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An unlevel playing field: national income estimates and reciprocal comparison in global economic history

  • Morten Jerven (a1)
Abstract

If we take recent income per capita estimates at face value, they imply that the average medieval European was at least five times ‘better off’ than the average Congolese today. This raises important questions regarding the meaning and applicability of national income estimates throughout time and space, and their use in the analysis of global economic history over the long term. This article asks whether national income estimates have a historical and geographical specificity that renders the ‘data’ increasingly unsuitable and misleading when assessed outside a specific time and place. Taking the concept of ‘reciprocal comparison’ as a starting point, it further questions whether national income estimates make sense in pre-and post-industrial societies, in decentralized societies, and in polities outside the temperate zone. One of the major challenges in global history is Eurocentrism. Resisting the temptation to compare the world according to the most conventional development measure might be a recommended step in overcoming this bias.

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1 Pomeranz, Kenneth, The great divergence: China, Europe, and the making of the modern world, Princeton, NJ: Princeton University Press, 2000. For one recent attempt at quantitative resolution see Roy, Tirthankar, ‘Economic conditions in early modern Bengal: a contribution to the divergence debate’, Journal of Economic History, 70, 1, 2010, pp. 179–94; see also the papers deriving from the project ‘Historical patterns of development and underdevelopment: origins and persistence of the great divergence’, http://www.cepr.org/research/HIPOD.htm (consulted 19 September 2011).

2 Maddison, Angus, Contours of the world economy, 1–2030 AD: essays in macro-economic history, Oxford: Oxford University Press, 2007. Maddison's work continues to be revised and expanded under the auspices of the ‘Maddison Project’: see http://www.ggdc.net/maddison/maddison-project/ (consulted 9 December 2011).

3 For a basic introduction to the technicalities of the measure, see Lequiller, François and Blades, Derek, Understanding national accounts, Paris: OECD, 2007.

4 A premise shared with a article recently published in this journal: Speich, Daniel, ‘The use of global abstractions: national income accounting in the period of imperial decline’, Journal of Global History, 6, 1, 2011, pp. 7–28.

5 Austin, G., ‘The “reversal of fortune” thesis and the compression of history: perspectives from African and comparative economic history’, Journal of International Development, 20, 8, 2008, pp. 996–1027.

6 This article will focus on GDP estimates. Others have explored the use of alternative measures, most notably real wages, which may also have significant biases. For a review of recent contributions in this direction, see Booth, Anne, ‘Review article: living standards in the past: new perspectives on well-being in Asia and Europe’, Journal of Global History, 1, 2, 2006, pp. 289–92.

7 The principle gained currency with the work of Wong, R. Bin, China transformed: historical change and the limits of European experience, Ithaca, NY: Cornell University Press, 1997, was forcefully restated by Pomeranz, Great divergence (in particular pp. 8–10), and was more recently adapted to the study of Africa by Austin, Gareth, ‘Reciprocal comparison and African history: tackling conceptual Eurocentrism in the study of Africa's economic past’, African Studies Review, 50, 3, December 2007, pp. 1–28.

8 Maddison, Contours, p. 1.

9 European Review of Economic History, Symposium on Gregory Clark's A Farewell to Alms, 12, 2, 2008.

10 Persson, Karl Gunnar, ‘The Malthus delusion’, European Review of Economic History, 12, 2, pp. 165–73, esp. p. 166.

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12 Gerschenkron, A., Economic backwardness in historical perspective: a book of essays, Cambridge, MA: Belknap Press of Harvard University Press, 1962, quoted in Platt, D. C. M., Mickey Mouse numbers in world history: the short view, Basingstoke: Macmillan, 1989, p. 1.

13 O’Brien, Patrick K., ‘The reconstruction, rehabilitation and reconfiguration of the British Industrial Revolution as a conjuncture in global history’, Itinerario, 24, 2000, pp. 117–34.

14 Pomeranz, Great divergence, pp. 29–68, makes the case for the levels of material advancement in Europe and Asia as having ‘surprising resemblances’.

15 Crafts, N., ‘Productivity growth in the Industrial Revolution: a new growth accounting perspective’, Journal of Economic History, 64, 2004, pp. 521–35.

16 For a classic statement of European superiority, see Jones, Eric L., The European miracle: environments, economies and geopolitics in the history of Europe and Asia, Cambridge: Cambridge University Press, 1981; Landes, D., The wealth and poverty of nations: why some are so rich and some so poor, New York, NY: W. W. Norton & Company Inc., 1998; North, D., Institutions, institutional change and economic performance, Cambridge: Cambridge University Press, 1990.

17 Maddison, Contours.

18 These data include North Africa and are in 1990 international dollars. The data for ‘Sahel and West Africa’ and ‘Rest of Africa’ are completely stagnant at 415 dollars throughout those years. Ibid., p. 185.

19 There is some evidence of cash-crop-related growth for Ghana. Historical estimates are available for 1891, 1901, and 1911, and these show rapid growth in the period. For further discussion, see Jerven, Morten, ‘African growth recurring: an economic history perspective on African growth episodes, 1690–2010’, Economic History of Developing Regions, 25, 2, 2010, pp. 127–54.

20 Manning, Patrick, ‘The prospects for African economic history: is today included in the long run?’, African Studies Review, 30, 1987, pp. 49–62.

21 See recent new estimates for medieval Britain in Stephen Broadberry, Bruce Campbell, Alexander Klein, Mark Overton, and Bas van Leeuwen, ‘British economic growth, 1270–1870’, unpublished paper presented at the Third European Congress on World and Global History, London School of Economics, April 2011, http://www2.lse.ac.uk/economicHistory/pdf/Broadberry/BritishGDPLongRun.pdf (consulted 9 December 2011), p. 61.

22 The lowest income recorded in the Maddison dataset is for Sri Lanka in 1820, at 83 dollars per capita. The second lowest was recorded for Congo (Kinshasa) in 2001, at 207 dollars.

23 Holcombe, Randall G., ‘National income accounting and public policy’, Review of Austrian Economics, 17, 4, 2004, pp. 387–405.

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25 Organisation for European Economic Cooperation, A standardized system of national accounts, OEEC: Paris, 1952; United Nations Statistical Office, A system of national accounts and supporting tables, UN: New York, 1953.

26 Ward, Quantifying the world, p. 45.

27 Seers, Dudley, ‘The political economy of national accounting’,in Cairncross, Alec and Puri, Mohiner, eds., Employment, income distribution and development strategy: problems of the developing countries, New York: Holmes and Meier, 1976, p. 193. Seers first published his criticism of the system in Seers, Dudley, ‘The role of national income estimates in the statistical policy of an under-developed area’, Review of Economic Studies, 20, 3, 1952–53, pp. 159–68.

28 See, among others, Lewis, W. A., ‘Economic development with unlimited supplies of labour’, Manchester School 1954, 22, 2, 1954, pp. 139–91.

29 Seers, ‘Political economy’, pp. 195–9.

30 Rostow, W. W., Stages of economic growth: a non-communist manifesto, Cambridge: Cambridge University Press, 1960.

31 Balasubramanyam, V. N., The economy of India, London: Weidenfeld and Nicolson, 1984.

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34 Ibid.

35 Ibid.

36 Broadberry, Stephen, The productivity race: British manufacturing in international perspective, 1850–1990, Cambridge: Cambridge University Press, 1997.

37 For a discussion of the categorization of recent Indian growth, see for instance Rashmi Banga, ‘Critical issues in India's service-led growth’, Indian Council for Research on International Economic Relations (ICRIER) Working Paper 171, October 2005, http://www.icrier.org/pdf/WP171.pdf (consulted 9 December 2011).

38 David Washbrook notes the strong standing of the service sector in pre-modern India in ‘Colonialism, globalization and the economy of South-east India, c.1700–1900’, Working Papers of the Global Economic History Network (GEHN) 24/06, 2006, eprints.lse.ac.uk/22466/1/wp24.pdf (consulted 9 December 2011).

39 UNDP, Human Development Report, Oxford: Oxford University Press, published annually since 1990.

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41 J. E. Stiglitz, ‘Towards a new paradigm for development: strategies, policies, and processes’, Prebisch Lecture at UNCTAD, Geneva, 1998, https://ceaemgmt.colorado.edu/ceae/images/File/mcedc/prebisch98.pdf (consulted 9 December 2011).

42 Jolly, Richard, ‘The MDGs in historical perspective’, IDS Bulletin, 41, 1, January 2010, pp. 48–50.

43 Pritchett, Lant, ‘Divergence, big time’, Journal of Economic Perspectives, 11, 3, 1997 pp. 3–17; Kenny, Charles, ‘Why are we worried about income? Nearly everything that matters is converging’, World Development, 33, 2005, pp. 1–19.

44 Rostow's Stages of economic growth, which hails from the same period and place as the national income estimation method, does this as well. Easterly, in the ‘The ghost of financing gap’, is one of many critics of this view of development.

45 The most famous statement of the variation across the time axis was simply that ‘late development will be different’, paraphrasing Gerschenkron, Economic backwardness.

46 Stern, Nicholas, ‘The economics of development: a survey’, Economic Journal, 99, 597, 1989, p. 685.

47 Taylor, Alan M. and Taylor, Mark P., ‘The Purchasing Power Parity debate’, Journal of Economic Perspectives, 18, 4, 2004, pp. 135–58.

48 Deaton, Angus and Heston, Alan, ‘Understanding PPPs and PPP-based national accounts’, American Economic Journal: Macroeconomics, 2, 4, 2010, pp. 1–35.

49 The last round was in 2005, and the next round is planned to finalize in 2011. See http://siteresources.worldbank.org/ICPEXT/Resources/ICP_2011.html (consulted 9 December 2011).

50 Ma, Debin, Fukao, Kyoji, and Yuan, Tangjun, ‘Real GDP in pre-war East Asia: a 1934–36 benchmark Purchasing Power Parity comparison with the U.S.’, Review of Income and Wealth, 53, 3, 2007, pp. 503–37.

51 Robert C. Feenstra, Hong Ma, C. Peter Neary, and D. S. Prasada Rao, ‘How big is China? and other puzzles in the measurement of real GDP’, University of California at Davis, March 2010, http://www.econ.ucdavis.edu/faculty/fzfeens/pdf/Feenstra_Ma_Neary_Rao_2010_Oxford.pdf (consulted 9 December 2011).

52 Bhalla, Surjit S., ‘World Bank: most Asians dead in 1950’, Business Standard, 23 August 2008.

53 Durlauf, Steven N., Johnson, Paul A., and Temple, Jonathan R. W., ‘Growth econometrics’,in Aghion, Philippe and Durlauf, Steven N., eds., Handbook of Economic Growth, Amsterdam: Elsevier, 2005, pp. 555–667.

54 Dawson, John W., DeJuan, Joseph P., Seater, John J., and Stephenson, E. Frank, ‘Economic information versus quality variation in cross-country data’, Canadian Journal of Economics, 34, 3, 2001, pp. 988–1009.

55 For a study of different distributions of African GDP, see Jerven, Morten, ‘The relativity of poverty and income: how reliable are African economic statistics?’ African Affairs, 109, 434, 2010, pp. 77–96.

56 A comparison of the growth rates in Penn World Tables, Maddison, and World Development Indicators for a sample of African economies was made by Jerven, Morten, ‘Random growth in Africa? Lessons from an evaluation of the growth evidence on Botswana, Kenya, Tanzania and Zambia, 1965–1995’, Journal of Development Studies, 46, 2, 2010, pp. 274–94.

57 Simon Johnson, William Larson, Chris Papageorgiou, and Arvind Subramanian, ‘Is newer better? Penn World Table revisions and their impact on growth estimates’, National Bureau of Economic Research Working Paper 15455, 2009, http://baselinescenario.files.wordpress.com/2009/10/jlps_oct-2009-final.pdf (consulted 9 December 2011).

58 Ciccone, Antonio and Jarocinksi, Marek, ‘Determinants of economic growth: will data tell?’, American Economic Journal: Macroeconomics, 2, 4, 2010, pp. 223–47.

59 Angus, Deaton, ‘Price indexes, inequality, and the measurement of world poverty’, American Economic Review, 100, 1, 2010, pp. 5–34.

60 Hopkins, Antony G., An economic history of West Africa, Longmans: London, 1973, pp. 13–14.

61 The lack of cattle due to tsetse-borne trypanosomes, causing trypanosomiasis, is specific to the African tropics. Non-tsetse-borne trypanosomes existed elsewhere in the tropics, but essentially affected equids rather than bovids.

62 As laid out by Landes, Wealth and poverty, and by Bloom, David E. and Sachs, Jeffrey D., ‘Geography, demography, and economic growth in Africa’, Brookings Papers on Economic Activity, 29, 1998, pp. 207–96.

63 The International Comparison Project uses market prices, instead of farm gate prices, when creating the PPP terms, thereby overestimating the poverty of all those who consume commodities that they themselves produce.

64 The most influential and recent version of this argument was put forward by Sokoloff, Kenneth L. and Engerman, Stanley L., ‘History lessons: institutions, factor endowments, and paths of development in the New World’, Journal of Economic Perspectives, 14, 3, 2000, pp. 217–32.

65 Sugihara, Kaoru, ‘The East Asian path of economic development: a long-term perspective’,in Arrighi, Giovanni, Hamashita, Takeshi, and Selden, Mark, eds., The resurgence of East Asia: 500, 150 and 50 year perspectives, Routledge: London, 2003, pp. 78–123.

66 Bray, Francesca, The rice economies: technology and development in Asian societies, Berkeley and Los Angeles, CA: University of California Press, 1986; or eadem, ‘Patterns of evolution in rice-growing societies’, Journal of Peasant Studies, 11, 1984, pp. 3–33.

67 Chandavarkar, Rajnarayan, ‘Industrialization in India before 1947: conventional approaches and alternative perspectives’, Modern Asian Studies, 19, 3, 1985, pp. 623–68.

68 Alvarez-Nogal, Carlos and de la Escosura, Leandro Prados, ‘The decline of Spain (1500–1850): conjectural estimates’, European Review of Economic History, 11, 3, 2007, pp. 319–66.

69 Ibid., p. 320.

70 Jean-Pascal Bassino, Stephen Broadberry, Kyoji Fukao, Bishnupriya Gupta, and Masanori Takashima, ‘Japan and the great divergence, 730–1872’, unpublished paper presented at the Third European Congress on World and Global History, London School of Economics and Political Science, April 2011.

71 Francks, Penelope, Rural economic development in Japan: from the nineteenth century to the Pacific War, New York: Routledge, 2006.

72 Ma, Debin, ‘The modern silk road: the global raw-silk market, 1850–1930’, Journal of Economic History, 56, 2, 1996, pp. 330–55.

73 Broadberry et al., ‘British economic growth’, 2009 version, unpublished paper presented at the World Economic History Congress, August 2009, Utrecht, table 24. (The 2011 version of the paper does not provide estimates for Britain in the year 1500.)

74 Broadberry et al., ‘British economic growth’, 2011 version, p. 35.

75 Pomeranz, Great divergence, p. 32.

76 Ibid., pp. 32–6.

77 Austin, Gareth, ‘Resources, techniques and strategies south of the Sahara: revising the factor endowments perspective on African economic development, 1500–2000’, Economic History Review, 61, 3, 2008, pp. 587–624.

78 Although Austin makes the crucial distinction that labour scarcity was subject to seasonal variation.

79 With some important exceptions where land usage was intensive, such as in Rwanda and Ethiopia.

80 Stolper, Wolfgang F., Planning without facts: lessons in resource allocation from Nigeria's development, Cambridge, MA: Harvard University Press, 1966, p. 21.

81 Herbst, Jeffrey, States and power in Africa: comparative lessons in authority and control, Princeton, NJ: Princeton University Press, 2000.

82 Gardner, Leigh A., ‘Decentralisation and corruption in historical perspective: evidence from tax collection in British Colonial Africa’, Economic History of Developing Regions, 25, 2, 2010, pp. 213–36.

83 Federation of Rhodesia and Nyasaland, Monthly Digest of Statistics, Salisbury, 1955.

84 Republic of Zambia, National Accounts 1964–1967, Lusaka.

85 Mamdani, Mahmood, Citizen and subject: contemporary Africa and the legacy of late colonialism, Princeton, NJ: Princeton University Press, 1996; Englebert, Pierre, State legitimacy and development in Africa, Boulder, CO: Lynne Rienner, 2001.

86 Hibou, Béatrice, Privatizing the state, New York: Columbia University Press, 2004.

87 MacGaffey, Janet, The real economy of Zaire: the contribution of smuggling and other unofficial activities to national wealth, London: James Currey, 1991, p. 11.

88 Titeca, Kristof and de Herdt, Tom, ‘Real governance beyond the “failed state”: negotiating education in the Democratic Republic of the Congo’, African Affairs, 110, 439, 2011, pp. 213–231.

89 Morten Jerven, ‘Random growth’; idem, ‘Relativity of poverty’.

90 Ghana Statistical Service, Rebasing of Ghana's National Accounts to Reference Year 2006, Accra, 2010.

91 Data provided in Table 1 above.

92 Joseph Stiglitz, Amartya Sen, and Jean Paul Fitoussi, ‘Report of the Commission on the Measurement of Economic Performance and Social Progress’, presented 14 September 2009, http://media.ft.com/cms/f3b4c24a-a141-11de-a88d-00144feabdc0.pdf (consulted 9 December 2011), p. 60.

93 Ibid., p. 137.

94 Hill, Polly, Development economics on trial: the anthropological case for a prosecution, Cambridge: Cambridge University Press, 1986.

95 See, for instance, Berry, Sarah, ‘The food crisis and agrarian change in Africa: a review essay’, African Studies Review, 27, 2, 1984, pp. 59–112; Carr-Hill, Roy A., Social conditions in Sub-Saharan Africa, Basingstoke: Macmillan, 1990, esp. pp. 39–51.

96 Hill, Development economics, p. 34.

97 Ibid.

98 Thornton, John, ‘Precolonial African industry and the Atlantic trade, 1500–1800’, African Economic History, 19, 1990–91, pp. 1–19.

99 Hogendorn, Jan S. and Gemery, Henry A., ‘Assessing productivity in precolonial African agriculture and industry, 1500–1800’, African Economic History, 19, 1990–91, pp. 31–5, esp. p. 31.

100 McDougall, E. Ann, ‘Production in precolonial Africa’, African Economic History Review, 19, 1990–91, pp. 37–43.

101 ‘Substantivism’ refers to the proposition, first put forward by Karl Polanyi, that both rational decision-making and the logic of economic scarcity are society-specific.

102 Frankel, S. Herbert, ‘Psychic and accounting concepts of income and welfare’, Oxford Economic Papers, 4, 1, 1952, pp. 1–17.

103 Sahlins, Marshall David, Stone Age economics, Chicago, IL: Aldine-Atherton, 1972.

104 For a discussion of the extent of ‘economic rationality’ in feudal systems, see Kula, Witold, An economic theory of the feudal system: towards a model of the Polish economy, London: N.L.B., 1976, esp. chs. 6 and 7.

105 Hopkins, An economic history of West Africa and Austin, ‘Resources, techniques and strategies’.

106 Goody, Jack, ‘Feudalism in Africa?’, The Journal of African History, 4, 1, 1963, pp. 1–18, and Goody, Jack, ‘Economy and feudalism in Africa’, The Economic History Review, New Series, 22, 3, Dec., 1969, pp. 393–405.

107 Maddison, Contours, p. 1.

108 Platt, Mickey Mouse numbers.

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