Category Archives: Economic growth


On Social Tables, Inequality and Pre-Industrial Societies

“Towards an explanation of inequality in pre-modern societies: the role of colonies and high population density”

by Branko Milanovic (City University of New York)

Abstract: Using the newly expanded set of 40 social tables from pre-modern societies, the paper tries to find out the factors associated with the level of inequality and the inequality extraction ratio (how close to the maximum inequality have the elites pushed the actual inequality). We find strong evidence that elites in colonies were more extractive, and that more densely populated countries exhibited lower extraction ratios. We propose several possibilities linking high population density to low inequality and to low elite extraction.


Distributed by NEP-HIS on: 2016-11-13

Guido Alfani (Bocconi University, Milan)

Given the recent increase in the availability of good-quality data on pre-industrial (or pre-modern) societies, there is much need for works of synthesis aimed at discovering the factors shaping long-term inequality trends. Branko Milanovic has been particularly active in this field, with the publication of a recent book on Global Inequality: A New Approach for the Age of Globalization (2016, Harvard University Press) [see the reviews here – Ed]. In this new working paper, Milanovic tries to move forward, using a large database of social tables to single out the potential causes of differences in historical inequality levels and in inequality extraction. He focuses in particular on institutional factors (inequality in colonies vs other areas) and on demographic factors (population density). The results are very interesting and represent a useful step forward in our understanding of inequality change in preindustrial societies.

This paper was distributed by NEP-HIS on 2016-11-13. It makes use of a relatively large collection of social tables for preindustrial societies, including overall 40 social tables for about 30 distinct countries/world areas over a very long time: from Athens in 330 BCE to British India in 1938. As is well known, social tables allow us to roughly estimate income inequality. They are particularly useful in situations of relative scarcity of data and although they have been in use for centuries – the first example is Gregory King’s social table dating 1688 – many new ones have recently been produced for a variety of preindustrial societies across the world (see Lindert and Williamson 2016 for the U.S., Saito 2015 for Japan, Broadberry et al. 2015 for England, and Alfani and Tadei 2017 for Ivory Coast, Senegal and the Central African Republic). Although estimating complete distributions is the better option (see for example the accurate reconstruction of income distribution in Old Castile around 1750 by Nicolini and Ramos 2016, the impressive work by Reis 2017 on Portugal from 1565 to 1770, and finally, the estimates of wealth inequality in the period 1300-1800 produced by the EINITE project for a variety of Italian pre-unification states and other European areas: Alfani (2015, 2017); Alfani and Ryckbosch (2016); Alfani and Ammannati (2017), this is not always possible or feasible and social tables must be considered a good alternative especially when there is a relative scarcity of data.


As rightly argued by Milanovic, the recent accumulation of new evidence has not been accompanied by equal advances in the work on causal factors driving inequality change in preindustrial times. The seminal article by Van Zanden (1995), in which long-term inequality growth in the Dutch Republic was explained by long-term economic growth, has later been nuanced by works demonstrating that during the early modern period, in many parts of Europe inequality grew also in phases of economic stagnation, or even decline (Alfani 2015; Alfani and Ryckbosch 2016). The role played by large-scale mortality crises, particularly plague epidemics, has been underlined and the Black Death of 1347-51 has been shown to be the only event able to produce large-scale and enduring inequality decline in the period from ca. 1300 to 1800 (Alfani 2015; Alfani and Ammannati 2017). In a very recent book, Scheidel (2017) has taken this line of reasoning further, arguing that all substantial declines in inequality recorded in human history are due to catastrophic events (epidemics, wars, revolutions…).

Milanovic’s aim is to find further regularities, looking for possible economic, institutional or demographic drivers of inequality change in preindustrial times. He adopts the theoretical framework of the Inequality Possibility Frontier (introduced in Milanovic, Lindert and Williamson 2011), arguing that we should focus not only on how unequal a society is, but also on how much inequality it manages to “extract” compared to the maximum inequality it could achieve given that everybody needs to reach at least the subsistence level. Hence, as an economy manages to increase the per-capita surplus produced, it also acquires a potential for becoming more unequal. A first relevant empirical finding is that colonies tend to be exceptionally extractive, especially at low levels of per-capita GDP. As Milanovic points out, this is not surprising and can be explained by colonies being more exploitative, i.e. being pushed closer to the inequality possibility frontier by rapacious elites. This is apparent when looking at inequality extraction (being a colony raises the “inequality extraction ratio” by almost 13 percent points), but not necessarily when looking at overall inequality as measured by a Gini index.

Branko Milanovic

Branko Milanovic

A more novel finding is the negative correlation between population density and both inequality and inequality extraction. In fact, a “high number of people per square kilometer seems to be a strong predictor of relatively egalitarian economic outcomes” (p. 16). Explaining this empirical finding is not easy and Milanovic resorts to two conjunctures: 1) in a less extractive economy, the poor enjoy relatively good living conditions and this might lead to greater population growth; or 2) a particularly dense population might be better able to make the position of the elite/of the ruler relatively precarious, enjoying de facto some sort of control over the actions of the elite and forcing it to adopt less extractive policies. As is clear, the direction of causality is the opposite in the two explanations – which are probably to be considered not mutually exclusive. Other correlates of inequality and inequality extraction include per-capita GDP and urbanization rates, which turn out being borderline significant (per-capita GDP) or positively but non-significantly correlated (urbanization rate), coherently with what was found by other recent comparative studies (Alfani and Ryckbosch 2016; Alfani and Ammannati 2017).


Undoubtedly, Milanovic’s new article helps to fill in a real need for more comparative research on preindustrial societies. The findings, albeit provisional, are very interesting and either they provide useful confirmation of what has already been argued by others – for example about the inability of per-capita GDP to explain preindustrial inequality growth in a satisfying way– or they lead us to think along new lines, especially regarding the impact on inequality of demographic variables. In fact, as urbanization rates proved to be a far poorer explanatory variable for inequality change than we expected (see in particular Ryckbosch 2016; Alfani and Ryckbosch 2016; Alfani and Ammannati 2017), demographic factors came to be perceived as probably relevant, but also somewhat puzzling (exception made for mass-mortality events like the Black Death, whose inequality-reducing effects now stand out very clearly). Population density offers us a novel perspective and in time, might prove to be the right path to follow.

However, there is also some space for constructive criticism. A first point to underline is that, differently from what Milanovic argues, the time might not yet be ripe for the kind of definitive and encompassing comparison that he seems to have in mind. The data available is still relatively scarce, including for Europe, which is the world area that has attracted the greatest amount of recent research. Additionally, social tables, albeit easily comparable, are not perfectly comparable – for example because they can include a greatly varying number of classes/groups. In some instances, classes are very few and we have no hint at within-class inequality. These are two reasons why, as argued above, complete distributions are strictly preferable to social tables. Finally, in the current version of Milanovic’s database, for the vast majority of countries only one social table is available, whereas multiple social tables for the same country at different time points would make for sounder statistical analyses. There are ongoing projects, especially EINITE and related projects, whose aim is to provide comparable state-level information on wealth and income inequality for large areas of the world at different points in time in the long run of history, but these projects are heavily dependent on new archival research and require time to be completed.


Secondly there are other possible common factors shaping long-term inequality change which Milanovic cannot consider in the context of the current article. Some of these have been underlined by a recent comparative paper by Alfani and Ryckbosch (2016) which, although focusing on “only” four European states during 1500-1800, nevertheless had the advantage of having recourse to inequality measures produced with a common methodology and covering all states continuously in time. This study underlined two factors common to all the areas covered: 1) “proletarianization”, i.e. the progressive disappearance of small peasant ownership, which occurred throughout Europe during the early modern period, and 2) the inequality-increasing consequences of the rise of the fiscal-military states from ca. 1500. These factors might have played a role also in other world areas, from the broader Mediterranean to East Asia and maybe elsewhere – but at present that is no more than speculation.

Obviously, such criticism in no way negates the considerable usefulness of Milanovic’s new paper – which is also a further demonstration of how his relatively new concept of the inequality possibility frontier allows for a deeper understanding of the actual conditions and consequences of distribution. It does, however, indicate that we are still a long way from being able to identify without ambiguity the main causes of inequality change in preindustrial societies that so many international economic historians are now attempting to discover.

Selected bibliography

Alfani, G. (2015), “Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries)”, Journal of Economic History, 75(4), 2015, pp. 1058-1096.

Alfani, G. (2017), “The rich in historical perspective. Evidence for preindustrial Europe (ca. 1300-1800)”, Cliometrica 11(3), forthcoming (early view: ).

Alfani, G., Ryckbosch, W. (2016), “Growing apart in early modern Europe? A comparison of inequality trends in Italy and the Low Countries, 1500–1800”, Explorations in Economic History, 62, pp. 143-153.

Alfani, G., Ammannati, F. (2017), “Long-term trends in economic inequality: the case of the Florentine State, ca. 1300-1800”, Economic History Review, forthcoming.

Alfani, G., Tadei, F. (2017), Income Inequality in Colonial Africa: Building Social Tables for Pre-Independence Central African Republic, Ivory Coast, and Senegal, IGIER Working Paper, forthcoming.

Broadberry, S., Campbell, B., Klein, A., Overton, M, Van Leeuwen, B. (2015), British Economic Growth 1270-1870, Cambridge University Press.

Lindert, P.H. and Williamson, J.G., Unequal gains. American growth and inequality since 1700, Princeton University Press, Princeton 2016.

Milanovic, B. (2016), Global Inequality: A New Approach for the Age of Globalization, Harvard University Press.

Milanovic, B., Lindert, P.H., Williamson, J.G. (2011). “Pre-Industrial Inequality”, The Economic Journal, 121, pp. 255-272.

Nicolini, E.A., Ramos Palencia, F. (2016), “Decomposing income inequality in a backward pre-industrial economy: Old Castile (Spain) in the middle of the eighteenth century”, Economic History Review, 69(3), pp. 747–772.

Reis, J. (2017), “Deviant behaviour? Inequality in Portugal 1565–1770”, Cliometrica, 11(3), forthcoming (early view:

Ryckbosch, W. (2016), “Economic inequality and growth before the industrial revolution: the case of the Low Countries (fourteenth to nineteenth centuries)”. European Review of Economic History, 20(1), pp. 1-22.

Saito, O. (2015), “Growth and inequality in the great and little divergence debate: a Japanese perspective”, Economic History Review, 68(2), pp. 399–419.

Scheidel, W. (2017), The Great Leveller: Violence and the Global History of Inequality from the Stone Age to the Present, Oxford University Press.

Van Zanden, J.L. (1995), “Tracing the Beginning of the Kuznets Curve: Western Europe during the Early Modern Period”, Economic History Review 48(4): 643-664.


A Gift From Europe to the World: Globalization, Capitalist Expansionism and Professional Bicycle Road Racing

The History of Professional Road Cycling

by Jean-François Mignot


Why did cycling become professional as early as the late nineteenth century, while other sports (such as rugby) and other sport events (such as the Olympic Games) remained amateur until the 1980s? Why are the organizers of the most important bicycle races private companies, while in other sports such as soccer the main event organizer is a nonprofit organization? To what extent have bicycle races changed since the late nineteenth century? And how does cycling reflect long-term economic changes? The history of professional road cycling helps answer these questions and understand many related phenomena. This chapter provides a long-term, historical perspective on (1) professional road cycling’s economic agents, i.e., the public, race organizers, team sponsors and riders, and the relationships amongst them; (2) cycling’s governing body, the International Cycling Union; and (3) professional cycling’s final product, i.e., the show of bicycle races. More precisely, the chapter mostly focuses on the history of male professional road cycling in Western Europe since the late nineteenth century. It is founded on both an analysis of quantitative time series on the Grand Tours (and, to some extent, the classics) and a review of the existing literature on the history of professional cycling, whether economic history, institutional history, cultural history, or sport history.


Distributed by NEP-HIS on 2016-10-02

Revised by: Stefano Tijerina, Ph.D.

The professionalization and commercialization of sports illustrates the forces of capitalism in action, as its culture and institutional structures transition from the local to the global in response to the demands of the market and the increasing interdependence among multiple private and public stakeholders. In his brief history of professional road cycling Jean-François Mignot demonstrates how the sport is transformed throughout the twentieth century as it transitioned from amateur to professional. Mignot argues that the professionalization of this sport anticipated many other international sports because the forces of capitalism pressured the athletes to abandon their amateur status early on in order to secure an income.[1] His research reveals the early infiltration of the private sector within the culture of cycling in Europe, the institutional transformation of the sport, the market’s impact on the institutional structure of bicycle racing, and its integration into the global system. Ultimately, his historic analysis allows the possibility of drawing parallels with the processes of transformation experienced by other goods, commodities, and services that adapted to the inevitable pressures of the expansion of capitalism.


Jean-François Mignot’s research shows that the idea of organizing road race competitions around the commonly used bicycle emerged from the desire of newspapers across Europe to sell more newspapers through this new and creative marketing scheme. Newspapers in France, Belgium, Spain, and Italy began organizing races on public roads in the late 1800s to show the public that human and bicycles could cover vast distances across flat and mountainous terrain. As indicated by Mignot, early races of 25 to 70 hours in duration covering 250 to 400 kilometers became epic sporting events of duration and perseverance among extraordinary European athletes.[2] The media’s construct of these epic figures created the thirst for road cycling, but it was the fact that the spectator standing on the side of the road was only able to watch the spectacle for a few seconds and depended on the print media to recreate the rest of the race, that pushed newspapers into the sponsorship business. It was this interdependent relation between spectator, athlete, and newspapers that inspired the print media industry to organize these road races, hoping that races would become magnets for advertisement sales. As indicated by Mignot, “cycling fans demanded more information” and “pictures of the race,” and the race organizing newspapers were interested in supplying the demand by covering the races in detailed form as they watched circulations increase.[3]

The one-day races or “Classics” and the three-week “Grand Tours” became the backbone of professional road racing in Europe. By the 1930s newspapers had monopolized the sponsorship of the events, while fans filled the roadways accompanied by publicity caravans “that distributed product samples to spectators.”[4] Meanwhile bicycle and tire companies became the sponsors of teams, as individual riders were replaced by teams that worked on behalf of the stars that made up the top cycling teams in Europe.[5]


In the early stages of professionalization, cycling stars did not receive any wages and were therefore forced to secure their income through race earnings. The increase in the popularity of the sport was followed by the increase in riders’ income.[6] The interdependent relations necessary for the expansion of capitalism slowly developed; increasing sales motivated the newspapers to improve the quality of the spectacle by increase the race winnings, forcing the sponsors to offer better wages in order to recruit and maintain the loyalty of the top cyclists, ultimately attracting more fan-base that in turn attracted other secondary sponsors that turned the caravans into marketing spectacles as well. This became even more lucrative as other means of communication joined in, particularly radio and later on television.

Jean-François Mignot points out at the first three decades of the Cold War was a period of crisis for the sport in Europe, emphasizing that urbanization and the increasing sales of motorcycles forced bicycle manufacturers to decrease their team sponsorship funding and ultimately sending the salaries of professional riders in a downward spiral.[7] This, argued Mignot, forced the professional rider to seek sponsorships outside of the bicycle world.[8] The stars and their teams began to tap the “extra-sportif” market for sponsorship and this market segment was quick to capitalize on the opportunity.[9]

Jean-François Mignot points out that sponsoring newspapers and bicycle companies interested in protecting their own profit margins opposed the penetration of “extra-sportif” sponsors by trying to control the rules of the sport in order to impede their participation, but at the end the market forces prevailed.[10] This European crisis that unfolded between the 1950s and 1980s was in fact the initial era of global commercialization of the sport. Mignot’s Euro centrism impedes him from moving beyond the region’s Grand Tours and Classics, not recognizing that the “extra-sportif” sponsorships that challenged the status quo took professional cycling outside of Europe and introduced it to the rest of the world. For example, by the 1950s radio transmissions of the European races were common in distant places like Colombia where their own private sectors had replicated the European business model and established lucrative professional road races to supply the local demand for professional bicycle road racing. The first edition of the Colombian Grand Tour, La Vuelta a Colombia, was organized in 1951, and by then several local Classics like the Tunja-Bucaramanga and the Medellín-Sansón were already engrained in the Colombian cycling culture. As in the case of Europe, local newspapers like El Tiempo became interested in sponsoring the local Grand Classic as a means to increase sales and circulation, but contrary to the European distrust of “extra-sportif” sponsors, the Colombian organizers welcomed other private local sponsors including the national airline Avianca, the Bavaria brewery, Avisos Zeón and the Flota Mercante Grancolombiana.[11]

The crisis of professional bicycle road racing in Europe described by Mignot was certainly caused by a decreasing popularity of the sport and the internal struggles over the monopoly of the sponsorship and management of the sport, but it was also the market’s response to the emergence of other professional sports in Europe as well as the professional cyclist’s ability to capitalize on the globalization of the sport. It was an illustration of how, in a capitalist system, the internal saturation of a market led to the natural expansion into other global markets, as in the case of Colombia in the 1940s and 1950s.[12]


Such was the case of French Born, José Beyaerst, the 1948 Olympic road race champion who moved to Colombia after the Second World War, winning the second edition of the Vuelta a Colombia in 1952 and later on establishing a career as the coach for the Colombian national cycling team.[13] Beyaerst would make Colombia his home, developing the professionalization of the sport and becoming a key player in what would later become one of the cycling powers of the world. The expansionism of the sport would reach all corners of the world between the 1950s and the 1980s, it was a period of crisis for Europe as Mignot points out but it was a glorious time for global professional bicycle road racing.

Television was the game-changer, spearheading the resurgence of professional cycling in Europe in the 1980s. Taking advantage of the integration of Europe, race organizers capitalized on the magic of television to attract new European audiences, redesigning the stage circuits of the Grand Tours (Giro d’Italia, Vuelta a España, and the Tour de France) with the intention of tapping new urban centers that were outside of Spain, France, and Italy.[14] Television also globalized the European Grand Tours, introducing the cycling stars to the world, providing an opportunity for sponsors to reach a global audience, selling commercial air space, and as a result increasing revenues, salaries and profits for the whole sport.

Jean-François Mignot points out that the globalization of the sport also impacted the nature of cycling teams. By the 1980s the teams competing in the Grand Tours were no longer made up of Spanish, Italian, and French riders; their nationalities diversified and so did their sponsors.[15] Although Mignot highlights the fact that by 1986 the American Greg LeMond had won the Tour de France, Colombia’s Lucho Herrera had conquered the Vuelta a España (1987), the Russian Evgueni Berzin the Giro d’Italia (1994), and the Australian Cadel Evans the Tour de France (2011), he does not point out that these foreign cyclists also brought with them new local sponsors that then began to compete with European sponsors.[16] Mignot avoids talking about the American Lance Armstrong, leaving a large gap in the history of the globalization of the sport, considering that the American rider won seven consecutive Tour de France championships (1999-2005) before the US Anti-Doping Agency and the Union Cycliste Internationale stripped him from his titles after a doping scandal. Although LeMond popularized cycling racing in the United States it was Armstrong that converted it into a multi-billion dollar industry bringing in American brands such as RadioShack and Motorola into the world of cycling.


Jean-François Mignot’s research illustrates how the sport expanded globally as the Western World exported the idea of the professionalization and commercialization of cycling, taking advantage of the expansion of Western culture across the world, the increasing leisure time and incomes of the global population, and the increasing communications technology that allowed viewers from across the world to connect with the live stage by stage action of the Grand Tours and the Classics. Nevertheless, his Euro centric approach impedes him from explaining how the professionalization of the sport evolved outside of Europe. Although Mignot clarified early on that his analysis centered on Europe, this approach weakened his argument regarding the globalization of the sport and its repercussion on the European construct, as foreigners began to conquer and dominate the sport as in the case of Americans Greg LeMond and Lance Armstrong, or the current stars South African born Christopher Froome and the Colombian climber Nairo Quintana. The incorporation of a broader global perspective would have allowed Mignot to test whether or not the professionalization of the sport in other markets was also spearheaded by other local newspapers or if on the contrary other media and non-media-based sponsors jumped on this business opportunity. It would have also been important to identify when professionalization took place in other markets to compare whether or not the influence of the European sport transcended the borders in a timely manner or even identifying political, economic, social, and cultural factors that delayed its expansion into other global markets. Moreover, it would have been important for Mignot to link the policies of the Union Cycliste Internationale to the globalization of the sport, as well as the escalation of global competition among bicycle manufacturers, and the global competition between scientists, technological designers, and pharmaceutical industries that centered on the legal and illegal preparation of the current athlete.

[1] Jean-François Mignot. “The History of Professional Road Cycling.” HAL,, June 5, 2016, p. 4.

[2] Ibid., 2.

[3] Ibid.

[4] Ibid., 3.

[5] Ibid.

[6] Ibid., 4.

[7] Ibid., 5.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] “Vuelta a Colombia Historia.” Ciclismo colombiano – La Vuelta a Colombia. April 25, 2007. Accessed November 21, 2016.

[12] Ibid.

[13] Kidnapping of Lucho Herrera (and José Beyaert’s Narrow Escape”. Alps&Andes, March 2000. Accessed November 21, 2016.


[14] Mignot, “The History of Professional Road Cycling,” 5.

[15] Ibid.

[16] Ibid., 6.

Debt forgiveness in the German mirror

The Economic Consequences of the 1953 London Debt Agreement

By Gregori Galofré-Vilà (Oxford), Martin McKee (London School of Hygiene and Tropical Medicine), Chris Meissner (UC Davis) and David Stuckler (Oxford)

Abstract: In 1953 the Western Allied powers implemented a radical debt-relief plan that would, in due course, eliminate half of West Germany’s external debt and create a series of favourable debt repayment conditions. The London Debt Agreement (LDA) correlated with West Germany experiencing the highest rate of economic growth recorded in Europe in the 1950s and 1960s. In this paper we examine the economic consequences of this historical episode. We use new data compiled from the monthly reports of the Deutsche Bundesbank from 1948 to the 1960s. These reports not only provide detailed statistics of the German finances, but also a narrative on the evolution of the German economy on a monthly basis. These sources also contain special issues on the LDA, highlighting contemporaries’ interest in the state of German public finances and public opinion on the debt negotiation. We find evidence that debt relief in the LDA spurred economic growth in three main ways: creating fiscal space for public investment; lowering costs of borrowing; and stabilising inflation. Using difference-in-differences regression models comparing pre- and post LDA years, we find that the LDA was associated with a substantial rise in real per capita social expenditure, in health, education, housing, and economic development, this rise being significantly over and above changes in other types of spending that include military expenditure. We further observe that benchmark yields on long-term debt, an indication of default risk, dropped substantially in West Germany when LDA negotiations began in 1951 and then stabilised at historically low rates after the LDA was ratified. The LDA coincided with new foreign borrowing and investment, which in turn helped promote economic growth. Finally, the German currency, the deutschmark, introduced in 1948, had been highly volatile until 1953, after which time we find it largely stabilised.


Distributed by NEP-HIS on 2016-09-04

Review by Natacha Postel-Vinay (LSE)

The question of debt forgiveness is one that has drawn increased attention in recent years. Some have contended that the semi-permanent restructuring of Greece’s debt has been counterproductive and that what Greece needs is at least a partial cancellation of its debt. This, it is argued, would allow both faster growth and a higher likelihood of any remaining debt repayment. Any insistence on the part of creditors for Greece to pay back the full amount through austerity measures would be self-defeating.

One problem with this view is that we know very little about whether debt forgiveness can lead to faster growth. Reinhart and Trebesch (2016) test this assumption for 45 countries between 1920-1939 and 1978-2010, and do find a positive relationship. However they leave aside a particularly striking case: that of Germany in the 1950s, which benefited from one of the most generous write-offs in history while experiencing “miracle” growth of about 8% in subsequent years. This case has attracted much attention recently given German leaders’ own insistence on Greek debt repayments (see in particular Ritschl, 2011; 2012; Guinnane, 2015).

Eichengreen and Ritschl (2009), rejecting several popular theories of the German miracle, such as a reallocation of labour from agriculture to industry or the weakening of labour market rigidities, already hypothesized that such debt relief may have been an important factor in Germany’s super-fast and sustained post-war growth. Using new data from the monthly reports of the Deutsche Bundesbank from 1948 to the 1960s, Gregori Galofré-Vilà, Martin McKee, Chris Meissner and David Stuckler (2016) attempt to formally test this assumption, and are quite successful in doing so.

By the end of WWII Germany had accumulated debt to Europe worth nearly 40% of its 1938 GDP, a substantial amount of which consisted in reparation relics from WWI. Some already argued at the time that these reparations and creditors’ stubbornness had plagued the German economy, which in the early 1930s felt constrained to implement harsh austerity measures, thus contributing to the rise of the National Socialists to power. It was partly to avoid a repeat of these events that the US designed the Marshall Plan to help the economic reconstruction of Europe post-WWII.



Marshall aid to Europe between 1948 and 1951 was less substantial than is commonly thought, but it came with strings attached which may have indirectly contributed to German growth. In particular, one of the conditions France and the UK had to fulfil in order to become recipients of Marshall aid was acceptance that Germany would not pay back any of its debt until it reimbursed its own Marshall aid. Currency reform in 1948 and the setting up of the European Payments Union facilitated this process.

Then came the London Debt Agreement, in 1953, which stipulated generous conditions for the repayment of half the amount due from Germany. Notably, it completely froze the other half, or at least until reunification, which parties to the agreement expected would take decades to occur. There was no conference in 1990 to settle the remainder.


Galofré-Vilà et al. admit not being able to directly test the hypothesis that German debt relief led to faster growth. Instead, making use of simple graphs, they look at how the 1953 London Debt Agreement (LDA) led to lower borrowing costs and lower inflation, which comes out as obvious and quite sustained on both charts.

Perhaps more importantly, they measure the extent to which the LDA freed up space for social welfare investment. For this, they make use of the fact that Marshall aid had mainly been used for infrastructure building, so that the big difference with the LDA in terms of state expenditure should have been in terms of health, education, “economic development,” and housing. Then they compare the amount of spending on these four heads to spending in ten other categories before 1953, and check whether this difference gets any larger after the LDA. Perhaps unsurprisingly, it does, and significantly so.

This way of testing the hypothesis that the LDA helped the German economy may strike some as too indirect and therefore insufficient. This is without mentioning possible minor criticisms such as the fact that housing expenditure is included in the treatment, not control group (despite the 1950 Housing Act), or that the LDA is chosen as the key event despite the importance of the Marshall Plan’s early debt relief measures.

Nevertheless testing such a hypothesis is necessarily a very difficult task, and Galofré-Vilà et al.’s empirical design can be considered quite creative. They are of course aware that this cannot be the end of the story, and they are careful to caution readers against hasty extrapolations from the post-war German case to the current Spanish or Greek situation. Some of their arguments have somewhat unclear implications (for instance, that Germany at the time represented 15% of the Western population at the time, whereas the Greek population represents only 2%).


Perhaps a stronger argument would be that Germany’s post-war debt was of a different character than Greek’s current debt: some would even call it “excusable” because it was mainly war debt; it was not (at least arguably) a result of past spending excesses. For this reason, one may at least ask whether debt forgiveness in the Greek context would have the same — almost non-existent — moral hazard effects as in the German case. Interestingly, the authors point out that German debt repayment after the LDA was linked to Germany’s economic growth and exports (so that the debt service/export revenue ratio could not exceed 3%). This sort of conditionality is strangely somewhat of a rarity among today’s sovereign debt contracts. It could be seen as a possible solution to fears of moral hazard, thereby mitigating any differences in efficiency of debt relief emanating from differences in the nature of the debt contracted.



Eichengreen, B., & Ritschl, A. (2009). Understanding West German economic growth in the 1950s. Cliometrica, 3(3), 191-219.

Guinnane, T. W. (2015). Financial vergangenheitsbewältigung: the 1953 London debt agreement. Yale University Economic Growth Center Discussion Paper, (880).

Reinhart, C. M., & Trebesch, C. (2014). A distant mirror of debt, default, and relief (No. w20577). National Bureau of Economic Research.

Ritschl, A. (2011). “Germany owes Greece a debt.” in The Guardian. Tuesday 21 June 2011.

Ritschl, A. (2012). “Germany, Greece and the Marshall Plan.” In The Economist. Friday 15 June.

The Limitations of Correcting Data with more Data

Brazilian Export Growth and Divergence in the Tropics during the Nineteenth Century

By Christopher D. Absell and Antonio Tena Junguito (both at Carlos III, Madrid).

Abstract: The objective of this article is to reappraise both the accuracy of the official export statistics and the narrative of Brazilian export growth during the period immediately following independence. We undertake an accuracy test of the official values of Brazilian export statistics and find evidence of considerable under-valuation. Once corrected, during the post-independence decades (1821-50) Brazil’s current exports represented a larger share of its economy and its constant growth is found to be more dynamic than any other period of the nineteenth century. We posit that this dynamism was related to an exogenous institutional shock in the form of British West Indies slave emancipation that afforded Brazil a competitive advantage.


Distributed by NEP-HIS on: 2015-05-22 and published under the same title in Journal of Latin American Studies (Online, April 2016)

Reviewed by Thales A. Zamberlan Pereira (University of São Paulo)

The best place to find the (rather scarce)  macroeconomic data for 19th century Brazil are the official statistics compiled by the Brazilian Statistics Institute (IBGE). The IBGE data is the main source in Brian Mitchell’s international historical statistics and both are commonly used in the literature exploring Brazilian economic history. The paper by Absell and Tena is an attempt to test the accuracy of these sources by looking at official export statistics between 1821 and 1913. If nothing else this  already makes this an interesting paper.


The focus in export data relies on the argument that the Brazilian economy remained stagnant during the decades that followed Brazil’s independence until 1850 when there was renewed economic growth. While the more recent literature suggests the development of a domestic economy before 1850, the more “classic” literature focuses on the foreign sector to calculate Brazil’s economic growth in the 19th century.

Absell and Tena confirm previous findings that official export statistics were undervaluing exports after 1850. But their study extends to the earlier period and suggests that official statistics  also had a significant bias for the first half of the 19th century. In particular their analysis suggests that Brazilian export growth before 1850 was much higher than previously assumed and that a change in international demand, especially for coffee, was the principal determinant for this growth. The last section of the paper tries to explain the sources of Brazil’s “dynamic export growth” during the post-independence decades and shows that an increase in foreign demand was much more important than changes in domestic productivity. The high rate of growth in exports between 1821 and 1850, a very interesting result, is calculated by deflating prices using an index from a new series of commodities prices.




All of Absell and Tena’s results are grounded in the price correction of the official export data and, therefore, the most interesting part of the paper is the reconstruction of Brazil’s export statistics. To correct the official data, they used international prices for the different commodities (mainly cotton, sugar, and coffee) and subtract freight rates, insurance costs, and export taxes. That is, they convert c.i.f. (cost, insurance and freight) values to f.o.b. (free on board) creating new series for these variables. For insurance and freight rates they used trade data between Rio de Janeiro and Antwerp. It should be noted, however, that a large part of cotton exports before 1850 went to Britain, and freight rates between Brazil and Liverpool were half of what they were for freight travelling to Portugal or France.

Absell and Tena argue that official data for exports was sourced in a weekly table organized “by a government committee in consultation with local commodity brokers and commercial associations.” This information was then verified by the Ministry of Finance,  who sent the tables to provincial customs houses (which calculated the tax revenue) and also to major news periodicals. If the official values were organized like this for the whole period under study, as the authors argue, it would be easier to doubt the accuracy of exports statistics. But, it is difficult to understand how a system of weekly information could work in a country the size of Brazil during the 19th century. Before 1850, northern provinces like Maranhão had stronger business relationships with Lisboa and Liverpool than with Rio de Janeiro. Some northern provinces did not support independence in 1822 because of close economic ties with Portugal.


An additional issue is that many important provinces, even after 1850, did not use the weekly table to calculate their taxes. Evidence suggests that in Minas Gerais and São Paulo, two major coffee exporters, the government used a fixed price system to calculate taxes. See, for example, debates at the provincial assembly of Rio de Janeiro, November 1862, 1879; available online. This information, of course, does not invalidate the argument about the inaccuracy of official values, but it provides some clues that the authors’ correction could have a significant bias as well.

Another problem with the transformation to f.o.b. prices regards export duties. In the working paper version of this article, they assume this “additional trade cost” represented between 1 to 7 per cent of export values. There is extensive evidence, however, that export taxes were a much higher burden throughout the 19th century. Debates at the Chamber of Deputies, the Senate, and in newspapers show that before the fiscal reform in the 1830s, export duties for sugar and cotton could reach more than 20 per cent. The export duties also varied across provinces. After 1850, they continued to be at least 10 per cent.  The export duties presented by Absell and Tena are undervalued because their source from 1821 to 1869 only show the total revenue collected by the central government, not revenue collected by provincial custom-houses. Making assumptions in such calculations is valid, but information regarding data sources should have been more clearly explained in the published version.


Because the objective of the authors is to correct export values using more accurate price data, it should be clear that they do not use only price for Brazilian commodities to adjust the official statistics. To correct the value of Brazilian cotton exports, for example, they use price information of Guyana Raw (Berbice or Demerara) and Middling Uplands (United States) to the United Kingdom. The figure below shows the price of an arroba of cotton in pennies (d) from four different sources, including two prices series for Brazil not used in Absell and Tena paper. The first is the price from the official statistics (IBGE), the second is the price of cotton at the port of Maranhão, the third is the price of cotton from Maranhão in Liverpool, and the last one in the average price of West Indies in Liverpool. As can be seen,  using prices for Brazilian cotton would change some of the magnitudes that the paper proposes.


In summary the paper by Absell and Tena makes a worthy contribution and it proposes a revisionist approach to an important source. An important problem in the paper, however, is not discussing how its own sources could limit their conclusions, a crucial aspect in any revisionist study.

The USA’s First ‘Belle Époque’ (1841-1856)

America’s First Great Moderation

By Joseph Davis (NBER) and Marc Weidenmier (Claremont – McKenna University,


We identify America’s First Great Moderation, a recession-free 16-year period from 1841 until 1856, that represents the longest economic expansion in U.S. history. Occurring in the wake of the debt-deleveraging cycle of the late 1830s, this “take-off” period’s high rates of economic growth and relatively-low volatility enabled the U.S. economy to escape downturns despite the absence of a central bank. Using new high frequency data on industrial production, we show that America’s First Great Moderation was primarily driven by a boom in transportation-goods investment, attributable to both the wider adoption of steam railroads and river boats and the high expected returns for massive wooden clipper ships following the discovery of gold in California. We do not find evidence that agriculture (i.e., cotton), domestic textile production, or British economic conditions played any significant role in this moderation. The First Great Moderation ended with a sharp decline in transportation investment and bank credit during the downturn of 1857-8 and the coming American Civil War. Our empirical analyses indicate that the low-volatility states derived for both annual industrial production and monthly stock prices during the First Great Moderation are similar to those estimated for the Second Great Moderation (1984-2007).


Distributed by NEP-HIS on 2016-03-23

Review by Natacha Postel-Vinay (University of Warwick)

Those who like to study the causes of business fluctuations are often primarily interested in severe downturns, or sometimes wild upswings. They may be tempted to gloss over periods of relative calm where not much seems to be happening. Yet there is a good case for studying such phenomena: surely a long period of low volatility in output, prices and unemployment combined with relatively high sustained growth would make many policy makers happy. As such they deserve our attention.

The Great Moderation is usually thought of as one such period when, from the 1980s up to 2007, US economic growth became both more sustained and much less volatile. The causes of the Great Moderation are still being debated, and range from better monetary policy to major structural changes such as the development of information technologies to sheer luck (for example, an absence of oil shocks). Less well-known is the fact that the US economy experienced a similar phenomenon more than a century earlier, from the 1840s to the mid-1850s. In their paper, Davis and Weidenmier draw our attention to this period as it was, in their view, America’s First Great Moderation.  While much of the paper is spent demonstrating just that, they also look for its causes, and argue that important structural changes in the transportation industry were probably at the origin of this happy experience.


Despite being sometimes pointed out as America’s “take-off” period (Rostow, 1971), the idea that this was the US’s First Great Moderation is far from straightforward. This is partly because the period has been commonly known for its relative financial instability, with for instance financial panics in the late 1930s, 1940s and 1950s. In addition, the National Bureau of Economic Research (NBER)’s official business cycle data do not go further back than 1854, which itself results from the fact that most of the extant data on pre-1854 output is qualitative. Thorp’s Business Annals (1926), for example, are primarily based on anecdotal newspaper reports. Thorp identifies a recession in almost every other year, which Davis and Weidenmier think is a gross overestimation.

Instead, the authors use Davis’s (2004) index of industrial production (IP) and defend their choice by pointing out a number of things. First, this is a newer, high-frequency series which despite its industrial focus is much more precise than, for example, Gallman’s trend GDP data. It is based on 43 annual components in the manufacturing and mining industries which were consistently derived from 1790 to World War I. The series does not contain any explicit information on the agricultural sector, which produced more than half of US output in the antebellum era. However, Davis and Weidenmier argue that any large business fluctuations apparent in this sector would also be reflected in the IP index as the demand for industrial goods was very much tied to farm output. Conversely, the demand for say, lumber, could be intimately related to business conditions in the construction and railroad industries.

Simply looking at standard deviations makes clear that the 1841-1856 period was indeed one of especially low volatility and sustained growth in industrial production, with no absolute normal declines in output. From this data it is thus apparent that even the well-known 1837 financial panic was not followed by any protracted recession, thereby confirming Temin’s (1969) earlier suspicion. Testing more rigorously for breaks in the series, their Markov regime-switching model suggests that the probability of a low-volatility state indeed rises the most during this period as compared to the early and late 19th-century periods. Applying the same model up to the recent era, it even appears that the two Great Moderations were similar in magnitude – a remarkable result.


But what could explain this apparently unique phenomenon? To answer this question, Davis and Weidenmier first decompose industrial production into several sectors such as metal products, transportation machinery, lumber, food, textiles, printing, chemicals and leather. They then find that the probability of faster growth and lower volatility during the First Great Moderation is significantly higher for the transportation-goods industry. This corresponds to the general idea that the “transportation revolution” (especially in railroads and ships) was an important aspect of America’s take-off. However, increased production in transportation goods could be a result of increased demand in the economy as a whole. The authors then refute this possibility by showing that transportation production preceded all other industrial sector increases in this period, which would tend to confirm the importance of transportation investment spillover effects into other sectors.

Davis and Weidenmier therefore make a convincing case that the Great Moderation should in fact be called the Second Great Moderation, since a first one is clearly apparent from the 1840s to the mid-1850s. Interestingly, they emphasize that in both cases deep structural changes in the economy seem to have been at work, especially in the realm of general purpose technologies, with significant spillovers (transportation in one case, IT in the other).


An important question left to answer is the extent to which an era of the “Great Moderation” type is to be desired, and on what grounds. Although aiming at a quiet yet prosperous era seems legitimate, it is important to remind ourselves that the 1850s ended with a severe financial and economic crisis which some argue had its roots in financial speculation and overindebtedness in preceding years. Likewise, we all know how the 2000s sadly ended. The “Second” Great Moderation also saw significant increases in inequality. Davis and Weidenmier acknowledge not being able to account for financial and banking developments during this era; perhaps this needs to be investigated further (or at least pondered upon). One may ask, indeed, whether such periods of prosperity may not bear in themselves the seeds of their own demise.



Davis, Joseph. (2004). “An Annual Index of US Industrial Production, 1790-1915.” The Quarterly Journal of Economics 119:4, pp. 1177-1215.

Gallman, Robert. (1966). “Gross National Product in the United States, 1834-1909” in Dorothy S. Brady (ed.) Output, Employment, and Productivity in the United States after 1800. New York, Columbia University Press.

Rostow, W. (1990). The Stages of Economic Growth: A Non-Communist Manifesto. 3rd Edition. Cambridge: Cambridge University Press.

Temin, Peter. (1969). The Jacksonian Economy. New York: W. W. Norton & Company, Inc.

Thorp, William. (1926). Business Annals. NBER.


Don’t Panic!! War, Money and Stability, 1914-45

Confidence, Fear and a Propensity to Gamble: The Puzzle of War and Economics in an Age of Catastrophe 1914-45

by Roger L. Ransom ( (University of California at Riverside)

This paper uses the notion of animal spirits introduced by John Maynard Keynes in the General Theory and more recently employed by George Akerloff and Robert Shiller in their book Animal Spirits, to explain the speculative bubbles and decisions for war from 1914 to 1945. Animal spirits are “a spontaneous urge to action rather than inaction” that produces decisions which are not bounded by “rational” calculations. My analysis shows how confidence, fear, and a propensity to gamble can encourage aggressive behavior that leads to speculative “bubbles” in financial markets and military or political crises. Elements of prospect theory are added to demonstrate how the presence of risk in crises tend to produce a very strong bias towards taking gambles to avoid economic or military loses. A basic premise of the paper is that war and economics were inexorably joined together by 1914 to a point where economic strength was as important as military might in determining the outcome of a war. The final section of the paper deals with the problem of measuring military and economic strength by using the composite index of national capability [CINC] created by the Correlates of War Project to evaluate the riskiness of the Schlieffen Plan in 1914 and the changes in military capability of major powers between 1914-1919


Distributed by NEP-HIS on: 2016-03-17

Reviewed by Mark J Crowley

This paper surveys the impact of war on economic stability, and the role that confidence and fear plays in the nature of the economy and economic development.   It provides an interesting addition to the historiography, especially since numerous similar studies have concentrated on the social ramifications of war, most notably the correlation between armed conflict and social change first identified by Arthur Marwick in the 1970s.


John Maynard Keynes is still regarded by many as the architect of modern economics in war and peace

Using the framework of ‘animal spirits’, first advanced by John Maynard Keynes in his classical General Theory study of 1936, Ransom shows how emotion and rationality have governed many of the economic cycles that ensued as a result of war and peace. He shows that decisions based on instinct were often the driver of many deep-rooted changes that would impact on long-term economic stability.  With the perception among policymakers that interwar years (i.e. the period after the First World War) would lead to a period of significant economic instability, he shows how major world leaders often took gambles – some of which paid off, but some of which had deep consequences that not only changed the course of war, but also affected long-term economic performance.

In identifying the limitations of economic history analyses in this area, Ransom argues that the uncertainties caused by war and the transition to a peacetime economy leads to several difficulties. For economists, no real models exist for the predictions of uncertainty or volatility, whereas outcomes can, to a certain degree of accuracy, be predicted. Furthermore, he claims that in countries where the economy was growing and the war effort was achieving positive aims, leaders were thus operating in a ‘confidence bubble.’ Yet while this progress could be regarded as positive for the nation, the implications for the economy were not always fruitful, especially since the impact of emotion on leaders’ psyche meant that despite these developments, leaders and planners did not always act rationally. In explaining this phenomenon, Ransom draws on Daniel Kahneman and Amos Tverskey’s 1979 ‘Prospect theory’ in which they argue that many leaders have focused on the results they think are really possible while also seeking to avoid large losses. This, in turn, has served to cloud judgement with regard to the possibilities open to make significant gains.


Hoovervilles in the USA became a common sight of the Great Depression of the 1920s

In the final part of the paper, Ransom shows how historians have used the Composite Index of National Capability in order to assess a nation’s capability to wage a war.  The test, comprising six areas includes: military personnel; military expenditure; total population; urban population; primary energy consumption; and iron and steel consumption.  This approach looks at these aspects and divides each nation by the overall global variable.   While not totally reliable, it can offer possibilities to explain why leaders, in preparation for, and in prosecution of, war have changed strategies according to national needs.  Using the Battle of the Marne during the First World War as an example, Ransom shows how this acted as a ‘tipping point’ in the German prosecution of the war effort – the failure of which saw confidence turn into fear and the widely-regarded failure of General Schlieffen to discharge Germany’s military capability in the most effective way. Thus the idea that economics formed the foundation a nation’s military capability after the First World War has now received greater attention.


General Schlieffen’s economic decisions during the First World War have now been seen as a possible reason for German’s failures.


This paper is fascinating for the way that it shows the impact of emotion and human rationality on economics.  In terms of economic policymaking, little attention has been dedicated to the role of emotion and human behaviour on the economic decisions taken that, in turn, had a fundamental impact on the trajectory of war.

The interesting aspect of this paper lies in the way that Ransom uses case studies to show how wars, and the pressures placed on leaders, could have influenced their state of mind concerning their economic decisions.  The approach is geo-political.  This is particularly useful, since the importance of international relations would have impacted severely on a nation’s economic capability.  However, what could also be of interest is a consideration of the response on the home front to the challenges brought about by war and peace, and how the opinions of ordinary citizens may or may not have influenced those in positions of power.  For example, in the British case, the Ministry of Information during the Second World War commissioned surveys of the home front to ascertain people’s opinions on a wide range of topics, of which the condition of the economy featured heavily.  The social research organisation, Mass Observation, also conducted similar surveys so as to inform the government of the home front’s condition, and how it could be maintained to ensure solidarity for the war effort.  At the core of many citizens’ grievances was the nature of the economy, especially rising food prices.  While ascertaining this information in a transnational study such as this may not be easy, perhaps a little more focus on citizens’ opinions of economy and the prosecution of the war effort would provide a wider framework in which to understand the influences on world leaders when making decisions controlling the trajectory of their nation’s economies in war and peace.



Jefferys, Kevin (ed.), War and Reform: British Politics during the Second World War (Manchester: Manchester University Press, 1994).

Marwick, Arthur, War and social change in the twentieth century: a comparative study of Britain, France, Germany, Russia and the United States (London: Macmillan, 1974).

Milward, Alan S., War, Economy and Society, 1939-45 (Harmondsworth: Penguin, 1987).

Minns, Raynes, Bombers and Mash: The Domestic Front, 1939-45 (London: Virago, 1980).

Where is the growth?

Mismeasuring Long Run Growth: The Bias from Spliced National Accounts

by Leandro Prados de la Escosura (Carlos III)

Abstract: Comparisons of economic performance over space and time largely depend on how statistical evidence from national accounts and historical estimates are spliced. To allow for changes in relative prices, GDP benchmark years in national accounts are periodically replaced with new and more recent ones. Thus, a homogeneous long-run GDP series requires linking different temporal segments of national accounts. The choice of the splicing procedure may result in substantial differences in GDP levels and growth, particularly as an economy undergoes deep structural transformation. An inadequate splicing may result in a serious bias in the measurement of GDP levels and growth rates.

Alternative splicing solutions are discussed in this paper for the particular case of Spain, a fast growing country in the second half of the twentieth century. It is concluded that the usual linking procedure, retropolation, has serious flows as it tends to bias GDP levels upwards and, consequently, to underestimate growth rates, especially for developing countries experiencing structural change. An alternative interpolation procedure is proposed.


Distributed in NEP-HIS on 2015 – 01 – 09

Reviewed by Cristián Ducoing

Dealing with National Accounts (hereafter NA) is a hard; dealing with NA in the long run is even harder…..

Broadly speaking, a quick and ready comparison of economic performance for a period of sixty years or more, would typically source its data from the Maddison project. However and as with any other human endevour, this data is not free from error. Potential and actual errors in measuring economic growth is highly relevant economic history research, particularly if we want to improve its public policy impact. See for instance the (brief) discussion in Xavier Marquez’s blog around how the choice of measure can significantly under or overstate importance of Lee Kuan Yew as ruler of Singapore.

The paper by Leandro Prados de la Escosura, therefore, contributes to a growing debate around establishing which is the “best” GDP measure to ascertain economic performance in the long run (i.e. 60 or more years). For some time now Prados de la Escosura has been searching for new ways to measure economic development in the long run. This body of work is now made out of over 60 articles in peer reviewed journals, book chapters and academic books. In this paper, the latest addition to assessing welfare levels in the long run, Prados de la Escosura discusses the problems in using alternative benchmarks and issues of spliced NA in a country with a notorious structural change, Spain. The main hypothesis developed in this article is to ascertain differences that could appear in the long run NA according to the method used to splice NA benchmarks. So, the BIG question is retropolation or interpolation?

Leandro Prados de la Escosura. Source:

Leandro Prados de la Escosura. Source:

Retropolation: As Prados de la Escosura says, involves a method that is …, widely used by national accountants (and implicitly accepted in international comparisons). [T]he backward projection, or retropolation, approach, accepts the reference level provided by the most recent benchmark estimate…. In other words, the researcher accepts the current benchmark and splits it with the past series (using the variation rates of the past estimations). What is the issue here? Selecting the most recent benchmark results in a higher GDP estimate because, by its nature, this benchmark encompasses a greater number of economic activities. For instance, the ranking of relative income for the UK and France changes significantly when including estimates of prostitution and narcotrafic. This “weird” example shows how with a higher current level and using past variation rates, long-run estimates of GDP will be artificially improved in value. This approach thus can lead us to find historical anomalies such as a richer Spain overtaking France in the XIXth century (See Prados de la Escosura figure 3 below).

An alternative to the backward projection linkage is the interpolation procedure. This method accepts the levels computed directly for each benchmark year as the best possible estimates, on the grounds that they have been obtained with ”complete” information on quantities and prices in the earlier period. This procedure keeps the initial level unaltered, probably being lower than the level estimated by the retropolation approach.

There are two more recent methods to splice NA series derived from the methods described above: the “mixed splicing” proposed by Angel de la Fuente (2014), which uses a parameter to capture the severity of the initial error in the original benchmark. The problem with this solution is the arbitrary value assigned (parameter). Let’s see it graphically and using data for the Maddison project. As it is well known, these figures were recently updated by Jutta Bolt and Jan Luiten van Zanden while the database built thanks to the contributions of several scholars around the world and using a same currency (i.e. the international Geary-Kheamy dollar) to measure NA. Now, in figure 1 shows a plot of GDP per capita of France, UK, USA and Spain using data from the Madison project.

GDP per capita $G-K 1990. France, UK, USA and Spain. 1850 – 2012

The graph suggests that Spain was always poorer than France. But this could change if the chosen method to split NA is the retropolation approach. Probably we need a graph just with France to appreciate the differences. Please see figure 2:

GDP pc Ratio between Spain and France. Bolt&vanZanden (2014) with data from Prados de la Escosura (2003)

GDP pc Ratio between Spain and France. Bolt&vanZanden (2014) with data from Prados de la Escosura (2003)

Figure 2 now suggests an apparent convergence of Spain with France in the period 1957 to 2006. The average growth rate for Spain in this period was almost 3,5% p.a. and in the case of France average growth shrinks to 2,2% p.a. Anecdotal observation as well as documented evidence around Spainish levels of inequality and poverty make this result hard to believe. Prados de la Escosura goes on to help us ascertain this differences in measurement graphically by brining together estimates of retropolation and interpolation approaches in a single graph (see figure 3 below):

Figure 3. Spain’s Comparative Real Per Capita GDP with Alternative Linear Splicing (2011 EKS $) (logs).

Figure 3. Spain’s Comparative Real Per Capita GDP with Alternative Linear Splicing (2011 EKS $) (logs).

In summary, this paper by Prados de la Escosura is a great contribution to the debate on long run economic performance. It poises interesting challenges scholars researching long-term growth and dealing with NA and international comparisons. The benchmarks and split between different sources is always a source of problems to international comparative studies but also to long-term study of the same country. Moving beyond the technical implications discussed by Prados de la Escosura in this paper, economic history research could benefit from a debate to look for alternative measures or proxies for long-run growth, because GDP as the main source of international comparisons is becoming “dated” and ineffective to deal with new research in inequality, genuine savings Genuine Savings, energy consumption, complexity and gaps between development and developed countries to name but a few.


Bolt, J. and J. L. van Zanden (2014). The Maddison Project: collaborative research on historical national accounts. The Economic History Review, 67 (3): 627–651.

Prados de la Escosura, Leandro  (2003) El progreso económico de España (1850-2000). Madrid, Fundación BBVA, , 762 pp.


1) This paper by Prados de la Escosura has already been published in Cliometrica and with the same title

2) Prados de la Escosura’s A new historical database on economic freedom in OECD countries | VOX, CEPR’s Policy Portal.