. The order of magnitude is similar and suggests that
levels of development had not seriously diverged at this time yet within Europe with the
exception of Britain.
[Figure 2 about here]
12
Appendix 2 is a brief note on how these two indicator have been estimated.
13
3.2 Data
3.2.1 Information from the market
As in other country studies, this one rests on the supposition that markets played an
important role in economic activity during the Early Modern era. Market signals are
therefore deemed highly relevant for understanding the production and consumption
behaviour of economic agents as well as the outcomes of such decisions.
Our paper makes use of a data set which comprises the prices both of products and of
factors of production between 1300 and 1910. This has been under construction since
2008 and remains so to this day, with the title PWR – Prices, wages and rents in
Portugal, 1300-1910. Long term annual series have been gathered for wages,
commodity prices and land rents for several regions.13 We restrict ourselves for present
purposes to those pertaining to Lisbon and its hinterland, following the widely accepted
principle of the “national representativity” of the data from the country’ principal cities,
in this case Lisbon.14
In common with other such projects, the data for this one come chiefly from the
accounts of religious foundations, the University of Coimbra, hospitals, charitable
institutions, municipalities and royal palaces. They refer to actual market transactions,
usually on a small scale. In order to homogenize results, all monetary values have been
converted into grams of silver and prices have been normalized to correspond to metric
units. The existence of gaps in the series, particularly during the 16th century, forces us,
in keeping with current practice, to fill them in by means of linear interpolation. Given
13
Quantitative history in Portugal has a long and respectable tradition going back to the 1950s. This has
yielded a considerable and mostly published stock of price and wage statistics, though not of land rents.
However, the heterogeneity of procedures followed by different scholars make it difficult to use it for
long run macro-economic analysis. Hence the development of the project PWR Portugal - aiming at
constructing a new data base for all three variables, which can be visited at
http://pwr.dev.simplicidade.com/000000/1/index.htm.
14
Allen (2001) and many others. The adoption here of this principle is justified also by the following
circumstances. Portugal is a small country (89,000 square km) and Lisbon is located more or less in the
middle of it. It has long had reasonable communications by sea and river with most of the country’s
regions and their markets. By European standards (Federico 2010), the integration of its markets for basic
food products at least in the 18th century was already fairly high (Justino 1988; Santos, 1998). In the case
of labour, restrictions on mobility were non-existent and qualitative evidence regarding internal labour
migration during this period is plentiful. This too suggests a well-integrated market (Silbert, 1986; Dias,
1998, Reis, 2005b).
14
the impact this may have on the soundness of the results, the degree of coverage of the
data being used is summarized in table 1.15
[table 1 about here]
a) Wages
Although there is a wide array of occupations for which rates of pay are known, we
have chosen to use here only the daily wages of skilled and unskilled male adult
workers as the measure of the factor raw labour. These wages refer always to
employment in either agriculture or the building industry and to situations in which nonmonetary complementary remunerations were entirely absent. Data for “white collar”,
usually salaried workers is also abundant but are left out of the present exercise.
b) Prices
Again, we use only a small part of the entire range of information on commodity prices
available. For the agricultural sector we have selected those corresponding to the
principal articles of consumption and of production. They comprise wheat and maize,
meat, olive oil, wine, eggs and hens, all of which form part of the standard consumption
basket used by much of the Early Modern period literature and described in Allen
(2001). On the side of manufactures, we take the prices of charcoal, linen cloth, soap
and candles all of which belong to this basket too. We further add those for nails, lime,
paper and ink, in order to endow our data set with a greater sensitivity to the prices of
capital and luxury goods. The consumer price index used in the estimates below adopts
the structure of the so-called “Strasbourg basket” for 1745-1755, with the necessary
adaptations arising out of the differences in consumption and production patterns
between Portugal and northern Europe (Allen, 2001).
c) Land rents
Land rents have attracted little attention from economic historians who deal with
Portugal. At this time, most land in use was not directly cultivated by its lords. Possibly
a little less than half of all agricultural land was under commercial tenancy, with leases
typically running from three to ten years (Monteiro, 2005). The remainder was held
under long term or perpetual emphyteutic contracts, whereby the lord received a fixed
fee and the tenant enjoyed an assignable right to the exclusive enjoyment of all the fruits
15
For comparable evidence on Early Modern Dutch statistics, see van Zanden and van Leeuwen (2013).
15
of the land (Costa et al. 2011; Fonseca and Reis 2011).16 For present purposes, we
assume that the rent of the first category of contracts provides a reliable indicator for the
market value of the services provided by agricultural land as a whole. The argument for
this is that tenant turnover in the second, more rigid category, although lower, was not
insignificant given the mortality of tenants and their successors. Emphyteutic rents
would thus have been more flexible and responsive to market forces than might be
expected and closer in their variance to commercial ones.
Data for land rents are drawn from two sources. One is the aggregate rental income of a
time invariant set of thirty two estates owned and regularly leased by a charitable
institution in the region of Alentejo between 1595 and 1850 (Santos, 2003). The other
comes from a similar set located in the region of Ribatejo and which covers the years
1560- 1700. We fill the gap left for the earlier 16th century, by interpolating from the
land rent index for Spain for the same period published by Alvarez-Nogal and Prados de
la Escosura (2012).
3.2.2 Population and occupational structure
Long term continuous time series for population and its occupational structure are one
of the hardest data problems we have to face regarding Portugal’s Early Modern period.
Until recently, long run demographic trends were shrouded in uncertainty. Empirical
evidence on a national scale was almost entirely drawn from hearth counts at rare and
irregular intervals. The first proper census was not carried out until 1801 (Rodrigues,
2008).The problems this caused were compounded by the uncertainty regarding the
average number of persons per hearth, which makes it difficult to transform hearth
counts into population statistics. The common practice has therefore been to anchor any
historical analysis of Early Modern demographics onto a set of six to eight benchmarks
taken from these data and to interpolate linearly between them.
A paper by Palma and Reis (2013) has now managed to overcome the first of these
informational bottlenecks. Thanks to a fairly numerous set of recent parish level microdemographic studies ranging from the sixteenth to the nineteenth centuries, it has
marshalled an array of records of births and deaths respecting most of the principal
regions of the country and thus been able to construct a proxy for net national
16
While the first of these arrangements applied mostly to larger units of production, the latter
corresponded to small or minuscule farms. Other things being equal, monastic and religious lords had a
preference for the latter and lay lords for the former.
16
demographic variation year by year. Instead of linear interpolations linking the few
available benchmarks, it interpolates this indicator from the first reliable population
count – that of 1527-32 – to deduce a yearly population figure, which is then pinned to
another reliable benchmark, such as that of the 1801 census. The terminal date for the
series is 1850. It should be pointed out that available registers of births and deaths only
start around 1570 so that, for the time being, we are using linear interpolation for the
period 1500-70. The demographic profile we obtain for Portugal is presented in figure
3.
[figure 3 about here]
Unfortunately, a similar continuous occupational structure time series is unlikely to be
available in the near future. This forces us to rely on constructing a set of evenly spaced
benchmarks for this variable and linking them year to year by means of linear
interpolation. We start in 1500 and continue at 50 year intervals all the way down to
1850. Grouping the working population into categories which are relevant to the present
purpose is done here at the most elementary level, and yet even so poses enormous
problems. To begin with, our categorisation does no more than distinguish between the
two most basic economic sectors – agriculture and non-agriculture – since we lack
consistent information to permit a more detailed analysis. Some benchmarks allow a
breakdown of “non-agriculture” into manufacturing, administration, trade, transport and
so on but not all of them. Secondly, we are unable to consider the active population
separately from the rest of the population and thus get an accurate measure of labour
supply, since the evidence for this does not occur in Portugal until the early 20th century.
Our quantification refers entirely therefore to the aggregate population of families
dependent on a particular economic activity, without regard for whether their individual
members were employed full time, part time or not working at all. We should note that
the historical sources we employ, in particular tax records 17, are organised also on a
family basis, never on an individual one, and only mention the occupation of the heads
of households.
17
Most of this information comes from the records of the décima tax, a family income tax which started
in 1643 and left a voluminous though rarely explored mass of documentation. For a good overview of the
records this valuable fiscal measure. see Silva (…).
17
The first step in this exercise is to separate the urban population, defined as the
inhabitants of agglomerations of more than 5,000 residents. We employ for this a single
source, Bairoch (1988), which has two advantages. It provides complete coverage for
the period considered and uses the same methodology throughout. Nevertheless, care is
needed for how these data are employed. Bairoch included in his aggregate estimate all
urban centres irrespective of size. Instead we recalculate his aggregates by excluding all
towns with less than 5,000 inhabitants. At the same time, we have recovered the
residents of all the towns which Bairoch dropped from his count every time they were
not mentioned in a given year in his sources though they are known to have continued
to exist. We assume that this was due to an error, omission or simply to a gap in the
historical records, and not to a contraction of the population to a figure below the
stipulated minimum. We have interpolated the “missing” inhabitants at the level
observed in the count of the previous benchmark, as long as this was not less than
5,000.
A common assumption in such exercises, which we endorse here, is that the urban
population was engaged entirely in non-agricultural activity.18 Non-urban population,
on the other hand, consisted of rural dwellers, not all of whom were associated with
agriculture in some way or another, and of those in small towns, villages and hamlets of
whom the same can be said too. The difficulty lies in how to carry out the partition of
the rural population into these two categories. For 1500, we accept (Wrigley, 1985;
Allen, 2000) that in Portugal, like the rest of rural Europe, up to the early sixteenth
century, agriculture occupied some 80 percent of the population, with the remaining 20
percent corresponding to non-agricultural occupations.19 At the other end of the
continuum, we have reliable data from Reis (2005) for 1800 and 1850, and, for 1750,
from Sá (2005). For 1700, we use unpublished material concerning personal tax rolls
18
Allen (2000). In particular, we ignore the argument by Alvarez-Nogal and Prados de la Escosura (2007
and 2013) about agro-towns, a phenomenon which was present in Portugal only in the Alentejo region,
with 10 percent of the Portuguese population.
19
These proportions are confirmed by the scarce evidence available for late medieval Portugal. See
Godinho (1968-71), Rodrigues (1989) and Marques, (1980).
18
from various regions.20 We derive the remaining benchmarks – 1550, 1600 and 1650 –
from the shares employed by Alvarez-Nogal and Prados de la Escosura (2007) for Spain
in the same years. The results are displayed in figure 4.
[figure 4 about here]
4. Results and discussion
4.1. Overview and periodization
Figures 5a and 5b present the results of our estimates of total real GDP between 1500
and 1850 in its two versions. As described in section 3.1 above, GDP I is obtained with
a constant value for the inter-sectoral productivity gap. GDP II uses a variable instead.
Interestingly and reassuringly, the two results have important similarities. They both
display steady upward tendencies and strong and frequent oscillations about the trend.
Their long run growth rates are within the same order of magnitude, which is small but
not trivial when we consider for how long it was sustained. A relevant difference is that
the former’s annual rate was 0.38 percent over the entire period, implying a cumulative
rise over these three and a half centuries by a factor of 3.7. The second is roughly two
thirds of this, with an annual growth rate of 0.23 percent which was equivalent to an
overall increase by a factor of 2.2. For the sake of comparison, in a similar period
(1510-1897) Holland, one of Europe’s most dynamic nations, achieved a four and a half
fold expansion, corresponding to an annual rate of 0.5 percent (van Zanden and van
Leeuwen, 2013).
[figures 5a and 5 b about here]
20
Data for 1700 exist for the following counties: Avis, Castro Marim, Tavira-Cacela, Portalegre, Viana
do Castelo , Montemor- o-Novo and Vila do Conde.
19
From this point of view, there can be no question that Portugal’s Early Modern
economy was far from stagnant, contrary to what some have claimed (…). On the other
hand, the population it was sustaining in the meantime was experiencing one of the
fastest growth rates of Europe at the time, amounting to a rise of about 450 percent in
the same time span. When this is taken into account, our evaluation switches from
positive to negative, as can be seen from figures 6a and 6b. Real per capita product in
version I falls at a rate of -0.19 percent per annum on trend, while version II’s variation
falls at -0.07 percent a year. In cumulative terms this represents a long run contraction
of, respectively, 30 and 22 percent. Thus, Holland now leaves Portugal behind by a
differential of 90 percentage points in the first instance and 82, in the second, a sharp
contrast in welfare between the two countries.
[figs 6a and 6b about here]
Figures 6a and 6b reveal another similarity of interest involving the two per capita GDP
estimates. One regards to the long swings of this indicator which brings to light
unexpected dimensions of the ebb and flow of this economy. A three sub-period
division emerges. The first one covers more or less the whole of the fifteen hundreds, a
time marked by very severe fluctuations relating to climatic circumstances (1521-2,
….), but also by the severest secular decline, from 1500 to 1600 (circa 40 percentage
points) in per capita output of the Early Modern era. In national terms, this is
unexpected given that the conventional wisdom has been to ascribe to this century a
positive economic status, partly associated with the emergence of Portugal’s seaborne
empire.
The second swing in our periodization is an upward one, running from the early
seventeenth to the mid eighteenth centuries. Again, this will cause surprise to some, for
two reasons. The first is that it contradicts the traditional view of an “iron seventeenth
20
century”, of economic recession and human hardship, assumed to be in consonance with
most of Europe and also with the now beleaguered fortunes of the empire. The second
reason is the shift to a burst of economic growth during the first half of the eighteenth
century. In the traditional view, this has been accepted as the consequence of the lustre
of Brazil’s Golden Age. What now emerges as of greater interest still is the amplitude
of this movement which the graphs reveal. Figure 6a indicates that, by 1760, GDP per
capita had reached for the first time the level attained in 1500, thanks to a cumulative
growth of 66 percent relative to the low point of the early seventeenth century. Figure
6b depicts an even more remarkable fact, namely that the level achieved in 1760 may
have exceeded the 1500 benchmark by more than 40 percent.
The third long swing, which runs from 1760 to the mid nineteenth century, portrays a
significant retreat of the economy, which wiped out most of the gains of the previous
growth period. At one point (fig 6b), this drove the Portuguese economy, in 1815, to the
level of the fearful crisis of 1521. It was a time of natural (the Lisbon earthquake) and
man-made disasters (the Seven Years and the Napoleonic wars) which might account, in
part at least, and for part of the decline. Political turmoil, even civil war, and loss of
empire after 1820 might help account, at least in part, for the absence of recovery from
then until 1850.
At this juncture, it would have been desirable to participate fully in the scholarly debate
concerning the economic performance of European nations in the century and a half
following the Black Death. How quick was the economic and demographic recovery
from this great shock? What implications may this have had for subsequent economic
development during the Early Modern period? In the present state of research, the PWR
data base cannot support a backward extension to 1348 of our analysis along the lines
we have been following here. All it allows us to do is to create a real wage index for
21
skilled labour going back to before the Plague and joining it up, after 1500, with the real
wage time series we have been using to obtain our GDP figures. The result, presented in
figure 7, suggests that this as yet unquantified demographic shock was large enough to
produce the expected jump in real wages, which, by the end of the fourteenth century,
may have tripled. This enormous gain was then eroded as the population gradually
recovered on the course of the fifteenth century and finally reached, in circa 1500, its
1347 level, real wages gradually declined, and ended up back at their pre-Black Death
level soon after 1500. This total loss of the gains for labour associated with the 1347
cataclysm did not occur in England (Clark, 2007), Holland or Spain (Alvarez-Nogal and
Prados de la Escosura, 2012) while in Italy, it did so only much later (Malanima, 2011).
We may conjecture that this probably constituted a serious comparative disadvantage
for Portuguese long term development starting in the 1500s.
[figure 7 about here]
4.2 The Portuguese economy in the European mirror
The recent study by Alvarez-Nogal and Prados de la Escosura (2012) allows us to
situate our present estimates of Portuguese per capita GDP in the broader historical and
geographical context of European national growth patterns between 1550 and 1850. It
thereby raises interesting comparative issues. Table 2 contains their compilation of GDP
per capita series at fifty year intervals and starting in 1500, for a number of countries
adjusted for different price levels in accordance with the short cut procedure pioneered
by Prados de la Escosura (2000). They are expressed in US 1850 relative prices, with
the UK level at that date held as the term of reference (=100). We now add to the
original data, a full run of new Swedish estimates Schon and Krantz, (2012), as well as
22
our Portuguese results, both of them projected back from their respective 1850
benchmark figures.
[table 2 about here]
Obviously, these figures cannot be treated as the result of a particularly precise
methodology, but they are of interest even when just considered as approximations.
Three main finding can be drawn from them. As was mentioned in the opening
statement of this paper, at the beginning of the Early Modern period, Portugal appears
to have belonged to the group of economic leaders, along with Spain and Italy. Those
which in later centuries were to lead Europe economically were still at the back of the
pack, though the Netherlands can be seen as being by then not far from its early and
well-known “explosion” of modern growth. This first impression corroborates the view
propounded by Alvarez-Nogal and Prados de la Escosura (2007, 2012) that setting up,
in the Early Modern era, vast seaborne empires flung around the globe could only be
done by countries endowed with abundant resources and not because they were
impoverished and had to seek outlets to overcome this constraint. On the other hand,
what made the Iberian nations so far advanced in terms of GDP is another matter which
will be taken up for consideration further on in this paper.
A second conclusion suggested by table 2 is that although Portugal’s long-run
macroeconomic performance was not outstanding, it was not by current standards a
failure either, particularly if we leave out the 1800-1850 period out. Slow decline from
the sixteenth to the nineteenth centuries was the norm in Europe, which, from time to
time, was broken by a burst of growth temporarily inverting the trend. In Portugal, this
burst came during the eighteenth century. In particular, if we compare it with Britain
and the Netherlands, at times it was ahead of them, other times it fell behind, but until
the 1750s, it was never losing ground to them permanently. This evaluation leads us to
23
the need for a definitive reconsideration of the persistent concern with national
“backwardness” and “decadence” which has been the hallmark of the Portuguese
historiography of the pre-industrial era. This does not appear to have been the time of
Portugal’s little divergence.
The last 50 year phase we are observing here, from 1800 to 1850, links the Early
Modern period with the beginnings of Kuznetzian Modern Economic Growth. Two
features stand out in Europe in this epoch. One is that whereas in earlier times, in every
half century, some economies, but not always the same ones, progressed and others
regressed, this time, all economies but one experienced significant expansion. Britain,
of course, stands out in this respect and its impact on the other economies, coupled with
the advent of globalization, no doubt contributed strongly to this generalized surge. The
other is that Portugal, which was also involved in this process and also endured, like all
the others, its share of social, political and institutional disruption, was left out of it.
The reasons for this have barely been on the agenda of present day research on
Portuguese contemporary Economic History. The latter has remained continually
focused on the issue of national economic backwardness, which has been considered as
a feature of the latter part of the nineteenth and of the twentieth centuries.
Yet, looking at the very long run, as one can here, it is tempting to recognize, first of all,
how much these fifty years appear to be the moment when the country evidently broke
off from the rest of Western Europe and began persistently to fall behind. In the second
place, it is impossible to avoid thinking of the deleterious impact of two then
momentous losses for Portugal’s economy: the end of its commercial privileges in the
newly liberated colony of Brazil; and the loss of its supremacy in the British wine
market. The latter plunged the important wine sector into a deep crisis. The former
implied, according to the recent study by Costa et al., 2013), foregoing a gain for GDP
24
in a range of 15 to 20 percent, as was estimated for the end of the seventeen hundreds.
The failure to reorganize the economy in order to cope with these two shocks plagued
the following century and was possibly explains why in Europe Portugal suffered the
strongest divergence of all vis-à-vis the advanced core.
4.3 Iberian parallels or contrasts?
The issue of possible similarities between the two Iberian Peninsula’s neighbours are a
special though nevertheless interesting case of Portugal’s reflection in the European
mirror. The two countries have much in common in their geography and history which
is relevant to the present discussion. On the first score, they are southern European, they
have important coast lines but difficult internal communications, their natural average
aptitude for temperate climate agriculture is less than satisfactory, yet for this reason too
they are able to specialize in tradable commodities which are sought by Northern
Europe. On the second score, both polities21 emerged after a prolonged struggle of
reconquest of land from the Moorish kingdoms and therefore had all the spin-offs of
military activity strongly imprinted on their birth marks. As part of this, they set
themselves up as nations with unusually abundant land resources, strong towns, free and
mobile labour and emphatic political checks on central power. In the sixteenth century,
they created impressive overseas empires, which brought amazing riches though had
probably much less impact on GDP.
The macroeconomic profiles of the two countries during the Early Modern period are
also somewhat similar. The trend growth of GDP for Spain had an annual rate for this
time span of just under 0.4 percent, that for Portugal was either 0.38 or 0.23 (versions I
or II). In per capita terms, up to 1800 they were very much alike too, at which point
Spain had a burst of growth while Portugal experienced a decline.
21
We are aware that speaking of “Spain” in the present historical context is a serious anachronism but
one which is widely practised for reasons of simplicity and inter-temporal comparability. It is equivalent
to speaking of Germany, Switzerland or even France in the same period.
25
In their recent re-interpretation of Spanish economic history between 1270 and 1850,
Alvarez-Nogal and Prados de la Escosura (2012) have come up with a challenge to the
conventional view on the transition of this economy from the late Middle Ages to the
first century of the Early Modern period. Their claim is that this made the country quite
different in important ways from others in Western Europe, and may have led to
contrasts which were decisive for future developments. The initial regime, starting from
the thirteenth century, was based on “a high land–labour ratio frontier economy, which
[was] pastoral, trade-oriented, and led by towns. Wages and food consumption were
relatively high” (p.1). This would account for Spain’s affluence prior to, as well as for a
while after the American expansion. The second regime, from circa 1600 on, was “a
more agricultural and densely populated low-wage economy which, although it grew at
a pace similar to that of 1270–1600, ended at a lower level” (p.1).
Do we find these regimes also in Portugal and with the same transitional timings? Are
their respective macroeconomic consequences comparable too? Unfortunately, as noted
above, data on Portugal for the period prior to 1500 are too scarce to allow us to make
more than a very rough assessment of the nature of the regime which the country
experienced between 1300 and 1600. For two centuries before 1500, population appears
to have fluctuated considerably, with a possible peak of 1.2 million in the pre-Black
Death decades, a low point in the 1420s and a recovery of the 1340s mark around the
1520s (Henriques, 2013). Throughout this time, therefore, density varied a lot but was
always low compared to what happened once it started to grow rapidly and consistently
over the course of the sixteenth century.
In the hundred years before 1600, population almost doubled, causing the land-labour
ratio to reach a figure which was under 50 percent of its level in 1500 and probably for a
long time before this date too. It seems fair to conclude that in the two centuries
26
before1500, the regime in Portugal was indeed one of land and food abundance, as in
Spain. The real wages then being earned were relatively high too, as shown in figure 7
above, or at least far higher than was the experience of the sixteenth century and
beyond. Such findings enhance the plausibility of our two papers’ parallel claims
regarding the international prominence of Iberia in terms of per capita GDP at the start
of the Early Modern period.
This situation was to change dramatically, however, in the course of the sixteenth
century. Figures 8 and 9 depict, respectively, the profiles of the land-labour ratio and of
food consumption per capita from 1500 onwards. It corroborates the preceding analysis
by adding quantitative content to it. In particular, figure 9 shows that the early 1600s
were the moment when food consumption not only reached its lowest ebb since as far
back as we can know, but made a transition (in two successive steps: 1500-1550s and
1550s-1600s) to a new and permanent level 30 percent below the 1500 mark. It was not
until the early eighteenth century that any improvement occurred in this respect, but it
neither reached the bounty of the pre-1500 era, nor was long-lasting. After the 1760s,
Portuguese society returned again to its food consumption amounts of the early 1600s
and remained there until well past the middle of the nineteenth century.
[figure 8 about here]
[figure 9 about here]
It seems indubitable that the outline of Spain’s first economic regime described above
fits the circumstances of Portugal quite closely and in the same time frame, although
more work still needs to be done on this topic. From a structural perspective, the
comparison is hard to sustain, mainly owing to the weakness of available data. The role
of the urban economy or of its strong trade orientation, for example, are hard to deal
with comparatively. In the case of the contrast between the earlier pastoral character of
27
the primary sector and its later more agricultural and land-intensive vocation the
empirical ground for assessing Portugal is not particularly firm but tentative inference is
supportive of a similar conclusion. Evidence on the composition of Portuguese
agricultural output in 1515 shows that animal products were then worth significantly
more than arable ones, in other words, more meat than bread was being consumed
(Godinho,1968).22 Another sign pointing in this direction is revealed by figure 10,
namely the secular increase by a factor of three in the total land yield. This could only
have happened with large increases in labour inputs, an occurrence which would have
been highly unlikely on this scale in the case of animal husbandry continuing to prevail.
[figure 10 about here]
4.4 Structure and agriculture
Most European countries in the Early Modern period underwent only very slow, if any
change in their economic structures. The exceptions were the Netherlands (van Zanden
and van Leeuwen, 2012) and Britain (Broadberry et al., 2011), the only ones to have
experienced long term real per capita GDP growth. In such a situation, the efficiency of
the primary sector takes on a particularly important role, given that it is subject to the
constraint imposed by the fixed factor of production, i.e. land. Population increase in
this context becomes a problem, due to the burden of decreasing marginal returns to
labour and was bound to weigh heavily on the mean result for all sectors together. Even
when industry and services were raising their respective productivities, that of GDP
could easily fall.
These problems were clearly visible in the case of Portugal, which had one of the fastest
growing populations in Europe over these 350 years and a share of agriculture in total
22
By the nineteenth century, these positions had been inverted (Reis, 2000).
28
output slightly below 50 percent.23 This combination raises the issue of how, during this
period, the sector was able nevertheless to feed, on a fixed amount of land, a number of
mouths which quadrupled, whilst keeping food consumption per capita steady for most
of the time, with the exception of the 16th century. It also prompts concern over the
issue that although at first sight lacklustre, the performance of the Portuguese primary
sector may actually have been rather more impressive than one might suppose. Finally,
it helps us to understand why structural change was apparently so hard to achieve in this
and other similarly structured economies, where numerous non-food producers weighed
heavily on low surplus cultivators.
The problem was how to produce, from a fixed amount of land, the enormously
increased agricultural output needed by this expanding society, without reducing the
marginal product of labour to the point of hopeless impoverishment of the work force.
Four circumstances combined to achieve this result. One was land clearance (arroteias),
which occurred with varying degrees of intensity over time.24 The second was a gradual
shift from animal to arable husbandry, as happened elsewhere throughout Europe, about
which little is known quantitatively. The third was the so-called “maize revolution”,
which spread throughout the northern half of Portugal and significantly displaced other
grains, mainly rye and millet. The fourth was the development and expansion of a
commercial wine sector from the late 17th century. All of these processes were gradual
and only one – the introduction and spread of maize - might be described as a
technological shock (Costa et al., 2011). Unfortunately, too little is known about any of
23
In Spain it was closer to 55 percent but similarly stable over the long run until, surprisingly, the last 70
years of our period.
24
Our view is that by the 16th century, there was little cultivable land which had never had some economic
use or another, no matter how tenuous. Given the pastoral vocation of much of the national territory, it
seems likely that a lot of the clearance was in order to convert rough pasture into arable. It therefore
represented an intensification of land use, but not an increase in “agricultural land”.
29
them. In particular, their respective chronologies, impacts and rates of diffusion remain
obscure and tracking these movements with precision is hard.
Land clearances had long been the classic way to intensify the use of the fixed
production factor in agriculture and thereby raise efficiency. It was a “land augmenting”
improvement and unlikely therefore to have entailed gains in labour productivity. They
were certainly important before 1500 (Barata and Henriques, 2011) and continued to be
so during the fifteen hundreds (Gil 1965). At this time they may even have been the
principal positive influence on TFP, since the other improvements had not yet made
themselves felt. A glance at the land yield figures (see figure 10) suggests that it was
concentrated between the 1540s and the 1600s. Throughout the next two centuries,
however, there was an unavoidable decline in the amount of under-utilized land
available for putting under the plough. Data from the accounts of several monasteries
suggest that new leases for clearing land were becoming less common, with a clear drop
from the 17th to the 18th centuries. They probably comprised land which was of
increasingly poor quality too (Oliveira 1979; Maia 1991; Neto 1997; Campos 1989;
Silva 1994; and Amorim 1994).
The introduction to Portugal, in the early 16th century, of American corn (zea maïs) and
its subsequent diffusion has been glorified by historians as a “revolution” (Ribeiro,
1963). In fact it took until the first half of the 19th century to be completed.25 Once a
garden plant, the advantages of converting it into a field plant were manifold. Its yields
were considerably higher than for other breadstuffs (wheat and rye), its caloric content
per kilogram was 30 percent greater, and its unit costs of production were lower. In
25
Thorough studies of the Portuguese “maize revolution” are surprisingly sparse. See, however, Almeida
(1992). For a world view on this plant, see Langer (1975) and Messer (2001). There is an obvious parallel
with the potato but two contrasts are important. The potato revolution came later and was shorter and
maize never had to face a natural catastrophe, remaining Portugal’s principal breadstuff until the
twentieth century. Nunn and Qian (2011) give reasons why people resisted the widespread adoptions of
the potato until late. Historical evidence indicates it did not play a major role in Portugal until the second
half of the nineteenth century.
30
addition, it required more labour per hectare, was less sensitive to climate fluctuation
and could be used for different purposes besides human food. Adopting maize involved
a learning curve for Portuguese peasants, who despite being already familiar with millet,
had now to reorganize the field system, create micro irrigation facilities and therefore
undertake a certain amount of investment, both physical and informational. It was thus
not a simple matter and involved a degree of social transformation and cohesion.
Little is known regarding the timing of the spread of this crop. It is clear, nevertheless,
that around 1600 its share in total grain output was small, though non trivial, and by
1850 had reached its long term ceiling, having attained 60 percent of total grain
production. In between these benchmarks, information from local histories points to a
vigorous spread all through the 1600s and the first half of the 1700s (Oliveira, 1990 and
2002). Not surprisingly, a national survey of parishes in 1758, the memórias paroquiais,
shows that maize had taken on a leading role in most of the country north of the Tagus
river, where conditions were best suited for it.
The growing of vine and the production of wine, although hardly a novelty for the Early
Modern period, developed remarkably at this time and became the second pillar of the
sustained improvement in agriculture that we can observe. Much more is known about
this sector, in particular the timing of its expansion, from the late 17th century to its
heyday in the 1750s and subsequent deceleration down to circa 1800. Total output
doubled between 1700 and 1800 (Martins, 1998). Can we speak in this case of a
technological shock?
There were two drivers behind this change. One was sustained market expansion, both
on the national and international fronts. The latter was significantly stimulated by a
change in military and diplomatic relations which led to the signing of the Methuen
treaty between England and Portugal in 1703. This gave Portuguese wine a signal
31
advantage throughout the 1700s in the English market, the only one on a major scale in
Europe at this time (Cardoso et al. 2003).The other was technical progress on the
ground, which occurred in grape growing, the processing of wine and its marketing. As
in the case of maize, the conjunction of circumstances meant deep adjustments in the
regions where the process made itself felt. It required profound changes in the field
system, new equipment and production techniques, and substantial investment. It led to
pronounced productive specialization – some districts in northern Portugal became
practically mono-cultural – and required the achievement of higher levels of marketing
expertise (Serrão, 2010).
Two questions are raised by this sketch of the evolution of Portuguese evolution. The
first arises when we compare the vague chronology of events presented above with the
curve of agricultural output per worker presented in figure 11. This reveals three stages
in this partial productivity measure, of which the first, the sixteenth century, appears
with a significant fall at a time when only some land enhancing improvement was
counteracting the effect of population growth. The second phase covers the next century
and a half. It reflects the benefits of the spread of maize and of wine, both of which had
tremendous land enhancing effects, besides involving significant capital inputs as well.
This happened during a time when the demographic pressure on the stock of agricultural
land continued, though much abated by comparison with the sixteenth century. The
result was a remarkable increase in agricultural product per worker at an annual rate of
about 0.34 percent. These changes were must have been labour enhancing too. The third
phase, from the 1750s to 1850, witnesses a severe reversal previous successes, with a
negative growth rate in average productivity of 0.35 per cent per annum.
[figure 11 about here]
32
Why did this happen? Was it simply a Malthusian downswing following the upswing of
the second phase? Although Malthusian influences were certainly involved, two non –
Malthusian ones played a role here as well. One was the disengagement between
Portugal and England in the late 18th century which caused a considerable loss of share
for wine growers and a price collapse in their markets, clearly an exogenous influence.
The other was the inevitable slowdown in the spread of maize as good land with
irrigation potential became increasingly scarce. The problem for Portugal’s economy at
this juncture was that there were no further technological shock available any more, but
with population still growing after 1800, the drop in the marginal return to labour
became increasingly difficult to contain. The repercussions of this went through wages
and caused the downward shift in GDP per capita.
5. Conclusion
Portuguese economic historiography has viewed the country’s macroeconomic
performance on the whole with a jaundiced eye. For those concerned with the Early
Modern period, the majority view has been that from the end of the Middle Ages to the
end of the Ancien Regime this could best be characterized with the words “decline” or
decadence”.26 Some bright moments existed, such as during the Golden Age of Brazil,
but essentially the experience was consistently negative. For those who sought to
account for how Portugal had become a “backward” country in the second half of the
twentieth century, the answer was persistent divergence from the core countries since
the mid nineteenth century, when the latter began to surge in their performance.27
Interestingly, from an intellectual point of view these two strands never met. Otherwise,
they would have had some difficulty in reconciling their respective perspectives, unless
26
27
See text above, section 2.
Pereira (1983), Reis (1993), Justino (1988-9), Lains (2003).
33
they could accept that Portugal had had an enviable economic position at the end of the
medieval period and declined ever since.
This paper has attempted to reconstruct time series for the main indices of
macroeconomic performance, from the dawn of the Early Modern period to the mid
eighteen hundreds to work out these long term historiographic problems. We have used
for this a new data base of prices, rents and wages and followed the procedures which
are current in the literature that quantifies the long term economic evolution of nations.
The principal finding is that overall Portugal did not fall behind most of Europe
between 1500 and 1800. Indeed, it enjoyed some comparatively high moments, such as
in the transition from the fifteenth to the sixteenth centuries or in the first half of the
eighteenth centuries. It also experienced slow but long periods of growth thanks to the
conjunction of external shocks to its agricultural sector. It fell behind the two leaders of
Early Modern growth, but more or less always kept up with the remaining nations.
This story could have been different if some circumstances had been different. Most
important of all in this was demography, which finally eroded, in Malthusian style, the
productivity gains achieved. We have not tried here to explain why the Portuguese
demographic response to increases in per capita GDP was more intense than in other
countries. Another was the exhaustion of opportunities for raising productivity, in part a
matter of politics and therefore beyond control, in part a matter of finite natural
resources, also perhaps beyond control.
The Portuguese economy began to really decline during 1800-1850, just as the whole of
Europe seemed to be breaking out of the Malthusian grip. This is when divergence
began to occur, and not before. Once it had started, however, it became cumulative.
Probably the reason was that the new domestic conditions required for benefitting from
the forces of globalization which the Industrial Revolution had unleashed were not
34
sufficiently present in Portugal, and this is the second part of the narrative of
“backwardness”. It lies however outside this paper.
REFERENCES
FIGURES AND TABLES
Fig 1 GDP per capita (Maddison and Valerio) and
Welfare ratio (1500=100)
200
150
100
50
0
1500
1550
1600
1650
Maddison
1700
Valerio
1750
1800
1825
1850
Welfare ratio
Sources: Maddison (2001) and Valério (2010) for GDP per capita; for the welfare ratio,
see text
35
Fig 2 Inter-sectoral productivity gaps (p):
agriculture vs non-agriculture
1,2
1
0,8
0,6
0,4
0,2
0
France
(1840)
Germany
(1850)
Sweden
(1880)
Spain
(1850)
Britain
(1840)
Portugal
(1850)
Sources: for Spain, Prados de la Escosura (2003); for Portugal, Lains (2003) and Reis
(2005); for all others, Crafts (1984)
Note: for the calculation of p, see text
Table 1
Data coverage of series, 15001850
(percentage of number of years for which reliable data are
available)
wages wheat maize meat eggs hens wine
16c
17c
18c
1800-50
38
40
65
100
62
90
96
100
na
84
94
100
30
98
99
100
33
100
100
100
Sources: see text
36
35
100
100
100
55
82
100
78
olive
oil
39
100
100
100
charcoal linen
52
98
80
100
32
60
83
na
land
rents
40
100
100
100
Fig 3 Population of Portugal, 1500-1850
(linear interpolation 1500-1570)
4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
Sources: see text.
Fig 4 Occupational shares of Population 15001850
0,8
0,6
0,4
0,2
0
1500
1550
urban
1600
1650
rural non agric
Source: see text
37
1700
agric
1750
1800
total non agric
1842
1824
1806
1788
1770
1752
1734
1716
1698
1680
1662
1644
1626
1608
1590
1572
1554
1536
1518
1500
0
Fig 5a GDP I (1500=100)
400,00
350,00
300,00
250,00
200,00
150,00
100,00
50,00
Fig 5 b GDP II 1500=100
Sources: see text
38
1830
1808
1720
1698
1676
1654
1632
1610
1588
1566
1544
1522
1500
450,0
400,0
350,0
300,0
250,0
200,0
150,0
100,0
50,0
0,0
1836
1773
1786
1815
1752
1764
1794
1731
1742
1710
1689
1668
1647
1626
1605
1584
1563
1542
1521
1500
0,00
Fig 6a
GDP I pc (1500=100)
120,00
100,00
80,00
60,00
40,00
20,00
1836
1815
1794
1773
1752
1731
1710
1689
1668
1647
1626
1605
1584
1563
1542
1521
1500
0,00
Sources: see text
Fig 6b GDP II pc (1500=100)
180,0
160,0
140,0
120,0
100,0
80,0
60,0
40,0
20,0
Sources: see text
39
1836
1815
1794
1773
1752
1731
1710
1689
1668
1647
1626
1605
1584
1563
1542
1521
1500
0,0
Fig 7 Real wage of skilled labour, 1340-1600
14
12
10
8
6
4
2
1589
1572
1555
1538
1521
1504
1487
1470
1453
1436
1419
1402
1385
1368
1351
1334
1317
1300
0
Sources: see text
Note: the deflator of the nominal wage is composed of wine and wheat prices
only, the two largest consumption items.
Table 2 GDP per capita in Western Europe
(UK 1850= 100)
Britain Netherlands Germany France Italy Spain Sweden Portugal
1500
1550
1600
1650
1700
1750
1800
1850
39
39
37
34
55
61
75
100
37
37
68
69
54
60
67
79
49
na
34
Na
40
45
42
61
50
Na
50
na
54
55
56
78
68
64
60
62
65
68
60
66
50
54
53
41
48
46
54
64
na
35
na
42
62
47
46
52
64
35
41
45
46
61
49
46
Sources: for Sweden, Schon and Krantz (2012); for Portugal, see text; for the rest, see
Alvarez-Nogal and Prados de da Escosura (2013).
40
Note: the figures are ten year averages centered on each benchmark year; we have
chosen version I of Portuguese per capita GDP for this table because the stronger
oscillations of version II would lead to severe distortions.
Figure 8 Land-population ratio (ha per inhabitant)
5,0
4,0
3,0
2,0
1,0
1794
1815
1836
1794
1815
1836
1773
1752
1731
1710
1689
1668
1647
1626
1605
1584
1563
1542
1521
1500
0,0
Sources:
Figure 9 Agricultural output per capita
120
100
80
60
40
20
Sources: see text
41
1773
1752
1731
1710
1689
1668
1647
1626
1605
1584
1563
1542
1521
1500
0
Sources:
42
100
80
60
40
20
0
1800
1780
1760
1740
1720
1700
1680
1660
1640
1620
1600
1580
1560
1540
1520
1500
1840
120
1840
Average agric product per worker
(1500=100)
1820
Sources:
1820
1800
1780
1760
1740
1720
1700
1680
1660
1640
1620
1600
Fig 11
1580
1560
1540
1520
1500
Figure 10 Average land yield
90
80
70
60
50
40
30
20
10
0
APPENDIX 1
A note on the estimation of Portuguese food surpluses and deficits,
1500-1850
The need to produce estimates of exports and imports of the main foodstuffs in Portugal
during these 350 years in the context of estimating its gross agricultural product arises
from two circumstances. One of them is the need to verify whether the widely held
assumption that food output and consumption in Early Modern economies were roughly
equal holds for Portugal. This premise must be clarified so that a correct estimate of
food output can be derived from one for consumption. The consensus in the literature
has been to accept Allen’s (2000) claim that, in the main, the international trade in
foodstuffs occurred on a very small scale at this time and that such an identity may be
taken for granted (Pfister, 2008; Alvarez-Nogal and Prados de la Escosura, 2007;
Malanima, 2010). The exceptions were the Netherlands and England, where even so the
differential never exceeded 10 percent and would consequently have had no more than a
modest impact on the estimation of the gross agricultural product.
In the specific case of Portugal, a second reason for raising this issue is the strongly held
view that the country has always suffered from a pronounced food deficit, as a result of
the inability of its arable sector to meet the nutritional requirements – mainly grain - of
its population. Already a favourite topic by the early 17th century, it has been taken up
in every century thereafter by the many writers who have pondered over the problems of
the country’s decline and stressed the chronic need for massive imports of cereals as a
sign of economic failure (Marques, 1971). More recently, it has also been taken up by
historians who have mostly endorsed and reinforced this belief. Fairly typically,
Godinho (1955:147), for instance, has written that “une des constantes les plus
43
indiscutables et plus importantes de l’histoire économique portuguaise c’est le déficit en
grains”.
The purpose of this Note is first of all to gather the available information concerning the
foodstuffs consumed in Portugal and which were the object of significant international
transactions. This will enable us to calculate for each one of our benchmark years the
global surplus or deficit of the trade in agricultural commodities and compare this with
our estimates, at current prices, of agricultural consumption, in order to determine the
ratio (r) of domestic agricultural production to consumption.
This exercise suffers from several shortcomings. Portuguese foreign trade data are
sparse, especially for the 16th century, and those we could obtain do not always coincide
with our benchmark years. Until the late 18th century, there are no Portuguese official
trade statistics and most of the estimates proposed by historians are obtained in official
reports, accounts by travellers and consuls, petitions and remonstrances sent to the king,
and also the foreign trade statistics of Portugal’s principal commercial partners. We
have focused here exclusively on the three most important items – grain, wine and olive
oil. Other commodities such as almonds, figs, wool, etc. have been ignored, given their
lesser importance and the tremendous effort required in order to quantify their
respective trades. The results have been converted to both volume and value estimates
using contemporary prices and the standard measures supplied by the PWR data base.
For each benchmark year we have expressed the export or import of our three main
items in their respective current values in grams of silver (cols 1, 2 and 3) and summed
them up to calculate the overall food deficits or surpluses in silver too (col 4). Since we
do not possess direct any quantification of national agricultural consumption at current
prices, we use instead an estimate for it in grams of silver obtained using a short cut
estimation method proposed by Malanima (2011: 179). This affords us a standard of
44
comparison with which to gauge the importance of the food surplus/deficit relative to
the national effort at producing foodstuffs. The implementation of this procedure starts
by multiplying the total wage bill (see the main text) in grams of silver by 1.4 to obtain
the presumed income of all production factors (including also land and capital). In turn
this is multiplied by a coefficient of 0.6, to arrive at a figure for the total expenditure on
food of the recipients of national income, also in grams of silver (col 5 of table #). This
in turn allows us to assess the magnitude of the food surpluses/deficits relative to food
consumption (col 6 of table #) and to determine the value of the ratio r (col 7 of table #)
which helps us to adjust correctly food consumption when trying to estimate
agricultural output.
1500 and 1550
Agricultural exports from Portugal during the 16th century were very small
compared to re-exports from the empire, mainly to northern Europe. In particular, wine
exports, later to be a key item in Portuguese foreign trade, appear as insignificant in the
available sources. Total agricultural exports for the years 1535-7 amounted to 8.2
million reis in monetary value or, in silver, 0.680 tons. Wine exports in 1535-7
amounted to a negligible total of 18,425 hl, worth something of the order of …grams of
silver, the rest being mostly olive oil worth …(Costa et al., 2011). For want of a better
solution, we have assigned these data to our 1550 benchmark. To obtain figures for
1500, we have fitted a linear trend to the first of these items, given that olive trees are a
slow developing perennial, and a polynomial to the second, given that there is
qualitative evidence of accelerating growth in sales abroad of wine in the second half of
the 17th century. These are based on the respective volumes in 1550 (Costa et al., 2011)
45
and in 1700 (Hanson, ??) and enable us to justify, tentatively, attributing negligible
exports of wine and olive oil to the start of the 16th century.
National grain imports during this entire century are shrouded in mystery despite
frequent references by foreign and national observers to their substantial scale and the
concern of rulers to ensure that adequate supplies, particularly for Lisbon and also for
lesser cities, were assured. Rebelo da Silva, cited by VMG (Descobrimentos, 279),
claimed that between 1525 and 1562, the Cortes stated that yearly grain M were
500,000 cruzados, i.e. 200 contos. At the then current price of 5.53 rs/l this would have
represented a volume of 43,679 moios, or 36.2 million litres, and worth 17.4 tons of
silver, which we have adopted for this benchmark. This result is preferred here to
VMG’s (Prix: 147) estimate of 100,000 moios of grain circa 1550 for which the
evidential support is weak.28
1600
Given the absence of any export figures for olive oil and wine, we have
interpolated them also, as described above, from the two benchmarks for which
evidence exists. For the former, we have inferred a volume of 3.1 million litres worth
14.2 tons of silver. For the latter, we obtain a volume of 0.22 million litres worth 0,021
tons of silver.
For grain and for lack of anything better, we have taken the mean of the
imported volumes of grain in 1550 and 1650 – i.e. 24.5 million litres - and multiplied it
by the current price of 1.0 grams of silver per litre, making a global value of 24.5 tons
of silver for this benchmark.
1650
28
VMG’s first reference to this number, in 1955, was taken from Barros (1941: 115). Barros however
was citing a mid seventeenth century document produced by Lisbon’s municipality, which in any case has
never been traced.
46
According to trade figures inferred from Rau’s (???) 17th century shipping
estimates, total Portuguese grain imports amounted to 13.0 million litres on average
during the 1640s, a figure which we adopt for 1650. At a price for wheat in Lisbon of
1.1 grams of silver per litre, the total purchases abroad of this item would have come to
about 14.3 tons of silver. An independent source – an estimate by the juiz do povo of
Lisbon in 1632 (VMG, Descobrimentos, p. 279) - puts grain imports at 15 tons of silver,
the then value of 11.4 million litres.
Again as above, we are obliged to infer data for wine and olive oil exports by
interpolation from the two benchmarks for which we have any evidence. As a result,
we get a volume of 5.72 million litres worth 18.5 tons of silver for the latter and of 0.66
million litres worth 0.91 tons of silver for the former.
1700
Data for wine exports are only available at this date for those sent to Britain,
which was anyway the overwhelming consumer of this article. We therefore assume an
identity between total wine exports and those to England only. According to Martins
(1998), the volume was 8.1 million litres in 1700-4. This was a period of very rapid
growth in this trade - in 1690, this rubric had been 1.2 m litres (Hanson, 216 and 220).
We valued it by the price of wine landed in England in 1700-4 (Fisher, 1984) after a
presumed deduction of 20% for freight and other shipping expenses: This implied a
price in Portugal of 1.47 grams of silver per litre. The total Portuguese value of this
export in 1700 would have been therefore around 11.91 tons of silver.
There is no quantitative information on national grain imports at this time but we
have the figures for those from England, which was an important supplier. Two sources
are available for the 1700 benchmark. Fisher (1984) is for wheat only, while Francis
(1984) represents all types of grain. Both cases correspond to cereals sold in all
47
Portuguese ports. According to Francis (1960), Portugal imported 22.7 million litres of
grain in the early 18th century. To make Fisher’s 1700-4 yearly averages comparable,
we increase them, by a factor of 1.4, which is the ratio between the volumes
respectively for total grain and wheat implicit in Francis’ (1960) import data over the
1700-8 period. This would have implied a yearly average of 16.8 million litres for all
cereals landed in Portugal. Hanson’s (…) and Rau’s (19..) estimates for the late 17 th
century were respectively 12.4 and 19.3 million litres and we have consequently opted
for an intermediate value of 18 million litres. Given the prevalence of wheat in these
imports, we value the entire amount at the PWR silver price for this item in Lisbon,
which was 0.7 grams per litre, and obtain a total value for grain of tons of silver.
Costa et al.(2011: 192) afford us the evidence to estimate exports of olive oil. In volume
these would have been 8.2 million litres in 1690 worth 27.2 tons in silver.
1750
Total wine exports by volume are obtained from Martins (1998:..) and come to
23.5 thousands of pipas. We multiply this by the port wine price (Martins, 1990: 243 –
average of the prices for 1750, 1756 and 1757), given that at this time port represented
around 90 % of all wine exports. The total amounts to 532 contos, or 14.9 tons of silver.
In the absence of any data on foreign grain consumption around 1750, we have
adopted the mean for the years 1729 and 1776-7, i.e. 37.1 million litres. Valued at a
(PWR) wheat price of 0.62 grams of silver per litre, the total grain import to Portugal is
estimated at an equivalent of 23.0 tons of silver.
A similar solution has had to be employed for olive oil exports, for which no
data are available either, even approximately. In this case we have estimated them in
terms of volume as the mean of the quantities shipped in 1700 and 1800, and valued this
48
at the PWR price for 1750. The results are 4.737 million litres, valued at 3.3 grams of
silver per litre and a total export worth 15.6 tons of silver.
1800
Value and volume of wine exports are., from Martins (1998), respectively …..;
.The quantity of grain imports, for the entire country is from Serrão (2005) averaged
over the interval 1796-1810, i.e. 890,000 hl. This is valued by a grain price from PWR
(using the price of wheat for all grains = 60.7 reis/lt). The value of grain exports comes
to 151.6 tons of silver.
The figure for the export of olive oil in 1800 is given by the average of the
amounts drawn from the Balanças Comerciais, an annual compilation in manuscript
form of Portugal’s foreign trade, for three years – 1796, 1797 and 1799. They include
sales to foreign countries, the colonies (mainly Brazil) and the islands of Madeira and
the Azores. In volume, this comes to 1.274 million litres, which are valued at the PWR
1800 price of 6.5 grams of silver per litre and represent a total of 8.3 tons of silver.
In order to estimate the adjustment factor for international trade in food
represented by the ratio of domestic consumption to domestic production, we convert all
variables relevant to this exercise into grams of silver, which function here like current
prices. Food consumption is derived by multiplying the total wage bill in silver by 1.4,
to get total income (including from land and capital). The result of this is multiplied in
turn by 0.6, to arrive at a figure for total expenditure on food (Malanima, 2011: 179)
again in grams of silver. This can then be compared with the food surplus/deficit in
order to obtain the value of r, which is either larger or smaller than 1 depending on
whether output exceeds or not consumption.
1850 Percentages of food, grain and wine in terms of exports and imports from Lains
(1995); values of total imports and exports at current values, from Valerio (2001);
49
imports of grains and wines from Lains (1995) combined with Valerio (2001). Total
value of agricultural output in 1850 at current prices from Valerio (2001) combined
with Lains (2003) for sector shares (Agric=48%= 120,000 contos). Olive oil exports
were 2% of total exports, i.e. 160 contos. In volume this was 0.73 million litres, with a
total value in silver of 4.3 tons.
NB: Braudel, in o Mediterrâneo, vol.1, p. 629 estimates international
wheat trade as 1% of needs.
Figure 1A
Agricultural output: corrected and uncorrected by foreign trade
400
350
300
250
Corrected
200
uncorrected
150
100
50
0
1500
1550 1600
1650
1700
1750 1800
1850
Appendix 2
Notes on the calculation of the TFPs of agriculture and manufacturing
Total factor productivity in manufacturing
The lack of suitable data precludes the possibility of obtaining an index which covers a
wide range of products. It also obliges us to use the “dual” method for estimating
50
manufacturing TFP, instead of the “primal”, a choice discussed by Antràs and Voth
(2003). In a similar situation, Allen (2003) estimated the TFP of one important
subsector alone – woollens – and considered this as representative of manufacturing
as a whole. The index was obtained by calculating the geometric mean of the price of
the raw material and the skilled wage rate and then dividing this by a cloth price series.
Likewise, we have adopted a cheap (and therefore not imported) variety of linen cloth,
one of the principal textiles manufactured during the period in Portugal. And for the
input side we have calculated the geometric mean of the skilled wage and of the price
of flax.29 This is divided by the market value of linen cloth to find to get the TFP index.
Total factor productivity in agriculture
Analogous problems are met with agricultural TFP but the solution is slightly different.
We continue to make use of the “dual” approach. The price of aggregate of output is
the same as was used to estimate PAPM (see above d)). Input prices are given by the
weighted geometric mean of wages and rents, using the weights, respectively 65 and
35%, employed by Rosés et al. (2007), for Early Modern Spain.30
29
For a different methodology, see Rosés (2007).
We avoided Allen’s (2003) approach to the calculation of agricultural TFP because this would have
required annual data for agricultural population and output, which we are unable to estimate with any
degree of confidence.
30
51
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FROM MAJOR POWER TO ECONOMIC BACKWATER: PORTUGAL'S GDP, 1500-1850 Jaime Reis*