Transcript Lecture: Introduction

European Economic History
Economics 343:01
Professor Eugene N. White
Fall 2010
Lecture 1
Why is this course important?
• We are going to examine the central question of
long-term economic growth: Why do some
countries/economies “succeed.”
• Why did some countries first escape poverty?
• Why did/have some countries gain sustained
economic growth and rising standards of living?
• What are the policies or conditions that encourage
economic growth?
• Can rapid growth be taken for granted?
• Focus on Western Europe—source of modern
growth
Measuring Modern Growth (Success)
• GDP
– Total Real Output/Annual real growth (Who is #1? #2?
#3?.....)
– Real Output per capita/Real growth per capita
• Distribution of Income and Wealth
• Quality of Life (affected by distribution, pollution,
environment)
–
–
–
–
Life Expectancy
Infant Mortality
Height
Literacy
China is everyone’s mind…NYTimes 8/16/2010
•
•
•
China Passes Japan as Second-Largest Economy
SHANGHAI — After three decades of spectacular growth, China
passed Japan in the second quarter to become the world’s secondlargest economy behind the United States, according to government
figures released early Monday. The recognition came early Monday,
when Tokyo said that Japan’s economy was valued at about $1.28
trillion in the second quarter, slightly below China’s $1.33 trillion.
Japan’s economy grew 0.4 percent in the quarter, Tokyo said,
substantially less than forecast. That weakness suggests that China’s
economy will race past Japan’s for the full year.
Experts say unseating Japan — and in recent years passing Germany,
France and Great Britain — underscores China’s growing clout and
bolsters forecasts that China will pass the United States as the
world’s biggest economy as early as 2030. America’s gross domestic
product was about $14 trillion in 2009.
The Big Picture in One Slide!
25,000
20,000
15,000
Second Industrial Revolution
10,000
First Industrial Revolution
5,000
$425
10
00
11
00
12
00
13
00
14
00
15
00
16
00
17
00
18
20
19
13
20
03
90
0
80
0
70
0
60
0
50
0
40
0
30
0
20
0
10
0
0
1
1990 US $ Per Capita
Third Industrial Revolution
Western Europe
2003: Haiti $740, Burundi $477,
Afghanistan $668, Zaire $212
PULLING AWAY FROM THE PACK?
35,000
30,000
1990 US $ Per Capita
25,000
20,000
15,000
10,000
5,000
0
1600
1700
1820
Western Europe
1870
USA
1913
Former USSR
1950
China
1970
Japan
2003
India
2008
More Details
Another
way to
look at
the facts
So!……Why do some countries
succeed? Many candidates.
•
•
•
•
•
Culture/Religion
Natural Resources
Climate (Geography)
Genetics
Political-Economic Regime
• A Lot to Sort Out!
One Suggestive Comparison
South Korea and North Korea
•
•
•
•
•
Culture/Religion
Natural Resources
Climate (Geography)
Genetics
Political-Economic Regime
18,000
16,000
1990 US$ Per Capita Income
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1950
1955
1960
1965
1970
1975
South Korea
1980
1985
North Korea
1990
1995
2000
Or, electric lights from a satellite
What is
Western
Europe?
Economic Growth?
• The basic model
• Y = f (K, L, N)
• We will cover period 1200 to
present.
• Huge Change---Institutions and
Markets---Both Essential for
Growth
Some Big Issues
• How do economies make the transition from
stationary to growth economies? What is the role
of institutions and government?
• What is the role of technology? Can technological
change be promoted?
• What is the role of industrialization? What effects
does it have on the standards of living and on the
distribution of income and wealth? What is the
proper role of government?
• How did the modern state arise? What are its
effects on growth?
• How did financial markets arise---what do they
contribute to growth?
Some Big Issues
• What is the role of market integration?
Nationally? Internationally? Exports/Imports?
Globalization?
• What monetary/exchange rate regime should be
adopted? (gold or paper money standard /fixed or
floating exchange rate).
• Can depressions/financial crises be avoided?
• Why did the “nation-state” flourish, then begin to
retreat in Europe?
• Why did the Europeans feel that a European
Union was needed?
• How successful is the EU? What are its
prospects?