Technology and the great divergence: Global economic development since 1820

The paper measures productivity growth in seventeen countries in the nineteenth and twentieth centuries. GDP per worker and capital per worker in 1985 US dollars were estimated for 1820, 1850, 1880, 1913, and 1939 by using historical national accounts to back cast Penn World Table data for 1965 and 1990. Frontier and econometric production functions are used to measure neutral technical change and local technical change. The latter includes concurrent increases in capital per worker and output per worker beyond the highest values achieved. These increases were pioneered by the rich countries of the day. An increase in the capital-labor ratio was usually followed by a half century in which rich countries raised output per worker at that higher ratio. Then the rich countries moved on to a higher capital-ratio, and technical progress ceased at the lower ratio they abandoned. Most of the benefits of technical progress accrued to the rich countries that pioneered it. It is remarkable that countries in 1990 with low capital labor ratios achieved an output per worker that was no higher than countries with the same capital labor ratio in 1820. In the course of the last two hundred years, the rich countries created the production function of the world that defines the growth possibilities of poor countries today.     

The great divergence and the economics of printing†

While China's invention of printing took place several centuries ahead of Europe's, it was in Europe where the more advanced printing technology of movable type took hold and where book production reached far higher levels. This article explores the extent to which China's complex logographic writing system explains these different outcomes. Using an economic analysis, I show how China's preference for block printing technology over movable type can be justified as the rational choice of commercial producers. In addition to this, model simulations also predict that movable type would be used in China under some specific circumstances which closely match the historical record. On the other hand, the use of block printing would not have led to larger printing costs in China, and as such should not be regarded as the reason behind China's modest level of book production when compared to Europe's.     

Japanese nonprofit sector in comparative perspective

Nonprofit organizations have long been less visible in Japan than in most other developed countries. But this does not imply that Japan does not have a sizable nonprofit sector. To the contrary, large numbers of Japanese hospitals, universities, social service organizations, and community groups are essentially not‐for‐profit in form.     

Growth, inequality, and welfare: comparisons across space and time

We propose and apply several welfare measures that combine averageincome with a measure of inequality to undertake cross-countrycomparisons of aggregate welfare for the 1970 to 2000 period.Our welfare measures, which are based on theoretical and empiricalfindings on the role of inequality in social welfare, drasticallychange the impression of levels of welfare, significantly affectthe welfare ranking of countries in different benchmark years,affect changes in ranking over time, and affect convergencebetween industrialized and developing countries. While the resultsare sensitive to the type of inequality and its presumed effecton welfare, the results are robust to different ways to addresscomparability problems inherent in the inequality data used.     

A tale of two SICs: Japanese and American industrialisation in historical perspective

Late‐developing countries often adopt best practice technologies pioneered abroad, facilitating convergence toward leading economies. Meiji Japan (1868–1912) is one successful example of industrial convergence, but much of the evidence relies on national aggregates or selected industries. Using historical industry data, this paper examines whether Japan adopted new technologies faster compared to the United States. Contrary to conventional wisdom, new sectors did not appear relatively sooner in Japan, however, they did grow to economic significance faster.     

A regional perspective on inequality and growth in Portugal using panel cointegration analysis

This paper examines the relationship between inequality and economic growth for thirty Portuguese NUTS3 regions within a multivariate panel framework over the period 1995–2007, using panel cointegration techniques to test for the existence of a relationship between inequality and real GDP per capita. The results point to the existence of a relationship between the variables, where the effect of inequality, measured as the Gini index of the earnings distribution, on per capita output is negative. This negative influence seems to be determined by the behaviour of the bottom of the earnings distribution, most likely by dampening investment in human capital, with the results pointing to the coexistence of a positive impact of inequality at the top of the distribution, supporting the incentives argument for the inequality-growth nexus. Additionally, the results confirm the predicted positive relationship between human capital and output, lending support to both the exogenous and endogenous growth models predictions on the importance of human capital for production both as an input in the production of final goods and in the production of technology. Another interesting result concerns structural funds: we found a negative relation of this variable with regional output. We believe that EU structural funds were a source of Dutch disease for Portugal, which resulted mainly in a lack of external competitiveness of the Portuguese economy due to the excessive specialization in non-tradable goods made possible by the European funds.     

Strangers in a strange land: citizenship and the immigration debate in Lesotho

Lesotho, a small sovereign country located within the borders of the Republic of South Africa, displays a paradox as regards immigration. It lacks the attributes of a typical receiving country, but it has been attractive to immigrants, especially from those countries in sub-Saharan Africa which are not members of the Southern African Development Community (SADC). Lesotho's attraction to immigrants is explained largely by its ability to offer better remuneration for skilled workers than many non-SADC sub-Saharan African countries, and by its strategic location as an easy transit gate into South Africa, widely perceived as the ‘Europe’ of the continent. However, the influx of immigrants into Lesotho has generated a wave of anti-foreigner feelings among sections of the population and heightened the debate about the relevance of foreigners to national development. The paper reiterates the principal conventional arguments against immigration: that it compromises jobs, raises crime rates, intensifies the spread of diseases, undermines the homogeneity of the state and nation and exerts additional strain on the country's already overstretched resources. Demonstrating the limits of these arguments, the paper argues that for Lesotho, grappling with unemployment and manpower shortages, immigration is an asset rather than a liability because it creates jobs, brings in skills that are otherwise in short supply and raises the country's international profile and competitiveness.     

Displaced Capital and Japanese Economic Growth

Implicit in many theories of Japan's macroeconomic malaise is the displacement of financial capital. It underpins the widely held view that physical investment has been retarded by the disruptive effects of nonperforming loans on financial intermediation. This paper recognizes that the displacement of capital also has real dimensions. It develops the view that the reemployment of displaced capital can compromise growth, perhaps to the point of perpetuating a recession. This may help to explain Japan's prolonged period of stagnation. J. Japan. Int. Econ., June 2000, 14(2), pp. 105–120. Reserve Bank of Australia, 65 Martin Place, Sydney NSW 2000, Australia; and Goldman Sachs Asia, 68th Floor, Cheung Kong Centre, 2 Queen's Road, Central, Hong Kong, China. Copyright 2000 Academic Press.Journal of Economic Literature Classification Numbers: E22, O16.     

The early modern great divergence: wages,prices and economic development in Europe and Asia, 1500–18001

Contrary to the claims of Pomeranz, Parthasarathi, and other ‘world historians’, the prosperous parts of Asia between 1500 and 1800 look similar to the stagnating southern, central, and eastern parts of Europe rather than the developing north‐western parts. In the advanced parts of India and China, grain wages were comparable to those in north‐western Europe, but silver wages, which conferred purchasing power over tradable goods and services, were substantially lower. The high silver wages of north‐western Europe were not simply a monetary phenomenon, but reflected high productivity in the tradable sector. The ‘great divergence’ between Europe and Asia was already well underway before 1800.     

Mills,cranes, and the great divergence: the use of immovable capital goods in western Europe and the Middle East,ninth to sixteenth centuries

This article contributes to the ongoing debate on the causes of the great divergence by comparing the use of expensive labour‐saving capital goods—water‐mills, windmills, and cranes—in medieval western Europe and the Middle East. Using novel ways of measuring, we find that whereas the use of these goods increased in Europe, in the Middle East their prevalence decreased, or they were not used at all. We investigate several possible explanations and reject most of them, including religion, geography, technological knowledge, and disparities in wages and cost of capital. Our analysis shows that differences in lordship systems and the security of property rights best explain the patterns found.     

Savings: the policy debate in Europe

Three issues dominate the public policy debate over savingsin Continental Europe. First, can private savings substitutefor public pensions in the provision of retirement income, giventhat the current generosity of pay-as-you-go financed pensionsis hardly sustainable in the light of population ageing? Andif so, which policy steps have to be taken to alleviate thistransition? Second, does the evolution of a 'new financial landscape'in Europe necessitate policy response in terms of taxation andregulation, specifically considering the increase in pensionfunds? And third, closely related to the other two issues, isthere too much or too little saving in an ageing Europe? Willpension reform and the new financial landscape increase or decreaseoverall saving? Do we need to subsidize saving more or lessthan we currently do? The paper reviews economic theory andempirical evidence on these intertwined issues. Most importantly,it identifies many gaps in our theoretical and empirical knowledgethat caution us against overly strong policy recommendations.     

Establishing statistical foundations of a chronology for the great divergence: a survey and critique of the primary sources for the construction of relative wage levels for Ming–Qing China

This article is a survey and critique of recent endeavours to establish statistical foundations for a chronology for the great divergence based upon trends and levels in relative wages. Our reading of the bibliography in Chinese labour history, together with a preliminary investigation into other primary sources, suggests that the Kuznetsian paradigm for empirical economics may not be viable for the construction of analytical narratives for the Chinese and other premodern imperial economies in South and West Asia. Nevertheless, two datasets currently in print will continue to be quoted to lend support to numerically grounded speculations for levels and trends in real wages and welfare for the families of wage‐dependent urban workers in China over the eighteenth century. Statistical evidence for the Ming and Qing dynasties calibrated for the purposes of comparing real wage levels for wage‐dependent labour between China and western Europe can, however, be placed on a spectrum for accuracy and inferential analysis that runs from ‘unfounded guess work’ to ‘plausible conjectures’. The unwelcome contention of this article is that the data published and potentially available for China (and probably for India and the Ottoman Empire) stand close to the unfounded guess work end of that spectrum. Meanwhile, and as a speculative conclusion, we offer a conjecture that the ‘real wages’ for Qing China's tiny proletariat, whose income included high proportions of wages in kind, have remained as elusive as they were when the real wage debate began a decade ago.     

Categories and causes of bank distress during the great depression, 1929–1933: The illiquidity versus insolvency debate revisited

During the contraction from 1929 to 1933, the Federal Reserve System tracked changes in the status of all banks operating in the United States and determined the cause of each bank suspension. This essay analyzes chronological patterns in aggregate series constructed from that data. The analysis demonstrates both illiquidity and insolvency were substantial sources of bank distress. Periods of heightened distress were correlated with periods of increased illiquidity. Contagion via correspondent networks and bank runs propagated the initial banking panics. As the depression deepened and asset values declined, insolvency loomed as the principal threat to depository institutions.     

Growth opportunities,collateral and debt structure: the case of the Japanese machine manufacturing firms

We explore the determinants of debt structure by analyzing the Japanese machine manufacturing firms’ data from 1990 through 1996. We find that firms with abundant growth opportunities and scarce collateral are likely to borrow from banks rather than to issue bonds. This is robust even if we consider the simultaneous decision of the debt composition and leverage or managerial incentive. We also find that firms with abundant growth opportunities or collateral tend to depend on equity rather than on debt. Though banks reduce the agency costs of debt for growing firms, equity costs less than bank loans for them.     

The effect of import competition on labor income inequality through firm and worker heterogeneity in the Japanese manufacturing sector

This study estimates the effects of import competition from Asia on the labor income inequality of Japanese manufacturing workers, considering firm and worker heterogeneity. Parameters are obtained from regression results of annual salary by using constructed worker–establishment panel data. The estimated salary change is positively and negatively larger for higher- and lower-paid workers, respectively, implying that labor income inequality among industry–size–skill–gender groups has increased due to imports from Asia. However, the actual evolution of income inequality during 1998–2014 is not successfully explained by Asian imports: other shocks overshadow import competition to determine actual income inequality.     

The Japanese labour market during the global financial crisis and the role of non-standard work: A micro perspective

This paper analyses aggregate labour dynamics during the global financial crisis in Japan and the role of non-standard work using micro data. The analysis proceeds in two steps. First, using comprehensive establishment-level datasets for the period 1991–2009, it provides a detailed portrait of the adjustment behaviour of establishments at the micro level. Second, it compares aggregate labour market dynamics during the global financial crisis with that observed during the 1997 crisis and decomposes the observed differences into components that can be attributed to changes in the micro-adjustment behaviour of Japanese establishments, changes in the incidence of non-standard work and changes in the distribution of shocks across establishments. It finds that the incidence of non-standard work has increased considerably, worker turnover is much higher among non-standard than standard workers and adjustments in working-time are less important for non-standard workers. Counterfactual simulations suggest that the employment response during the global crisis would have been smaller if the incidence of non-standard work remained at the level observed during the 1997 crisis. The relatively small employment response observed during the global financial crisis is therefore driven by factors other than the increase in the incidence of non-standard work.