Category Archives: Economic History

The Elephant (-Shaped Curve) in the Room: Economic Development and Regional Inequality in South-West Europe

The Long-term Relationship Between Economic Development and Regional Inequality: South-West Europe, 1860-2010

by Alfonso Díez-Minguela (Universitat de València); Rafael González-Val (Universidad de Zaragoza, IEB); Julio Martinez-Galarraga (Universitat de València); María Teresa Sanchis (Universitat de València); and Daniel A. Tirado (Universitat de València).

Abstract: This paper analyses the long-term relationship between regional inequality and economic development. Our data set includes information on national and regional per-capita GDP for four countries: France, Italy, Portugal and Spain. Data are compiled on a decadal basis for the period 1860-2010, thus enabling the evolution of regional inequalities throughout the whole process of economic development to be examined. Using parametric and semiparametric regressions, our results confirm the rise and fall of regional inequalities over time, i.e. the existence of an inverted-U curve since the early stages of modern economic growth, as the Williamson hypothesis suggests. We also find evidence that, in recent decades, regional inequalities have been on the rise again. As a result, the long-term relationship between national economic development and spatial inequalities describes an elephant-shaped curve.

URL: https://EconPapers.repec.org/RePEc:hes:wpaper:0119

Distributed by NEP-HIS on 2018-02-26

Review by: Anna Missiaia

The relationship between economic development and inequality in a broad sense has been at the core of economic research for decades. In particular, the process of industrialization has been much investigated as a driver of inequality: Kuznets (1955) was the first to propose an inverted U-shaped pattern of income inequality driven by the initial forging ahead of the small high-wage industrial sector and a subsequent structural change, with more and more labour force moving out of agriculture into industry. The first to suggest that a similar pattern could take place in the spatial dimension was Williamson (1965), who showed that the process of industrialization could lead to an upswing of regional inequality because of the initial spatial concentration of the industrial sector, which eventually touches the less advanced regions. The paper by Díez-Minguela, González-Val, Martinez-Galarraga, Sanchis and Tirado circulated on NEP-HIS on 2018-02-26 deals with this latter inequality. The authors formally test what is the relationship between the coefficient of variation (in its Williamson formulation) of regional GDP per capita and a set of measures of economic development, most importantly the level of national GDP per capita. The authors use for the analysis four Southwestern European countries (France, Spain, Italy and Portugal).  The paper starts in 1860 and therefore takes a much appreciated multi-country and long-run perspective compared to the original work by Williamson, who was looking only at the 20th century United States.

The work by Díez-Minguela and co-authors also relies on the framework developed by Barrios and Strobl (2009), going from a merely descriptive interpretation of an inverted U-shape of regional inequality to a theoretically-founded one. In particular, Barrios and Strobl (2009) use a growth model that takes into account region-specific technological shocks and their later diffusion on the entire national territory; they also include measures of trade openness to test the hypothesis that more market integration leads to more regional inequality; they finally consider regional policies implemented by the State to even out regional disparities. The original paper by Barrios and Strobl (2009) was only considering a sample of countries from 1975 onwards, basically overlooking the whole post-WWII industrial boom in some more developed countries. In this respect, the contribution by Díez-Minguela and coauthors is fundamental, as it proposes a long-run regional analysis not only confined to one specific country as it is customary in the field, but on a group of countries. The paper also proposes a formal testing of the drivers of regional inequality, moving forward from a mere descriptive approach. In terms of methodology, the authors propose an approach that makes use of both parametric and semi-parametric estimations. This is to take into account that the relationship might be different for different levels of GDP.

Moving on to the results, the first thing to note is that three out of four countries in the sample present an inverted U-shaped pattern between GDP per capita and regional inequality (as can be seen in Figure 1).

fig426march2018

Figure 1: Regional Income Dispersion and Per-Capita GDP in France, Italy, Spain and Portugal (1860-2010). Source: Díez Minguela et al. (2017)

As for France, the authors suggest that the lack of a U-shaped pattern could be due to its early industrialization that pre-dates the first benchmark year available (1860). The analysis could thus be still capturing the downward part of the U-shape. In terms of the econometric analysis, the OLS regression confirms the predicted pattern through the significance of GDP per capita both in their quadratic and cubic forms.

One interesting discussion is on the controls used in the model: here both openness to trade and public expenditure are not significant, in spite of both being strong candidates for explaining regional inequality in the economic geography literature (see Rodríguez-Pose, 2012 on trade and Rodriguez-Pose and Ezcurra, 2010 on public spending). For the first variable (openness of trade), the explanation could be that the detrimental effect of trade on regional inequality could well have been offset by the increased integration of the financial and labour markets during the First Globalization.

Regarding the second control variable, public intervention (measured as public spending as a share of GDP): the authors admit that having a large public sector does not necessarily imply implementing effective cohesion policies. The example of Fascist Italy on this point is very illustrative: the 1920s and 1930s witnessed rising inequality in Italy, in spite of a growing intervention by the State in the economy and an alleged intent to favor the most backward parts of the country. In general, the impression is that more than one mechanism that is well present in empirical studies after WWII, might not be so in earlier periods. Finally, the authors test for the role of structural change in shaping regional inequality, which was the original explanation by Williamson (1965). This is measured as the non-agricultural value added and it is positive and significant in explaining the coefficient of variation of overall GDP per capita.

Although the paper represents an important step forward for explaining historical regional divergence, several aspects could be addressed in the future by either the authors or by other scholars in the same field. For instance, the use of only four countries from a specific part of Europe does not yet allow drawing general conclusions on the relationship between economic growth and inequality in the long run. As mentioned in the paper, several case studies from other parts of Europe do not entirely fit in the same path: this is the case of Belgium (Buyst, 2011) or Sweden (Enflo and Missiaia, 2018). It is possible that including more advanced economies such as Britain or even some peripheral but Northern ones in the sample might lead to re-consider the increase of regional inequality during modern industrial growth as a golden rule.

References

Barrios, S., Strobl, E., 2009. “The Dynamics of Regional Inequalities.” Regional Science and Urban Economics 39 (5), 575-591

Buyst, E., 2011. “Continuity and Change in Regional Disparities in Belgium during the Twentieth Century.” Journal of Historical Geography 37 (3), 329-337

Díez Minguela, A., González-Val, R., Martínez-Galarraga, J., Sanchis, M. T., and Tirado, D. 2017. “The Long-term Relationship Between Economic Development and Regional Inequality: South-West Europe, 1860-2010.” EHES Working Papers in Economic History 119

Enflo, K. and Missiaia, A. 2017. “Between Malthus and the Industrial Take-off: Regional Inequality in Sweden, 1571-1850.” Lund Papers in Economic History

Kuznets, S., 1955. “Economic Growth and Income Inequality.” American Economic Review 45 (1), 1-28

Rodríguez-Pose, A., 2012. “Trade and Regional Inequality.” Economic Geography 88 (2), 109-136

Rodríguez-Pose, A., Ezcurra, R., 2010. “Does Decentralization Matter for Regional Disparities? A Cross-Country Analysis.” Journal of Economic Geography 10 (5), 619-644.

Williamson, J.G., 1965. “Regional Inequality and the Process of National Development: a Description of the Patterns.” Economic Development and Cultural Change 13 (4), 1-8

 

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from VOX – The return of regional inequality: Europe from 1900 to today

by Joan Rosés (LES) and Nikolaus Wolf (Humboldt University)

 

 

via EHS The Long Run

Original post Here

The Middle Income Trap

Development State Evolving: Japan’s Graduation from a Middle Income Country

By Tetsuji Okazaki (University of Tokyo)

Abstract: This paper reexamines the industrial policy in postwar Japan from perspectives of the literature on a “development state” and a “middle income trap”. Japan transited from a middle income country to a high income country in the period from the 1950s to the 1970s. This process was characterized by a large structural change, such as resource reallocation from the primary industry to the secondary and the tertiary industries as well as resource reallocation within the secondary industry. Transition to a high income country is a challenging task for a middle income country. With respect to Japan, the industrial policy played a positive role in the transition. This was achieved by interactions between MITI and other related actors, who constrained and corrected MITI’s attempts of excess intervention.

URL: https://EconPapers.repec.org/RePEc:tky:fseres:2017cf1063

Distributed by NEP-HIS on 2017‒09‒03

Review by: Joyman Lee (University College London)

Summary

Students of modern Japanese economic history are familiar with the work of Chalmers Johnson (1982) on the Ministry of International Trade and Industry (MITI). In that work Johnson argued that MITI was the leading state actor in Japan’s economic miracle, playing a vital coordinating role between policymakers and the private sector. Johnson’s emphasis on the role of the state in the East Asian experience has triggered similar studies on the development state in Korea (Alice Amsden) and Taiwan (Robert Wade).

As Okazaki notes, the emergence of newly industrialising economies facing the challenges of globalisation and democratisation has led to a renewed interest in the development state. Okazaki argues that rather than constituting a static set of policies, Japan’s developmental state was highly dynamic and adaptive, echoing Douglass North’s idea of “adaptive efficiency” (North 2005). Significantly, this ceased to be the case in Japan after the 1990s. A second strand of literature that informs the paper is the idea of the “middle income trap” (Gill and Kharas 2007), which highlights a particularly challenging transition which middle-income economies face, as the policies that have fueled the initial stages of growth are no longer appropriate for continued growth. The idea has gained considerable traction among commentators in China.

china middle income

The fear of the “middle income trap” has been particularly acute in China.

Okazaki’s paper shows that Japan’s successful voyage through the “trap” was partly facilitated by its success in resource allocation across industries, in addition to well-known increases in the intra-sector productivity. Between 1955 and 1975, Okazaki attributes 29% of the increases in labour productivity to resource allocation, which he stresses was “substantial” (p. 4).

Okazaki traces the evolution of policies from the American occupation period, when U.S. advisor Joseph Dodge initiated the abolition of strict wartime controls. A 1953 government report was followed by the Five Year Plan of 1955, which highlighted the need to transition from light to heavy industries. MITI was formed in 1949 to pursue the policy of “industrial rationalization”. Formal economic controls were replaced by a portfolio of public financial institutions, including the Japan Development Bank (1951), tax relief, and foreign exchange allocation, and a central coordinating Council for Industrial Reorganisationolic . The government promoted new sectors, particularly the machinery and the automobile industries within it, which included the use of cultural strategies such as a campaign to promote the purchase of domestic cars at the same time as regulating foreign direct investment (1952) and curtailing the foreign exchange available for car imports (1954). The government also actively implemented policies concerning the automobile parts industry, which was quite atypical given the miscellaneous and low tech nature of that sector.

japan car industry

A Toyota factory in 1948. MITI’s policy in supporting the automobile parts industry which supplied major manufacturers such as Toyota was particularly distinctive.

At the same time as developing the domestic economy, MITI also foresaw foreign pressure on trade liberalisation, and formed a committee to formulate its strategy in 1959. While the ministry remained ambivalent with respect to its effects, it nonetheless adopted a sequential programme of liberalisation that was intertwined with plans to upgrade the industrial infrastructure. The high level of alert to likely external treasures had a direct effect on the government’s sector-specific strategies, e.g. to focus on passenger cars in the automobile sector. However, MITI’s more radical plans to consolidate the industry by policy intervention were not adopted, and instead the government aided the industry through JDB loans and low interest loans to small and medium-sized suppliers. MITI also successfully resisted IMF pressures to remove the industry from the foreign exchange system until Japan was well established in the world market (1963). Meanwhile, the government conceded that the coal industry would be uncompetitive and adopted a programme of gradual phasing out.

Comment

Okazaki’s study provides a timely, quantitative and authoritative review on an important and relatively understudied topic (given the acceptance of Johnson’s view as orthodoxy among historians) by one of Japan’s leading economic historians, whose trans-war perspective is particularly useful in teasing out more subtle changes amidst MITI’s strong posture towards industrial policy. As Okazaki observes,  the difficulties that middle-income economies face are acute, as “one of the difficulties that middle income countries face is that they should compete with low income countries in the markets of labor-intensive industries as well as with high income countries in the markets of capital and technology intensive industries” (Bulman 2017). In this context, Japan’s success appears remarkable, perhaps no less than the historiographically well-recognised significance of Japan’s Meiji-period Westernisation.

However, the complexity of policies required for breaking the “middle-income trap” in Japan’s case may not provide much comfort for middle-income economies currently facing the challenge. Although Japan rejected centralised state controls, the Japanese example appears to require a complex set of policies that presupposes a high degree of political cohesion and long-range economic planning, which is often difficult in many middle income economies given various political and social challenges. It also requires a state that is highly persuasive to the populace with respect to its vision for economic development. These factors appear to mark Japan out as an exception rather than an example that can be easily perceived as immediately relevant by many developing countries.

Perhaps the most avid student of Japan’s experiences will be China, which possesses a similar state capacity for a coordinated industrial policy and a qualified commitment to the market, even if it may not enjoy the same degree of social cohesion. This likely Chinese interest may explain the timing of Okazaki’s paper. However, the requirement of a strong state may produce perverse incentives for middle-income countries to maintain authoritarian systems of government (even though Japan was not classically authoritarian in that period in its history), and reminds us of unresolved tensions between economic development and democratisation.

Additional References

Alice, A, 1992. Asia’s Next Giant: South Korea and Late Industrialization. New York, NY: Oxford University Press.

Bulman, D, Eden, M, Nguyen, H, 2017. “Transition from Low-Income Growth to High-Income Growth: Is there a Middle-Income Trap ?” Journal of the Asian Pacific Economy, 22(1): 5-28.

Gill, I, Kharas, H, 2007. An East Asian Renaissance: Idea for Economic Growth. Washington DC: The World Bank.

Johnson, C, 1982. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. Stanford, CA: Stanford University Press.

North, D, 2005. Understanding the Process of Economic Change. Princeton, NJ: Princeton University Press.

Wade, R, 2003. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton, NJ: Princeton University Press.

Measuring Benefits from Energy Transitions

Consumer Surplus from Energy Transitions 

by Roger Fouquet (Grantham Research Institute on Climate Change and the Environment at LSE)

Abstract: Energy transitions have led to major advances in human wellbeing. However, little evidence exists about the scale of the net benefits. By developing a new method for identifying the demand curve, and by using a unique, historical data set, this paper estimates the consumer surplus associated with heating, transport and lighting over more than two hundred years and identifies the gains from a number of key energy transitions. For certain energy transitions, the increase was dramatic, reflecting the transformations in society and lifestyles that mobility and illumination provided in the nineteenth and twentieth centuries. Yet, the net benefits related to heating technologies only rose modestly. Finally, due to saturation effects of the demand for energy services, future technological developments and energy transitions may benefit consumers (though not necessarily society as a whole) less than those in the past.

URL: https://EconPapers.repec.org/RePEc:lsg:lsgwps:wp277

Circulated by NEP-HIS on 2017‒10‒22

Review by: Cristián Ducoing (Lund University)

 

Energy Transition

Summary

The current research focus in energy transitions is mainly motivated by the environmental implications of energy consumption. This more than justified direction has relegated to a second place the analysis of the enormous benefits derived from energy transitions, specially when we observe consumers’ welfare.  This new paper by Roger Fouquet analyses the positive impacts of energy transitions (hereafter, ET) by looking into how each ET generates consumer surplus.

roger_fouquet

Roger Fouquet

This paper combines data sets from two previous works of the author about the United Kingdom on service prices between 1300 and 2010 (Fouquet 2011a), and service consumption between 1700 and 2010 (Fouquet 2014). The data sources and methodologies used were explained in Fouquet (2008). In brief, Fouquet has done an upgrade of his former estimations to measure how much welfare we have obtained by ET. The author follows a standard measure of welfare (how less consumers pay for a specific service) and he applies it to each ET during the last two centuries in the United Kingdom.

income_price_elasticity

Figure 1: Income Price Elasticity of Demand for Energy Services in the United Kingdom, 1800 – 2008

As shown in the examples in Figure 1, a key advantage of focusing on energy services, rather than on fuels (energy carriers), is that the demand for services remains comparable with the introduction of new goods and technologies. 

Figure3

Figure 2: Consumer Expenditure on Domestic Heating, Passenger Transport and Lighting as a share of GDP in the United Kingdom, 1800 – 2010

The conclusions extracted from the paper could be summarized as follows:

  1. Attempts to estimate consumer surplus face enormous challenges, mainly by the effects of disruptive technologies. However, it could be possible to get an approximation taking into account the methodology used by Nordhaus (1997). Moreover, the paper presents a novel method that allows to identify the changes in demand curves for energy services (lightning, heating and transport).
  2. There were dramatic increases in consumer surplus due to energy transition in transport (stagecoaches to railways) and lightning (candles to gaslight and to electric lightning).
  3. Developing countries are benefited by increasing energy consumption. On the other hand, benefits in developed countries could be lower than in the past.
  4. The method offered allow us to forecast the long-run net benefits of new energy technologies and transitions. This issue has enormous policy implications in relation with the environmental challenges that we are facing us.

Comment

Currently, to defend energy systems/consumption as mechanisms of progress and development is quite complicated, specially if the energy systems contain fossil fuels, such as the main energy carriers in the case of the United Kingdom. This paper focuses its attention on the “good side” of energy consumption and mechanization, tackling a compulsory debate on the trade-off between economic development and sustainability. Roger Fouquet has mentioned this debate in an 2016 article, where he analyzed the lessons from history to our current energy transition. Now, Fouquet has demonstrated, accounting for the consumer surplus, than previous energy transitions have been beneficial for consumers/population. The question is: how should the current and  future energy transition be carried? In order to achieve economic development, countries pursuing higher income levels require an increase in energy consumption.  Fossil fuels still are a valid option to increase energy consumption; a low carbon economy could be farther in the road than we thought. A challenge to global society is to create an economic environment favorable to clean energy technologies, in order to promote economic growth in low income regions without the deprivation of our natural resources and environment.    

As this paper has shown us, there are periods when the increase in energy consumption has been beneficial to aggregate welfare, at least from a country/region perspective. However, the current global situation doesn’t allow an increase in energy consumption based in fossil fuels without risking main environmental equilibriums.

The only possible criticism to the paper is the implicit “normative” scope supported by one country experience. Nevertheless, Fouquet presented this paper as a starting point for further research.

References

Fouquet, R. (2011a) “Divergences in Long Run Trends in the Prices of Energy and Energy Services.” Review of Environmental Economics and Policy 5(2) 196-218.

Fouquet, R. (2014) “Long Run Demand for Energy Services: Income and Price Elasticities over 200 Years.” Review of Environmental Economics and Policy 8(2) 186-207.

Fouquet, R. (2008) Heat Power and Light: Revolutions in Energy Services. Cheltenham: Edward Elgar.

Black Living Standards in South Africa before Democracy

Black Living Standards in South Africa before Democracy: New Evidence From Heights

By: Bokang Mpeta (Stellenbosch University), Johan Fourie (Stellenbosch University) and Kris Inwood (University of Guelph)

Abstract: Very little income or wage data was systematically recorded on the living standards of South Africa’s black majority during much of the twentieth century. This paper uses four data sets to document, for the first time, an alternative measure of living standards: the stature of black South Africans over the course of the twentieth century. We find evidence to suggest that the first three decades of the century were particularly bad, perhaps due to the increasingly repressive labour policies in urban areas and famine and land expropriation that weighted especially heavily on the Basotho. The decade following South Africa’s departure from the gold standard, a higher international gold price and the demand for manufactured goods from South Africa due to the Second World War seem to have benefited both black and white South Africans. The data also allow us to disaggregate by ethnicity within the black population group, revealing levels of inequality within race group that has been neglected in the literature. Finally, we compare black and white living standards, revealing the large and widening levels of inequality that characterised twentieth-century South Africa.

URL: https://econpapers.repec.org/paper/rzawpaper/670.htm

Distributed by NEP-HIS on: 2017-10-15

Review by: Gregori Galofré-Vilà (University of Bocconi and University of Oxford)

Almost forty years ago, a group of historians led by Robert Fogel began to explore the potential of anthropometric measurements for answering a range of historical questions, largely, but not limited to, those concerning health and wellbeing (Fogel et al. 1978). Although around 80% of the main variation in individual height may be genetic, it has long been recognised that variations in the mean heights of different groups of people owe much to economic, social, and environmental circumstances.

Since the early efforts of Robert Fogel, anthropometric data contributed to long-standing debates such as the health of slaves in the US South (Steckel 1977) and the living standards during the British Industrial Revolution (Floud et al. 1990). Meanwhile many historians began to explore the development of height in many countries. For instance, Komlos (1985) began the collection of data for the Habsburg Empire, Martínez-Carrión (1986) for Spain and Sandberg and Steckel (1987) for Sweden, just to name a few. For a recent review of the height literature see Galofré-Vilà (2018).

Perhaps, the most interesting discovery until now, as commented by Floud et al. in The Changing Body (2011) and Deaton in The Great Escape (2016), is that since the 1850s, or over the course of some 6-7 generations, heights in Europe and North America have progressed into previously uncharted territories. For instance, Dutch men, being today the tallest in the world, grew from 166.5 to 182.7 (or 1.2 cm per decade). Better diets, sanitary reforms, lower frequency of sickness and shorter workdays are also reflected in terms of longevity, and during the same period Dutch life expectancy grew from 36.6 to 77.8 (or 2.8 years per decade).

However, in less wealthy parts of the world these improvements have been less important –if we can talk in terms of improvements at all. For instance, Guntupalli (2007) showed that Indian heights increased from 163.2 cm to 165.1 cm between the 1910s and 1980s (or 0.3 cm per decade) and Moradi et al. (2013) found that heights in Ashanti (Ghana) increased from 167.7 cm to 168.8 cm (or 0.6 cm per decade). Indeed, today life expectancy in developing countries is clearly below Western standards (in 2014 life expectancy in India was 68 years and 61 in Ghana).

In a very interesting paper, Bokang Mpeta, Johan Fourie and Kris Inwood (2017) take advantage of height records to chart, for the first time, the living standards of black South Africans between the 1890s and the 1990s. They addressed three questions: (1) Were poor black living standards a result of apartheid-era polices, or did they worsen even before South Africa’s most infamous era? (2) When did white and black living standards diverge? and (3) Can we explain the level and trend within the black population over the twentieth century? As the authors point out, the height data here are especially helpful as data on more conventional or modern indicators are lacking.

Similar to the less wealthy parts of the world, they found that the height of black South Africans improved little across the twentieth century (1.3 cm between 1895 and 1985 or 0.1 cm per decade). Indeed, as Figure 1 shows, they discovered that between the 1890s and 1910s heights declined from nearly 168 cm to 167 cm and linked this decline to the white repression and regulations of land expropriation (for instance, the 1913 Native Land Act was particularly painful as it banned the ownership of land by the black population). They also stressed some negative effects of extractive institutions following the discovery of diamonds in Kimberly in 1867 and gold mines in Johannesburg in 1886.

Figure 1: Height development of black South Africans between 1895 and 1990. Source: Mpeta, Fourie, Inwood (2017).

Yet, it seems that a reversal occurred when South Africa left the Gold Standard (in December 1932) and, due to the increases in the international price of gold, the prospects of employment for black people rapidly improved, with heights increasing from 167 cm to 168 cm during the 1930s and 1940s. Feinstein (2005) also observed that the Second World War created a powerful stimulus to local industries and gold mining, creating opportunities for many to sell goods abroad. However, this short-lived period of improvement somewhat slowed down after the 1950s, reaching 168.5 cm in the 1970s and followed the electoral victory of the National Party in 1948. The apartheid and new institutional reforms such as the 1959 Promotion of Black Self-Government Act (which among other things abolished parliamentary representation for Blacks) seem also to have worsened black living standards.

There are also additional interesting features of the paper. Black males born towards the end of apartheid were nearly 7 cm shorter than white males. However, this might not be surprising because, as the authors explain, infant mortality in the Cape Colony was two times higher for black Africans and the wages paid to white miners were almost eight times higher than those paid to black miners. They also find differences in height by nearly 2 cm between black ethnicities.

As seen in Figure 1 above, in order to have sufficient data to cover a century, the authors use four separate sets of data. First, the heights of men who joined the South African Army between 1940 and 1945 (and born between 1890 and 1922). Second, the heights derived from dead bodies deposited in regional hospitals of South Africa that were unclaimed (with birth years estimated between 1897 and 1980). Finally, the height data compiled in two modern health surveys: the 1998 South African Demographic and Health Survey (DHS) and the 2008 National Income Dynamics Study (NIDS). As the authors point out at different points in the paper, all these sources potentially carry different issues of selection and representativeness. For instance, there is almost no information on who these 500 dead men were and whose bodies were unclaimed. Indeed, this is a rather limited dataset with, on average, 6 men for each birth year. Meanwhile, medical surveys such as the DHS are based on men who were in a household at the time of the interview and married to a woman aged 15-49 (with single men neglected from the survey). Indeed, the differences between these two overlapping surveys after 1960 are rather curious.

The first sample, the military one, is perhaps the most controversial in light of recent papers from Bodenhorn, Guinnane and Mroz (2017) about sample selection bias. In a nutshell, these authors highlight the idea that height records coming from voluntary armies can be a biased sample of the underlying population because varying conditions of the economy and trade brought forward, at different times, recruits from different social classes. Mpeta, Fourie and Inwood (2017) seem rather confident that sample selection is not a concern here because heights and wages moved together and unemployment was rather low in the 1940s. Yet, Bodenhorn et al.’s argument requires the data to have been derived from men who were recruited over a relatively long period of time and Mpeta et al.’s black time-trends between 1895 and 1920 are derived from a shorter period of recruitment (1940-1945). Here, it would be interesting to know more about differences in economic conditions within that short-period of rapid economic growth and social change.

Indeed, the decline in black living standards seen between 1895 and 1920 is not universally accepted. For instance, in Why Nations Fail, Acemoglu and Robinson (2012) observe that “the development of the mining economy and the expansion of European settlement had other implications for the development of the area. Most notably, they generated demand for food and other agricultural products and created new economic opportunities for native Africans both in agriculture and trade”; at least, as the authors explain, until 1913 with the Native Land Act. The decline in stature found between the 1890s and 1910s might also be explained by the composition of age in the sample. Whenever we seek to derive time-trends from samples of army recruits who were recruited over relatively short periods of time, the time-trends appear to show a decline. This raises a question about the extent to which men who join the army at older ages are as representative of their birth cohorts as men who join at younger ages.
Despite these and other comments, and the limitation of data to pursue further econometric analysis, for now, we should be really grateful to the authors for charting a new African country in the height literature and for providing new material to ponder.

Acknowledgements

I thank María Gómez-León and Bernard Harris for valuable comments on a first draft of the column.

List of references

Acemoglu, D., J. Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business.

Bodenhorn, H., T. W. Guinnane, and T. A. Mroz, “Sample-Selection Biases and the Industrialization Puzzle,” Journal of Economic History, 77(1), 171-207.

Deaton, A. 2013. The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton University Press.

Feinstein, C.H. 2005. An Economic History of South Africa. Conquest, Discrimination and Development. Cambridge University Press.

Floud, R., K. W. Wachter, and A. Gregory. 1990. Height, Health and History: Nutritional Status in the United Kingdom, 1750-1980 (Cambridge University Press).

Floud, R., R. W. Fogel, B. Harris, and S. C. Hong. 2011. The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700. Cambridge University Press.

Fogel, R. W., S. Engerman, J. Trussell, R. Floud, and C. L. Pope. 1978. “The Economics of Mortality in North America, 1650-1910: A Description of a Research Project,” Historical Methods 11:2, 75-108.

Galofré-Vilà, G. 2018. “Growth and Maturity: A Quantitative Systematic Review and Network Analysis in Anthropometric History,” Economics and Human Biology 28, 107-118.

Guntupalli, A. M. 2007, Anthropometric Evidence of Indian Welfare and Inequality in the 20th century, Doctoral diss., Tübingen University.

Komlos, J. 1985. “Stature and Nutrition in the Habsburg Monarchy: The Standard of Living and Economic Development in the Eighteenth century,” The American Historical Review 90:5, 1149-1161.

Martínez-Carrión, J. M. 1986. “Estatura, nutrición y nivel de vida en Murcia, 1860-1930,” Revista de Historia Económica – Journal of Iberian and Latin American Economic History 4:1, 67-97.

Moradi, A., Austin, G., Baten, J. 2013. “Heights and Development in a Cash‐Crop Colony: Living Standards in Ghana, 1870‐1980,” unpublished manuscript.

Mpeta, B., Fourie, J., and Inwood, K. 2017. “Black Living Standards in South Africa before Democracy: New Evidence from Heights,” Stellenbosch Economic Working Papers 10/2017.

Sandberg, L. G., and R. H. Steckel. 1987. “Heights and Economic History: the Swedish case,” Annals of Human Biology 14:2, 101-110.

Steckel, R. H. 1977. The Economics of U.S. Slave and Southern White Fertility. Doctoral diss., University of Chicago.

Spatially-Embedded Collective Memory and Political Behaviors

Activated History – The Case of the Turkish Sieges of Vienna

Christian Ochsner and Felix Roesel (Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Dresden Branch)

Abstract: We study whether long-gone but activated history can shape social attitudes and behavior even after centuries. We exploit the case of the sieges of Vienna in 1529 and 1683, when Turkish troops pillaged individual municipalities across East Austria. In 2005, Austrian right-wing populists started to campaign against Turks and Muslims and explicitly referred to the Turkish sieges. We show that right-wing voting increased in once pillaged municipalities compared to non-pillaged municipalities after the campaigns were launched, but not before. The effects are substantial: Around one out of ten votes for the far-right in a once pillaged municipality is caused by salient history. We conclude that campaigns can act as tipping points and catalyze history in a nonlinear fashion.

URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_6586&r=his

Circulated by NEP-HIS on: 2017-11-05

Revised by Martin Söderhäll (Uppsala University)

The_Turkish_Siege_of_Vienna

The Turkish Siege of Vienna (1529). Collection: Vienna Museum. Source: Wikimedia Commons.

a) Summary

Is it possible for “arguably irrelevant” historical events to shape the voting behavior of a population if triggered by political campaigning exploiting said historical events? This is the main question the authors set out to answer in the paper. The authors show that political campaigning that uses stereotypes of religious and ethnic minorities can be highly effective when encountering spatially embedded collective memory utilizing a set of seemingly unique historical and societal circumstances occurring in present day Austria, among other things: 1. The pillaging of Austrian villages by Turkish troops during the Ottoman military expeditions in the 16th and 17th centuries. 2. The presence of one of Europe’s oldest and still existing right-wing populist parties (the Freigeitliche Partei Österreich, FPÖ) which in 2005 started to campaign against Muslims and Turks explicitly referring to “their vicious crimes during the Turkish sieges of Vienna” and 3. The arguably exogenous location of the Battle of Bisamberg which led to spatial discontinuity in the probability of villages being pillaged by the Turks north of the Danube during the second siege of Vienna in 1683.

map

The empirical strategy is directed towards examining if the vote share of the Austrian right-wing populist party (FPÖ) was significantly higher in villages exposed to Turkish pillaging in the 16th and/or the 17th centuries (i.e. in villages were the collective memory of Turkish pillages was stronger) than in villages that were not pillaged, right after the change in campaign tactics of the FPÖ in the year 2005. Using the “tools of the trade” of 21st century economic historical research (the baseline model uses a traditional DiD approach, although the spatial fuzzy RD design using panel data, seen in section 4.3 is new according to the authors), Ochsner and Roesel find that having been exposed to pillaging in the 16th and the 17th centuries led to an activation effect (i.e. the average treatment effect) of 1.6-3.05 percent depending on the specification. The larger effect sizes, 2.5-3.05 percent are estimated using the spatial fuzzy RD design on the sub sample of villages west of Vienna.

 

The authors conclude that neither “a local historical record of foreign atrocities” or “a campaign that addresses the stereotypes of these foreigners” are necessary and sufficient conditions to activate any effect. However, when both conditions are met the effect is statistically significant and robust across a range of specifications. In section 7 of the paper the authors address the underlying mechanisms at work. Ochsner and Roesel find that the effects of the campaigning were stronger in small rural communities and in communities with a lower share of out-commuters. Their findings suggest that “collective memory is likely to be a function of local embeddedness”. The authors conclude their paper with a call for future research that addresses the fact that societies can evolve and interact in a non-linear manner.

b) Comments

In general, I tend to approach quasi-experimental long-run effects papers with seemingly robust and large effects on the treatment group, with a bit of skepticism. In this case however, at least from my point of view, the authors made an excellent job of convincing me of (at least) the internal validity of their study. This is in part thanks to the appealing empirical setting, which they carefully account for in the introduction, and the two following sections of the paper.  The use of pictures and references to visual remnants of history in East Austria as well as quotes of “anti-Turkish” comments in online forums and the analysis of FPÖ’s campaign content provides context to readers unfamiliar with the setting, which is great!

campaign

While I find the authors interpretation of the mechanisms at work plausible, the empirical examination of said mechanism lacks the attention to detail shown in section 4-6. Collective memory might well be a function of local embeddedness; however, the authors use the share of out-commuters from a village as a proxy for embeddedness. Arguably this variable could also be a proxy for a lot of other things such as the average income or the age structure of the population in the villages (which they do not control for in the models presented in table 13). Addressing the mechanisms at work more carefully would in my opinion further improve the paper.

As a final comment, the results provided by the authors raises many interesting questions. The possibility to activate history in places were a collective memory of past events is present by campaigning could be utilized by a range of actors. In this day and age when the costs for highly customized political advertising (on social media platforms for example) is lower than ever before, “activating history” could be utilized by political parties (or other interest groups) in locations were the probability of a positive effect is higher, whilst other (less controversial) campaigning strategies could be used in other locations. The fact that the authors implicitly raise the awareness of how distant history in subtle ways can influence our opinions is truly a good thing.

Environmental Shocks and their Effects on Imperial Rome’s State Capacity

Droughts of Dismay: Rainfall and Assassinations in Ancient Rome

By Cornelius Christian (Brock University) and Liam Elbourne (St. Francis Xavier University)

Abstract: We find that lower rainfall in north-central Europe (Gaul/Germania) predicts more assassinations of Roman emperors from 27 BC to 476 AD. Due to agricultural pressures on Germanic tribes, low precipitation caused more barbarian raids. These raids, in turn, weakened the Empire’s overall political stability, and reduced the costs of assassinating an emperor. We buttress our empirical analysis with case study evidence.

URL: http://d.repec.org/n?u=RePEc:brk:wpaper:1703&r=his

Circulated by nep-his on 2017/10/08

Review by Fernando Arteaga (George Mason University)

 

Summary

Was Imperial Rome’s political stability disturbed by environmental shocks? If so, what were the transmission channels? These are the two fundamental questions the authors aim to answer. Their thesis is straightforward: As any pre-industrial society, rainfall levels predicted agricultural output in Roman times. A lack of rain affected food availability, especially in the underdeveloped regions where Northern Germanic Tribes resided, making these societies more prone to raid Roman towns across the border. The incursions then created political conflict among the Romans themselves.

colosseum

The text relies on econometric analyses and a couple of case studies to back up the argument. The main statistical test is simple: they regress Roman political stability on rainfall data. The main variable they use as a proxy of political unrest is the assassination of Roman emperors (as presented by Scarre 1995): the more emperors were killed, the less stability in the Empire. Alternatively, they also employ an index of inflation and new governmental infrastructure investment as a proxy for stability  (larger inflation and less imperial projects imply improved stability).  The rainfall variable comes from Buengten et al. (2011) own estimations on precipitation levels across France and Germany for all the period under study. Figure 1 displays the main data points used in the analysis. The authors find that negative rainfall shocks are both associated with more emperor’s being killed (Figure 2) and with having larger inflation rates and fewer investment projects. A decrease of one standard deviation in precipitation caused an 11.6% standard deviation increase in assassination probability. The regression is empirically valid because there is no possibility of reversal causality; precipitation is not a factor that may be influenced by Roman politics [1].

 

RomeFigure1

Figure 1: Roman Gaul/Germania (Yellow). Rainfall Datapoints (Green). Emperor Assassination Locations (Red)

 

 

RomeFigure2

Figure 2: The red line indicates the precipitation level, while the blue is the amount of Roman Emperors assassinated.

 

But how exactly does lack of rain destabilized Roman society? The paper’s hypothesis relies on the Germanic raid linkage: Germanic tribes attacked Rome when they had a poor harvest of their own, which then created unrest in Roman interior stability.  To test such assertion, they regress Germanic/Gaul incursions on the rainfall levels. The raid data they use comes from Venning (2010), who reviewed the many times the Roman Empire suffered raids through its history. The authors find a negative correlation: a decrease in one standard deviation in rainfall is associated with a 4% standard deviation increase in a number of raids. They corroborate the results by doing some robustness tests: 1) a placebo test, in which they regress non-Germanic raids on precipitation levels, which they find that had insignificant impact (which means that precipitation mattered only in Germanic zones, because they were the only ones that really suffered from a lack of rain); 2) an instrumental variable where the relationship between Roman instability and Germanic incursion is instrumented by rainfall. They find that “a standard deviation increase in the raid dummy [the presence of raiding] causes a 29.3% increase in the probability of assassination.”

To give more weight to their results, they present a brief recapitulation on the reigns of two assassinated Roman emperors: Severus Alexander (208-235) and Gallienus (218-268). The key insight is that both emperors faced important challenges on the Eastern and Northern borders, however only the latter had a relevant impact on Roman internal politics. On the East, the Roman Empire frequently collided with the Sassanid Empire (the other larger state in the area), but notwithstanding the severity of the clashes (at some point they even captured a Roman Emperor, the father of Gallienus) it never caused great civil unrest in Rome. However, on the North, Rome bordered the Germanic tribes (scattered non-organized societies) that did affect Rome’s stability.  The conclusion we get from the narrative is that the Germanic border was important/special precisely because it was very susceptible to environmental shocks, which then led to constant raiding; unlike the Sassanid border, in which the Romans faced a cohesive society that could successfully resist bad crops or confront military bravados on non-environmental factors.

 

Comment

I enjoyed reading the paper very much. It made me re-realize why I find Economic History fascinating: it deals with topics that are interesting in themselves (the politics of the Roman Empire! What is not to like about it?), that remain relevant for today’s problems (we still seek to understand the relationship between nature and political conflict very much), and it treats the issues under study with great care and humility (there is no grand universal theory, but a careful attempt to attain a reliable empirical finding- however small that is).

My main concern with the paper is that the authors never clarify the relationship between Northern Rome’s lack of state capacity and the barbarian incursions. The main narrative maintains that the Germanic raids were the source of Roman political unrest (that is the way I summarized the argument in the preceding section). But at several instances across the paper, the authors hint that Roman political complications in Gaul were themselves a precursory factor that made the Germanic incursions more menacing.

The problem is present in both the econometric analysis and in the case studies. If I understood it correctly (by looking at figure 1), the regressions they asses rely on data that captures rainfall in both Roman Gaul/Germania and non-Roman Germania. The argument is that lack of rain affected Germanic independent tribes more because they were less prepared than the Roman borderline towns. Intuitively, this sounds right. However, the assertion does not imply that alternative transmission channels could not matter too. Yes, Roman towns were better prepared to endure bad harvests than their Germanic neighbors, but that doesn’t imply that bad agricultural output in Roman towns could not be the cause of political instability in them. There may be a relevant omitted variable bias problem in the empirical specification. [2]

The problem seems clearer when we consider the conclusions the authors get from their case studies: in them, they compare the level of relevance local border town problems in Germania/Gaul and in Syria had on larger Roman politics. The Germanics were a constant thorn on Rome, but the Syrians weren’t. Why? The authors explicitly stress that Roman Gaul/Germania had lower state capacity than Roman territories next to Syria, and so it was easier to subdue unrest in Syria than in Gaul. However, if that is so, then we are led to beg the question of what causes what? Is weak state capacity due to raiding, or is raiding due to weak state capacity? The paper’s narrative emphasizes the former linkage (all of the quantitative estimations rely on that sole mechanism too) while, at the same time, it recognizes that the latter mattered too. Unfortunately, it never sets to disentangle the underlying causality. [3]

References

Buengten, Ulf et al. (2011)  “2,500 years of European climate variability and human
susceptibility.” Science, 331(6017), pp. 578-582

Scarre, Chris (1995) Chronicle of the Roman Emperors: The Reign-by-Reign Record of the Rulers of Imperial Rome. Thames & Hudson: London.

Scheidel, Walter (2015) “Orbis: the Stanford geospatial network model of the Roman world.” http://orbis.stanford.edu/

Venning, Timothy. (2010) A Chronology of the Roman Empire, Bloomsbury Academic: New York.

Endnotes

[1] The authors confirm this by regressing rainfall at time t on lagged t -1 political stability.  It is interesting to note that this obvious observation may not be true for current events. Climate change is indeed affected by the domestic politics of some countries.

[2] I also remain confused about what data was used for some of the alternative estimations. For example, on the placebo test, they regress non-Germanic raids on precipitation levels. I assume they are using non-Germanic precipitation levels too. Otherwise, it would mean they would be testing how rain in Germania affects raids in non-Germania, which would make no sense.  However, they don’t clarify.

[3] My two cents on the Syrian/Gaul distinction is that geography and travel times may explain it. ORBIS (A project that reenacts the geospatial framework of the Roman Empire) allows us to estimate the times and cost of regular trips to different cities in the Roman Empire. A trip from Rome to Cologne would last 32 days on the fastest route and 63 days on the cheapest. A trip from Rome to Palmyra, on the other hand, would last 28 on the fastest route and 42 on the cheapest. This can provide a benchmark of the cost of mobilizing resources across regions: moving a Roman army could be 1/3 cheaper if it had to go to Syria rather than Germania. This significative figure implies that the costs of subduing unrest in Germania were larger and so more difficult.