Unit 0: The Origins of Modern
Economic Growth and the Great
Divergence
English Book: 1-18
Spanish Book: 95-114
1 Introduction
Why some countries are more prosperous than others. Prosperity level is the
result of a long evolutionary process, i.e. of changes over time in technology,
institutions, culture, environment.
Economic history is therefore fundamental to understanding the causes of
economic growth and it helps us to understand the nature, causes and origins
of today’s major economic issues.
How do we measure prosperity over time?
Quantifying the availability of goods and services that we can access.
● GDP (the value of goods and services produced in a country over a
year) is the most recurrent indicator. It was developed after WWII.
This indicator has problems and many interpretative limits: it does not
capture inequality…
2 Modern economic growth
2.1 Acceleration
Until then, very limited growth rates. Per capita output was stable. Productive
growth associated with population increase.
Until c. 1800, per capita GDP growth was very low or non-existent.
Pre-industrial societies, by their very nature, were doomed to a ‘stagnant
state’ (stagnant output per capita)
●
2.2 The Great Divergence
All Countries have grown faster since c. 1800 (even the poorest ones).
Economic growth has occurred unevenly over time and across countries,
some improved faster than others.
In c. 1500 the prosperity of the territories of the world was similar
The gap between rich and poor countries started to grow from the end of the
15th century and accelerated with the Industrial Revolution
2.3 Temporary disruptions
3. Causes
3.1 Technological change
3.2 Institutions
3.3 Culture
3.4 Geography
3.5 Power
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