What happened to regional inequality in Britain in the twentieth century?

New estimates of regional GDP for Great Britain in the twentieth century differ from those of Crafts but confirm his hypothesis of a U‐shaped regional inequality curve between 1911 and 2001. Comparison of these estimates with revised estimates for 1861–1911 suggests that the decline in inequality in the first half of the twentieth century forms part of a trend of declining regional inequality and catch‐up of the poorer regions with the richest (the South East) dating back to the 1860s at least. This convergence trend was interrupted by the First World War and the subsequent difficulties of Outer Britain in the 1920s when the gap between the South East and the rest widened. However, sometime after 1931 it picked up again. Since 1971 inequality has worsened and catch‐up has stopped; indeed, there has been divergence of the South East from the rest. This divergence has been especially marked since 1991. Although growth for all regions was faster during the period of increasing regional inequality that encompasses the second half of the twentieth century, the golden age of economic growth for regions outside the South East occurred during the long boom following the Second World War.     

Women of an uncertain age: quantifying human capital accumulation in rural Ireland in the nineteenth century†

Geary and Stark find that Ireland's post‐Famine per capita GDP converged with British levels, and that this convergence was largely due to total factor productivity growth rather than mass emigration. In this article, new long‐run measurements of human capital accumulation in Ireland are devised in order to facilitate a better assessment of sources of this productivity growth, including the relative contribution of men and women. This is done by exploiting the frequency at which age data heap at round ages, widely interpreted as an indicator of a population's basic numeracy skills. Because Földvári, van Leeuwen, and van Leeuwen‐Li find that gender‐specific trends in this measure derived from census returns are biased by who is reporting and recording the age information, any computed numeracy trends are corrected using data from prison and workhouse registers, sources in which women ostensibly self‐reported their age. The findings show that rural Irish women born early in the nineteenth century had substantially lower levels of human capital than uncorrected census data would otherwise suggest. These results are large in magnitude and thus economically significant. The speed at which women converged is consistent with Geary and Stark's interpretation of Irish economic history; Ireland probably graduated to Europe's club of advanced economies thanks in part to rapid advances in female human capital.     

The Short‐Term Economic Impact of Levying E‐Tolls on Industries

TERM is used to analyse the short‐term regional economic impact of an increase in industries' transport costs when paying E‐Tolls. Market‐clearing and accounting equations allow regional economies to be represented as an integrated framework, labour adjusts to accommodate increasing transportation costs, and investments change to accommodate capital that is fixed. 1 1 TERM is a bottom‐up CGE model designed for highly disaggregated regional data. The Enormous Regional Model's originate from Horridge et al. ( 2005 ) and are better explained in Horridge ( 2011 ).
We concluded that costs from levying E‐Tolls on industries are small in comparison to total transport costs, and the impact on economic aggregates and most industries are marginal: investments (?0.404%), gross domestic product (GDP) (?0.01) and consumer price inflation (?0.10%). This is true even when considering costs and benefits on industries as well as consumers. Industries that experienced the greatest decline in output were transport, construction and gold. Provinces that are closer to Gauteng and have a greater share of severely impacted industries experienced larger GDP and real income reductions. Mpumalanga's decrease in GDP was 17% greater than Gauteng's.     

Economic Convergence in the African Continent: Closing the Gap

The paper attempts to analyse the conditional β‐convergence and its sources for 32 African countries over the period 1960‐2008. The augmented Solow model with both gross domestic product (GDP) per worker and per capita income is estimated using the dynamic system generalized methods of moments (GMM) technique with the panel data. This is the first study on the sources of conditional β‐convergence for African countries. According to the results of the augmented Solow model, income convergence rates are lower than those of GDP per worker. Moreover, total factor productivity convergence, human capital convergence and capital labour convergence are contributing towards the convergence of GDP per worker in Africa. This means that growth in the poorest African countries is being augmented by “catch‐up factor,” which is good news for them. However, convergence in terms of GDP per worker is not being fully translated into income per capita convergence. The demographic structure in the African continent with its record of persistent population growth has played an important role in lowering the income convergence of its countries.     

Hitting the Great Wall: Structural change and China's growth slowdown

China is facing slowing growth rates, slowing rates of rural to urban migration and resistance to reforms that would liberalize internal migration restrictions (Hukou). We use a two sector Ramsey growth model and show that, allowing for endogenous capital accumulation, labour reallocation has accounted for approximately one fifth of China's per capita GDP growth over the last 30 years, and that Hukou reform could generate a significant boost to China's per capita GDP growth over the next decade. Our results contrast with conclusions drawn from the traditional growth accounting literature on labour reallocation effects in China because our simulation method allows for endogenous capital accumulation dynamics.     

Australian squatters,convicts, and capitalists: dividing up a fast‐growing frontier pie, 1821–71

Compared with its competitors, Australian GDP per worker grew exceptionally quickly from the 1820s to the 1870s, at a rate about twice that of the US and three times that of Britain. Did this rapid growth produce rising inequality, following a Kuznets curve? Using a novel dataset, this article offers new evidence that provides unambiguous support for the view that, in sharp contrast with the US experience and with globalization‐inequality views concerning late nineteenth‐century frontiers, Australia underwent a revolutionary levelling in incomes up to the 1870s. This assessment is based on trends in many proxies for inequality, as well as annual estimates of functional income shares in the form of land rents, convict payments, free unskilled labour incomes, free skilled labour and white collar incomes, British imperial transfers, and a capitalist residual.     

China's Nonfinancial Corporate Debt Dynamics

Since the global financial crisis broke out in 2008, China's nonfinancial corporate debt has been rising steadily and rapidly, posing serious threat to China's financial stability. China's rising corporate debt is mainly attributable to three factors: worsening capital efficiency, worsening corporate profitability and high funding costs. Based on a dynamic recursive model developed in the paper, we simulate the trajectories of China's corporate debt‐to‐GDP ratio, and find that if China fails to reverse the current trends in capital efficiency, corporate profitability and financing costs, China's nonfinancial corporate debt‐to‐GDP ratio will continue to rise without converging to a limit. Against most economists' intuition, given the current trends of changes in parameters, higher economic growth will not help China to escape the corporate debt trap. On the contrary, it will make China's corporate debt problem even worse. To avert a corporate debt crisis, China needs to speed up the structural reform and change the growth paradigm so as to enhance capital efficiency and firms' profitability, while reducing firms' financing costs.     

Victorian’s economy in the long run

Annual estimates of the GDP of Victoria for the period 1861–1976/77 are here presented and used as a basis for an analysis of Victoria’s long–run economic growth. Victoria is represented as having fallen behind the per capita GDP of Australia as a whole in the 1870s but to have out–paced the national growth rate from the early twentieth century until the late 1950s. The changing importance of natural resources and of the scope for manufacturing development are seen as the basis for an explanation of the Victorian divergence. The article carries the implication of a need for regional disaggregation in the analysis of Australian economic growth.     

Japan's inflation under the Bretton Woods system: How large was the Balassa–Samuelson effect?

Japan's real exchange rate appreciation during the post-WWII manufacturing-led growth period has been regarded as a classical example of the Balassa–Samuelson effect. We choose the most conspicuous sub-period—1956–1970—to confirm the effect. Japan was in a rapid growth period under the U.S. dollar peg (real GDP growth, 9.7% per annum). The nominal anchor was weak as Japan's inflation rate (GDP deflator-based, 5.4%) was markedly higher than the U.S. rate (2.6%) during the 15-year period. The decomposition of the annual 2.7% (geometric) Japan–U.S. inflation rate gap (real exchange rate appreciation of the Japanese yen) reveals that the Balassa–Samuelson effect accounted for 0.7%; most of the real exchange rate appreciation (1.7%) was attributed to greater price increases in Japan's tradables. Although Japan's tradable sector achieved high TFP growth, the joint effect of the tradable–nontradable TFP growth difference between the two economies was too small to generate a sizable Balassa–Samuelson effect. Japan's example may suggest that even in rapidly growing economies, the magnitude of the effect in long-run real exchange rate appreciation is generally modest.     

Children's growth in an adaptive framework: explaining the growth patterns of American slaves and other historical populations

This article presents a new adaptive framework for understanding children's growth in the past. Drawing upon the recent work on adaptive responses in relation to growth, it presents prenatal and postnatal adaptive mechanisms that affect the growth patterns of children. The most novel adaptive response to the historical literature is the prenatal predictive adaptive response where the metabolism and growth trajectory of a child is programmed to match predicted conditions later in life. Having discussed the framework in detail, a reinterpretation of the growth pattern of American slaves is then suggested. It seems likely that a mismatch between relatively good conditions in utero and absolutely appalling conditions in infancy and early childhood led slave children to become extremely stunted by the age of three or four. However, after this age, slave children experienced catch‐up growth because their immune systems had become more developed and because their diet improved tremendously and hookworm exposure was reduced. Thus, it seems that American slave children may have experienced substantial catch‐up growth because they were prenatally programmed for a higher metabolism and growth trajectory. The article concludes by setting out some stylized facts about children's growth in the past and pointing toward areas of future research.     

Asia's ‘little divergence’ in the twentieth century: evidence from PPP-based direct estimates of GDP per capita, 1913–69

This article uses expenditure-based purchasing power parities (PPPs) to estimate GDP per capita in comparable prices for 12 Asian countries for six benchmark years during the period 1913–69. The article finds that in 1913 levels of real GDP per capita in several countries were comparable to those in Japan. GDP per capita in Japan and other Asian countries diverged during and after the First World War. The article questions whether Asia's ‘little divergence’ between Japan and other Asian countries dates back to the late eighteenth century. It draws attention to the different resource endowments of Japan, China, and India compared to other Asian countries, and their implications for the development trajectories of Asian countries. The article demonstrates that using historical PPP estimates yields estimates of GDP per capita that diverge from those based on retropolations of the single 1990 PPP-converted benchmark year. It concludes that historical estimates of PPPs are needed to confirm analyses of comparative economic performance based on available GDP per capita data.     

The Inequality of Regional Economic Development in China between 1991 and 2001

This paper measures the unequal development of the regional economies in China and investigates the primary factors leading to the inequality. The official data on China's regional GDP and the regional GDP of three industrial sectors from 1991–2001, as reported in the China Statistical Yearbook and A Statistical Survey of China, are adopted to calculate and decompose the Gini coefficient for each year. The primary finding is that the levels of inequality in China's regional economies clearly showed a slight upward trend after 1991. The inequality of the overall GDP is primarily attributed to the between-group effect rather than to the within-group effect. It is also found that the regional inequality of the secondary industry sector's development accounted for half of the overall inequality. Thus, this study suggests that it is crucial for China to formulate and adhere to policies that will help it to develop the economy more equally among all areas and to develop the secondary industry sector among all regions/provinces in order to overcome the important issue of the inequality in regional economic development.     

Serbia on the path to modern economic growth

Given the scanty and inadequate studies on Serbia's growth performance before the First World War, this paper presents production-side GDP estimates for Serbia for six years between 1867 and 1910. It probes into the growth dynamics, assessing convergence with the more developed countries of north-western Europe, as well as progress towards achieving modern economic growth. Although the economy showed some dynamism in terms of overall GDP, per capita GDP in pre-First World War Serbia grew by only 0.28 per cent per annum, as much of the overall GDP growth was eroded by rapid population growth. Far from converging with north-western Europe, Serbia continued to fall behind. Sluggish structural transformation and slow income per capita growth suggest that Serbia's transition to modern economic growth was in its infancy. Growth in the dominant agricultural sector was extensive, driven by expanding arable land and population growth. Land was affordable and easy to obtain; hence, peasants invested little in new technologies. Meanwhile, the modern industrial and service sectors were below a threshold that could sustain rapid growth. Nevertheless, this study also highlights the rapid expansion of a small modern sector and export diversification that reflected emergent ‘green shoots’ in 1905–10.     

Fiscal Consolidation and the Public Sector Balance Sheet in South Africa

Between 1994 and 2008 the South African government reduced its debt/GDP ratio from almost 50% to 27%. Unfortunately this reduction was accompanied by a significant decrease in government's fixed capital/GDP ratio from 90% to 55% – fiscal sustainability might have been restored, but government's balance sheet did not improve. A similar story can be told for State Owned Enterprises. Since the Great Recession the fiscal situation worsened markedly – the public debt ratio again approaches 50%. To restore fiscal sustainability this article suggests that the government faces two options: (1) to create room for future countercyclical policy, the government must cut current expenditure and reduce the public debt/GDP ratio to its pre‐crisis level, or (2) substitute much‐needed infrastructure capital expenditure for current expenditure while stabilising the debt/GDP ratio at its post‐crisis level. Given that the much lower fixed capital/GDP ratio inhibits economic growth, the latter option might be more sensible.     

Regional Divergence of per capita GDP in China: 1991–99

Using China's regional data from 1991 to 1999, this paper investigates inter-regional income inequalities. GMM estimation has been used to explore a dynamic panel data model based on the Solow growth model. We find that regions conditionally converge to their own steady states at an annual rate of 8%, indicating around 8 years for a region to halve the deviation from its balanced growth path. However, the panel data exploration of convergence could not explain the catching up phenomenon. To see whether poorer regions can grow faster than richer ones, sigma and absolute beta divergence have been employed. We find that when the regional income gap enlarges during the 1990s, the initially poor regions do not catch up with the initially rich regions.     

Regional value added in Italy, 1891–2001, and the foundation of a long‐term picture1

This article presents value added estimates for the Italian regions, in benchmark years 1891–1951, which are linked to those from official figures available from 1971 on, in order to offer a long‐term picture of Italy's regional development. Regional activity rates and productivity are also discussed and compared. Some basic questions about Italy's economic history are briefly considered, including the origins and extent of the north–south divide, the role of migration and regional policy in shaping the pattern of regional inequality, and the positioning of Italy in the international debate on regional convergence, where it stands out because of the long‐run persistence of its disparities.     

Regional Characteristics,Industry Agglomeration and Location Choice: Evidence from Japanese Manufacturing Investments in Korea*

Using extensive firm‐level data for the years 1998–2006, we analyze the regional location decision of Japanese manufacturing foreign direct investors in Korea by focusing on the role of agglomeration economies. Our logit estimates indicate that horizontal agglomeration matters in the location decision, but vertical agglomeration does not. Strong evidence of country‐of‐origin effects is found. Japanese foreign direct investments in high‐technology industries show a typical ‘follow‐the‐leader’ pattern, while those in the in low‐technology industries are influenced by regional endowments. In addition, Japan's high‐technology firms are likely to prefer urban locations so that they can enjoy the externalities of business services.     

Growth Slowdown in China since 2008: Will There Be a Hard Landing in the Near Future?

China has witnessed an unprecedented great leap forward in investment since the 2008 global financial crisis, and at the same time real GDP growth has undergone a significant slowdown. This paper examines China's growth slowdown since 2008 up to 2013 using a growth accounting model in a systematic way. It is found that China's growth slowdown since 2008 almost completely comes from a sharp slowdown in total factor productivity growth. During this period, the positive effect on growth from expanding investment has been completely offset by the negative effect of the slowdown in total factor productivity growth. Currently, China's economy has slid into the Solow downward path. Under these circumstances, a soft landing is completely infeasible. Unless the Chinese Government implements substantial rebalancing and comprehensive and in‐depth market‐oriented reform, accompanied by large‐scale de‐investment (decreasing in the ratio of investment in GDP) and massive employment adjustment, China will be unable to avoid the Solow downward path, and a hard landing in investment will be inevitable in the near future.     

Does GDP Distort Mexico's Economic Performance?

Between 1961 and 1980, Mexico's gross domestic product (GDP) per capita grew nearly 3.50% annually. During the 1980s, however, it shrank about 0.50% per year. GDP figures suggest that there was sustained economic growth for the 1960s and 1970s, changing suddenly to contraction in the 1980s. This impression may be misleading. GDP does not account for housework or informal production outside households. Further, GDP also may be distorted by transactional activities, which are expenditures to support transactions, not actual output consumed. This study recalculates output for Mexico for the 1961-1990 sample period, controlling for transactional activities and nonmarket production. We find that GDP misstates Mexico's “actual” economic growth. In the 1960s, the economy expanded more quickly than GDP suggests. But in the 1970s, growth was less than half that of the 1960s. The economy indeed slumped in the 1980s, but not as terribly as the official figures indicate. Mexico's economy did not collapse suddenly in the early 1980s; actual economic growth had slowed dramatically during the 1970s.