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International Perspectives on Social Policy,
Administration, and Practice
LeonidGrinin
AndreyKorotayev
Great
Divergence
and Great
Convergence
A Global Perspective
Leonid Grinin • Andrey Korotayev
Great Divergence
and Great Convergence
A Global Perspective
With a Foreword by Jack A. Goldstone
International Perspectives on Social Policy, Administration, and Practice
ISBN 978-3-319-17779-3 ISBN 978-3-319-17780-9 (eBook)
DOI 10.1007/978-3-319-17780-9
Library of Congress Control Number: 2015937746
Springer Cham Heidelberg New York Dordrecht London
© Springer International Publishing Switzerland 2015
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Printed on acid-free paper
Springer International Publishing AG Switzerland is part of Springer Science+Business Media
(www.springer.com)
Leonid Grinin
Eurasian Center of Big History and System
Forecasting
Institute of Oriental Studies of the Russian
Academy of Sciences
Moscow , Russia
Andrey Korotayev
International Laboratory of Political
Demography and Social Macrodynamics
Russian Presidential Academy of National
Economy and Public Administration
(RANEPA)
Moscow , Russia
v
Foreword
Since man fi rst forged metal tools and started farming for his food, thus emerging
from the stone age, no event in human history has had a greater impact than the
Industrial Revolution of the eighteenth and nineteenth centuries. During that span,
Europeans increased their use of fossil fuel energy by several orders of magnitude,
began to use that fossil fuel energy to produce motive power as well as heat, and
developed a host of high-effi ciency industrial processes and new modes of transpor-
tation, with spillovers into military technology as well. As a result, Europeans went
from “underdeveloped” nations, who mainly traded raw materials and bullion for
the manufactured and plantation goods of the “developed” world of Asia (cotton
and silk textiles; ceramics and lacquer ware and tropical woods; coffee, tea, indigo,
nuts, and spices), and who were allowed limited trading roles on the suffrage of
India, China, and Japan, to the world’s center of manufacturing and manufactured
exports, with military dominance and the ability to dictate terms of trade to the
major Asian societies.
The shorthand summary of this process for the last two centuries has been the
“Rise of the West” and explaining it has been one of the central questions of the
social sciences. The traditional view since the time of Karl Marx and Max Weber,
extended by twentieth century scholars such as William McNeil (1963, 1990) and
David Landes (1998), was that since the middle ages, Europe was a uniquely cre-
ative society that advanced in agriculture, accounting, use of wind and water power,
and craftsmanship, while Asian societies reached their peak of development in the
medieval period, and thereafter simply maintained themselves in a kind of “frozen”
state of development or even declined. While in the medieval period the societies of
Abbasid Islam and Song China might have started at a higher level of economic
productivity and technology than Europe, the “rise” of European productivity and
technology over the succeeding centuries led to European global domination by the
nineteenth century.
Yet in the last two decades, a group of comparative sociologists and global his-
torians have offered a counter-narrative, led by scholars of the “California School”
of global historians (Goldstone 1991, 2002, 2008a, b; Pomeranz 2000, 2002; Wong
1997; Frank 1998; Marks 2002; Vries 2003, 2010). This counter-narrative called
vi
attention to the continuing vitality of agricultural and manufacturing technology in
Asia, with India and China remaining world-dominant manufacturing powers up
through the seventeenth century. It illustrated relatively high living standards
among the Asian agricultural population, comparable to those in Europe, up to
1800. And it demonstrated that Asian merchants and pirates were the equal or supe-
rior of European trading companies in wealth and military prowess until the late
1700s. In this counter-narrative, the dominant position of Europe arose rather
quickly, not as a long “rise” but as a sudden “Great Divergence” from roughly equal
levels of productivity and material well-being c. 1750 to clear European dominance
a century later.
Both the traditional view and the California school view prompted similar ques-
tions: What caused Europe to reach clear superiority in wealth and power c. 1850?
And is this superiority destined to last a long time, or will it disappear as quickly as
it arrived? Yet they provided very different answers. The traditional view sought to
explain a long-term rise by deep and lasting features of European societies—their
religious pluralism and heterodoxy (especially Puritanism and Calvinism), their
heritage of Greek democracy and science and Roman law, the competitive multi-
state system in which they were embedded, regimes of secure property rights and
superior accounting of profi t and loss, more advanced systems of credit provision,
much higher levels of wages achieved by urban workers, and long-lasting experi-
ence in transnational and transcontinental trade. From all of these, military superior-
ity and accelerating productivity growth naturally emerged. Yet since it took many
centuries for this pattern of modern industrial economic growth to be established,
rooted in unique and characteristically European institutions and cultures, it would
take a very long time (if ever) for non-European societies to converge in income and
productivity levels with the West.
The California School takes the opposite view. Since the divergence was late and
rapid, they emphasize advantages that appeared late and somewhat by chance: the
discoveries that American colonies could produce bountiful cheap cotton for
European industry, and that England’s abundant coal could be used to fuel piston
and rotary engines; the sudden eighteenth century breakthroughs in mechanical
engines and production techniques by British metalworkers and craftsmen; and the
internal confl icts that undermined the effi ciency of Chinese, Ottoman, and Indian
agriculture and crafts and governance, amplifi ed by European military aggression.
For many of the California School, since the surge of European dominance was
short and based more on recent acquisitions and discoveries than long-lasting and
unique characteristics, there was every reason to expect that non-European coun-
tries would quickly catch up. The success of Japan and South Korea in reaching
Western levels of technology and living standards, and the recent growth of China
and India at much faster rates than Western nations, suggests that this viewpoint is
a more accurate template of current conditions.
For the last decade, proponents of the traditional view and the California school
have argued, producing more details and additional arguments to buttress their case.
But neither side has won the argument—instead the weaknesses of both positions
now stand revealed. On the one hand, many assumptions of the traditional view, that
Foreword
vii
Europe was superior in military technology, trading acumen, and scientifi c advances
as early as the 1500s or earlier, have been shown to be unfounded (cf. Agoston
2008; Andrade 2015; Ragep and Feldhay 2015). On the other hand, many assump-
tions of the California School, especially that the most advanced regions of China
had incomes per head equal to those in the most advanced regions of Europe as late
as 1800, have been called into doubt (Allen et al. 2011; Li and van Zanden 2012).
As a result, the era from 1500 to 1800 has emerged as central. Yet our view of those
centuries remains cloudy: Of the many characteristics and circumstances that sepa-
rated European societies from Asian ones in these centuries, which were critical for
the later emergence of European domination after 1800?
Into this confusion, Leonid Grinin and Andrey Korotayev bring clarity and
order. They treat the period from 1450 to 1830 as a lengthy period of innovation
and productivity increase in Europe, starting from a relatively low level of inven-
tive activity and technology, but proceeding through a series of phases, of which
the last phase—from 1760 to 1830, constituting the “classic” Industrial
Revolution—was only the fi nal phase of a lengthy process. These phases began
with a “preparatory” period from 1100 to 1450 in which the development of free
labor and capitalist relations set the stage for profi t-seeking and further economic
developments, peaking in the rich luxury manufactures of Venice and the trade and
accounting and artistic and scientifi c breakthroughs of the Renaissance. Then the
“long sixteenth century” from the late fi fteenth to the early seventeenth century
showed remarkable advances in oceanic navigation, engineering, windmills and
water power, and commercialized high productivity agriculture, led by the
Portuguese and Spanish, but also Germany and the Netherlands. This was also the
age of the great discoveries and the early breakthroughs to the mechanical model
of nature in European sciences. After this period, the next phase arose from the
early seventeenth century through the third quarter of the eighteenth century, led
by advances in Britain and especially the Netherlands. This period saw the con-
solidation of constitutional monarchy in Britain and of oligarchic republican rule
in the Netherlands; the latter’s development of mechanization, fi shing, warehous-
ing, and complex industrial centers; and the rise of global trading companies and
military advances, especially in naval warfare. All of these prior developments
then set the stage for the “fi nal phase” of the Industrial Revolution utilizing fossil-
fuel and water-powered machinery and major advances in chemical processes and
transport as well.
This new view, carefully presented and rigorously modeled by Grinin and
Korotayev, provides a richer and more nuanced version of the “Great Divergence,”
bridging many of the differences between the traditional and California viewpoints.
Yet they go further. Amazingly, by building a model utilizing human capital (educa-
tion), global population growth, and regional productivity, they show how both the
Great Divergence and the recent “Great Convergence” (the economic catching up of
developing countries) are phases of the same process of global modernization. They
make it clear that once begun, the Great Divergence inevitably leads to later
Convergence through the globalization of the world economy. Yet they also explain
specifi c regional lags and variations in this process.
Foreword
viii
This is a remarkable achievement and a major advance in the debate on the
long- term trajectory of global economic development. The Russian global-historical
systems school of scholarship has long been making important contributions to
identifying and explaining the major patterns in long-term world history (Turchin
and Korotayev 2006; Turchin and Nefedov 2009; Korotayev et al. 2006a, b;
Korotayev and Tsirel 2010; Grinin 2007, 2011a, 2012a; Grinin and Korotayev
2006). It is a pleasure to introduce this latest work to a broader audience, and com-
mend it to all those who are interested in the debate on the rise of the west and Great
Divergence, and all who ponder the future of global inequality and development.
George Mason University Jack A. Goldstone
Russian Presidential Academy
of National Economy and Public Administration
Washington, DC
Moscow
Foreword
ix
Acknowledgements
We would like to express our deepest gratitude to Antony Harper (USA), Ksenia
Ukhova, and Elena Emanova (Russia) for their invaluable help with the editing of
this book. This research has been supported by the Russian Science Foundation
(Project # 14-11-00634).
xi
1 Introduction. And Yet the Twain Meet: Great Convergence
Brings the East Closer to the West .......................................................... 1
Why This Book Has Been Written, or the Great Divergence
and Great Convergence as Two Phases of a Single Process ....................... 1
How Did the Perception by the Europeans of the Non- European
World Change? From Marco Polo to the California School ....................... 2
Great Convergence in the Past and in the Future ........................................ 6
2 Great Divergence and the Rise of the West ............................................ 17
A General Analysis of the Development of Asia and Europe .................... 17
Some Preconditions of the Great Divergence in the Early
Modern Period ............................................................................................ 31
Some Comparisons Between the West and the East:
Technological Peculiarities ..................................................................... 32
Some Comparisons Between Europe and the East:
Structural Features of Economic Systems .............................................. 36
Some Comparisons Between the West and the East:
Socioeconomic Peculiarities ................................................................... 37
Territorial and Demographic Proportions ............................................... 40
Catching Up Divergence of the Early Modern Period ................................ 41
Industrial Revolution and Its Three Phases ................................................. 52
Why Does It Make Sense to Consider the Industrial
Revolution as a Long-Term Process? ...................................................... 52
The Initial Phase of the Industrial Revolution ........................................ 55
Middle Phase of the Industrial Revolution.............................................. 57
Final Phase of the Industrial Revolution ................................................. 62
Why Britain? ............................................................................................... 64
Beginning and Apogee of the Great Divergence
and the Emergence of the Capitalist World-System ................................... 73
Modernization of the West ...................................................................... 73
Subjugation of the East and the Start of Its Transformation ................... 78
Contents
xii
3 Great Convergence and the Rise of the Rest .......................................... 85
Long-Term Divergence–Convergence Trends as Regards the GDP ........... 86
On the Dynamics of the West’s Share in the World Population ............. 93
On the Dynamics of the Gap Between the West
and the Rest as Regards the Per Capita GDP .......................................... 96
Statistical Addendum to This Chapter: On the Structure
of the Present-day Convergence .............................................................. 106
4 The Great Convergence and Globalization: How Former
Colonies Became the World Economic Locomotives ............................. 115
Western Technologies and the Emergence of Prerequisites
for a Shift Toward Convergence in the Late Nineteenth
and Early Twentieth Centuries .................................................................... 116
West and East After the Second World War:
Technologies and Politics ........................................................................... 120
The Beginning of the Turn to Convergence:
Causes and Manifestations .......................................................................... 124
Fundamental Reasons ............................................................................. 125
Some Consequences of Changes ................................................................ 134
On Discussions About the Possibility of Convergence:
Why Did Economists Overlook It? ............................................................. 138
Globalization Becomes the Major Cause of Convergence.......................... 145
How the Globalization Have Weakened the Core
and Strengthened the Periphery .................................................................. 149
5 Afterword: The Great Convergence and Possible Increase
in Global Instability, or the World Without an Absolute Leader ......... 159
Appendix A: Technological Innovation Activities in Britain
and Other Western Countries (1400–1900)—A Quantitative Analysis ..... 167
Appendix B: A Mathematical Model of the Great Divergence
and the Great Convergence—Demography, Literacy,
and the Spirit of Capitalism ........................................................................... 179
Reconsidering Weber .................................................................................. 179
A Mathematical Model of the Great Divergence
and the Great Convergence ......................................................................... 186
The Phases of Global Demographic Transition as Correlated
with Phases of the Great Divergence and Great Convergence .................... 198
The Income Gap and World Population Growth
as Tightly-Coupled Processes ..................................................................... 201
Methods and Data Summary for Appendix B ............................................. 205
References ........................................................................................................ 209
Index ................................................................................................................. 243
Contents
1© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9_1
Chapter 1
Introduction. And Yet the Twain Meet: Great
Convergence Brings the East Closer
to the West
Why This Book Has Been Written, or the Great Divergence
and Great Convergence as Two Phases of a Single Process
The globalizing world needs global knowledge that is required to investigate global
processes. This monograph is devoted to the analysis of such truly global processes.
It considers the economic development of the world in the last 600 years and offers
forecasts for the next fi ve decades and more.
The nineteenth century witnessed an explosive growth of a gap in per capita
incomes (and the level of development in general) between the West and the rest of
the world that has become recently known as “the Great Divergence” . In the twen-
tieth century, the Great Divergence continued until the early 1970s; then, in the late
1980s, some convergence between the First and Third World started to be observed.
Though this convergence has been noticed already by a number of researchers,
many economists still doubt its presence or importance.
In this book we demonstrate that after the 1980s we deal with a global
process of the same scale as the process of the Great Divergence and we pro-
pose to designate it as the “the Great Convergence” . Furthermore we show that
the Great Convergence is a logical continuation of the Great Divergence, and
that certain components of the Great Divergence process were already prepar-
ing the onset of the Great Convergence in the period of the former’s peak.
What is more, we suggest that the Great Divergence and Great Convergence
constitute two phases of a single Global Modernization process being tightly
intertwined with other dimensions of Global Modernization as well as with
globalization in all its historical phases.
We also provide some evidence in support of our forecast that the process of the
Great Convergence will continue over the forthcoming decades and, thus, will be
one of the main factors in our globalizing world.
2
How Did the Perception by the Europeans of the
Non- European World Change? From Marco Polo
to the California School
It has long been known that societies develop unevenly. In fact, we are dealing with
a kind of law of uneven development of societies, which implies that from time to
time the leaders of global development (as well as the ideas about the balance of
forces in the world) change. At the same time, certain ideas about the world hierar-
chy (after they have been strengthening for quite some time) can become very
strong stereotypes even among historians and economists who seemingly should
have a deeper understanding of how quickly things may change. And it is rather
symptomatic that the strongest belief in such stereotypes appear just before the
reversal of the respective trends (that can turn rather unexpected indeed). This phe-
nomenon, by the way, is one of the reasons of the abovementioned underestimation
of the importance of the present-day convergence.
Since the thirteenth century (especially after the famous book The Travels of
Marco Polo had appeared) for several centuries the Europeans perceived the Orient
to be fabulously rich in comparison with their own countries, and the quality of
products manufactured by the Eastern masters seemed unattainable. But then,
already in the eighteenth century (Gordon 1997 ; Alam 2006 ) such perceptions
began to change rapidly. Now the Orient, by contrast, became synonymous with a
sort of eternal stagnation and backwardness.
In the nineteenth century, Europe (and the West in general) left Asia and North
Africa (let alone Sub-Saharan Africa) far behind as regards their level of develop-
ment in economic, military, scientifi c, educational, and many other spheres. Britain
and other Western countries, to varying degrees of completeness, subjugated most
Asian and African societies. The Western infl uence was crucial for the rest of the
world and very noticeable in economic terms even in the distant periphery of the
eastern states. The fact is that the increased industrial might of Europe turned Asian
countries fi rst into markets for European manufactured goods and then ruined Asian
artisans, and fi nally transformed “the Orient” into a place for the application of
European capital and a source of cheap labor.
This very wide socioeconomic gap (whose emergence was much later called “the
Great Divergence”) between Europe and Asia became a fact that did not require
proof; it was so evident that there was an idea that this superiority was something
perfectly natural and permanent, in other words, “a simple affair” (Goldstone 2013 :
54). One could observe the strengthening of the idea (that emerged in the eighteenth
century) of the stagnant Orient that supposedly had never developed, of the Orient
which had constant primordial essential features, including “its tendency to despo-
tism, its aberrant mentality, its habits of inaccuracy, its backwardness” (Said 1979 :
205). The West was supposed to be so different from the East that they had little in
common. Finally, such a view was crystallized in the poetic words of Rudyard
Kipling “ East is East and West is West, and never the twain shall meet ” (Kipling
1919 : 3). On the one hand, this approach led to the situation when “every European,
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
3
in what he could say about the Orient”, risked to appear as “a racist, an imperialist,
and almost totally ethnocentric” (Said 1979 : 204). On the other hand, such views
led to the birth of the theory of civilizations (Rückert 1857 ; Данилевский 1995
[1869]; Spengler 1991 [1918–1922]; Toynbee [ 1934 –1961], etc.), as unique incom-
parable cultures.
1 But in any case, the backwardness of the East and the superiority
of the West were perceived almost as natural things that could be explained from
different philosophical perspectives (including even racist ones), but the reasons for
the rise of the West and the retardation of the East were not among the principal
issues discussed by the social scientists of the time of the Great Divergence. Perhaps,
this view was fundamentally important only for schools, which saw the historical
process as a single line, or from the position of a single main factor, as this was
observed within the framework of unilinear evolutionism (see, e.g., Carneiro 2003 ),
or the geographic school or Marxism .
2
Overall it is not, therefore, surprising that until the second half of the twentieth
century the problem of correlation in the development of the East and the West was
not investigated adequately. In the second half of the twentieth century together
with the liberation of the colonies and the generally increasing importance of devel-
oping countries, this issue became more popular, and it began to be studied from
different points of view.
In the early 1960s the famous book by William McNeill ( 1963 ) The Rise of the
West came out; it had a characteristic subtitle A History of the Human Community ,
which seemed to suggest that the achievements of the West for some time now
became synonymous with the achievements of humankind. And although the book
actually paid much attention to the history of non-Western civilizations, the author
seems to have taken the dominance of the West for granted, which is refl ected in
particular in the fact that in 1963 McNeill did not recognize the leading role of
China and the Chinese civilization in the period between 1000 and 1500. Later, hav-
ing reconsidered his approach, McNeil quite frankly acknowledged this fault
(McNeill 1990 : 5), as well as the pressure of Eurocentric stereotypes in general:
“In retrospect it seems obvious that The Rise of the West should be seen as an expression of
the postwar imperial mood in the United States. Its scope and conception is a form of intel-
lectual imperialism, for it takes on the world as a whole, and it tries to understand global
history on the basis of cultural diffusion developed among American anthropologists in the
1930s” (McNeill 1990 : 1–2).
1 On this basis Spengler, however, expressed an idea (that seemed pretty seditious in 1918 ) that the
success of the West was not eternal and that (like any other culture that experienced its transforma-
tion into civilization) it was to expect its “sunset” in the forthcoming centuries. Incidentally,
Spengler suggested the turn in the century (around 2000) as a landmark around which he expected
the start of the acute phase of the crisis of the Western culture.
2 Incidentally, this point was one of the main reason why the problem of the comparison of the
development of the East and the West was so important for the Soviet historians and theorists (e.g.,
Семенов 1970 , 1980 ; Качановский 1971 ; Васильев 1988 ; Фурсов 1989 ; Нуреев 1989 ; for the
analysis of the study of this issue among the Soviet social scientists see, e.g., Gellner 1988 ; Гринин
1998 ; Korotayev et al. 2000 : 24–25) many of whom achieved quite interesting results ( e.g. ,
Сказкин etal. 1962; Никифоров 1977 ; Павлов 1979 ; Васильев 1982 ).
How Did the Perception by the Europeans of the Non-European World Change?…
4
In the 1970s and 1980s many interesting works on the economic history of Asian
countries were published, and many of them consisted of valuable comparisons
between Asia and Europe, including economic development of the East within
global development. Some of these works have become the classics (e.g., Braudel
1973 ; Bairoch 1975 ; Issawi 1980 ; Maddison 1983 ; Cameron 1989 ). One could
observe the transition to truly scientifi c (and at the same time historical) methods in
these and many other works, because these problems (i.e., the question of the causes
of the East lagging behind the West) were placed at the center of research in eco-
nomic and demographic history with the appropriate use of quantitative methods. In
fact, it is very diffi cult to compare different cultures and cultural codes, especially if
one insists on their uniqueness and incomparability. However, it is possible to com-
pare indicators such as fertility and mortality rates, GDP per capita or calorie intake
per capita, and yield and productivity. Here we unquestionably see a clear common
denominator which may help to perform a cross-national study of the economic and
social history of all societies. Thus, there was a return to the idea of scientifi c
approaches and common laws of historical development of different societies on a
new basis. A particularly important contribution to the scientifi c study of the Great
Divergence was made by the California School that formed in the late 1990s and the
early 2000s (Blaut 1993 , 2000 ; Goody 1996 , 2004 ; Wong 1997 ; Frank 1998 ; Lee
and Wang 1999 ; Lieberman 1999 , 2003 ; Pomeranz 2000 , 2002 ; Goldstone 1991 ,
2000 , 2002 , 2009a , 2013 ; Hobson 2004 ; Rosenthal and Wong 2011 ; Vries 2013 ).
Note that the very term “Great Divergence” appeared in the writings of scholars of
this particular school. The founder of this school, Jack Goldstone quite justly
maintains:
“The problem of the Rise of the West has become ever-greater and more complex in the last
two decades. The ‘California School’ scholars (including myself) have documented deep
parallels between the material and political dynamics of European and Asian societies up
through the early nineteenth century. We fi nd that in many respects… the growing quantita-
tive record of economic history shows that Europeans were laggards, not leaders, in many
areas… Given this clear lead of Asian societies in exploration, production, manufacturing,
seafaring and navigation, experimental science, pluralism and toleration, lasting well into
the seventeenth and in some respects the eighteenth century, it has become far more diffi cult
to explain how and why Europeans suddenly leapt forward, becoming by the nineteenth
century masters of the world in all of these respects. From a region that in the twelfth, thir-
teenth, fourteenth, and fi fteenth centuries was pushed back on its heels by the Arabs, the
Mongols and the Turks, Europe suddenly became the aggressor, driving into Asia and
becoming the victor and conqueror. Because this change was relatively sudden and rela-
tively late, what is now labeled the ‘Great Divergence’ of East and West (Pomeranz 2000 )
has become very diffi cult to explain, and attracted a range of increasingly diverse and even
wild theories. What was once easy to explain in terms of long-standing, deep-rooted, and
persistent European advantages now is much harder to explain, as a sudden and late reversal
in global fortunes” (Goldstone 2013 : 55–56).
The California School has made a very important contribution in its attempt to
reconstruct the real proportions of the scales and levels of development of various
societies in the Early Modern Period. This allows us to remove distortions in our
understanding and imbalances of the Eurocentric view of history. In this respect one
can compare them with the creators of the civilizational approach, which opened
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
5
civilizations to the Europeans, showing these civilizations to be comparable and
even superior to the European civilization. To our mind, the most important contri-
bution of the California School is that its studies have demonstrated in a very con-
vincing way that the general level of the development of the most advanced societies
of the East was in the Early Modern Period quite comparable with that of the Early
Modern European societies.
3
But still we should note that some general theoretical approaches of a number of
representatives of this school have signifi cant methodological fl aws that eventually
exaggerate the abruptness of the Western breakthrough and that these fl aws do not
allow us to understand that the process of divergence in a number of important
aspects began much earlier than the nineteenth century (this point is discussed in
detail in Chap. 2 of this monograph).
4
3 On the other hand, the authors of the present monograph having obtained their majors in History
in Soviet universities had a feeling of déjà vu when they started reading the studies produced by
the California School. Indeed, this was just what the orthodox Soviet Marxist professors and ortho-
dox Soviet Marxist textbooks used to teach ( e.g. , Симоновская and Ацамба 1968 ; Губер et al.
1982 ; Ацамба et al. 1989 ). These were rather a very few dissident Soviet Marxists who relied on
Marx’ notion of the “Asiatic mode of production” and insisted on the point that Medieval and Early
Modern East lagged far behind Medieval and Early Modern West (Семенов 1970 , 1980 ; Васильев
1982 , 1988 ; Фурсов 1989 ; Нуреев 1989 ). The orthodox Soviet Marxists insisted that in the
Middle Ages both the advanced societies of the East and the advanced societies of West belonged
to one (“feudal”) “socioeconomic formation” and, hence, they had an essentially similar level of
development. According to them, in the Early Modern Period the most advanced Eastern societies
somehow lagged behind the most advanced Western societies as regards the development of capi-
talism, but before the nineteenth century the lead of the West was not signifi cant; it only became
really signifi cant in the nineteenth century in direct relations with colonial/semi-colonial subjuga-
tion of the East by the West. The data on the discussion on the Asiatic mode of production in the
Soviet Union (1928–1931) presented by Nikiforov (Никифоров 1977 : 176–186) demonstrate that
the Communist Leadership of the Soviet Union and Comintern opted for the theory of “Eastern
Feudalism” rather than “Asiatic mode of production” mainly for political reasons, as the latter
theory implied that the East lagged too much behind the West and, hence, one would have to wait
too long before the former caught up with the latter—thus opening perspectives of the Communist
revolution (which, according to Marx demanded a substantially high level of development of capi-
talist relationships). However, the Soviet orthodox Marxist scholars did not limit themselves to
ideological declarations but presented substantial evidence demonstrating that in the Late Middle
Ages and the Early Modern Period the most advanced societies of the East had approximately the
same level of development as the European societies (though they recognized that by the early
nineteenth century the former were somehow lagging behind the latter as regards the development
of capitalist relations) ( e.g. , Сказкин и др. 1962; Качановский 1971 ; Никифоров 1977 ).
4 About the achievements, development and some diffi culties in the course of researches of
California School see also in the Preface to this monograph written by Jack Goldstone. Here we
would mention only the fact that the representatives of this school tend to underestimate a funda-
mental point that the great breakthrough toward the use of machines and steam power (that was
observed in the second half of the eighteenth century in Britain) was a result of a rather long-term
pan-European scientifi c and technological development. For example, the idea of some representa-
tives of the California School and some economists who are ideologically close to it (like Robert
Allen) that the main causes of the industrial revolution in Britain were coals and colonies (Pomeranz
2000 ; Allen 2009 , 2011 ), does not take into account the point that all of these benefi ts (or the pos-
sibility of their use) in itself are already the result of socio-economic peculiarities of Europe. Thus,
commerce developed in Europe for several centuries (and it received a substantial additional push
How Did the Perception by the Europeans of the Non-European World Change?…
6
Great Convergence in the Past and in the Future
Even the largest-scale processes have their beginnings and their ends, they cannot
be eternal. Moreover, many processes are not just terminated; they may well be
transformed into their opposites. In fact, this was just the case of the Great
Divergence. Those processes that switched the Great Divergence into the Great
Convergence were gaining momentum gradually, almost imperceptibly. By now the
fact of the growing convergence between the First and the Third world has been
noticed by a number of researchers (e.g., Amsden 2004 ; Sala-i-Martin 2006 ;
Мельянцев 2009 ; Spence 2011 ; Derviş 2012 ). However, in our view, even these
researchers underestimate the real scale and historical signifi cance of this process.
As we have already mentioned previously, in the present monograph we demon-
strate that after the 1980s we deal with the Great Convergence, that is with a global
process of the same scale as the process of the Great Divergence.
A very interesting point (treated in detail in Chap. 4 ) is that the Western societies
fertilized (sometimes against their will) the soil for the onset of the Great
Convergence. The reason is that in order to maintain its superiority (and, thus, to
support the Great Divergence) the West had in one form or another to introduce in
the East modern infrastructure, education, management and so on. First, of course,
Britain and other European countries were concerned with the opening of Asian
markets for their manufactured goods, which involved a rather active use of various
military and fi nancial means. However, they discovered very soon that to continue
the expansion of exports of goods they needed to improve the infrastructure in the
peripheral countries and to modernize certain sectors of these countries. That is why
the process of opening and expanding markets almost immediately started to require
the export of capital in general and massive investments in infrastructure in particu-
lar, as well as in the expansion of the production of raw materials in the countries of
the World System periphery. The Western technology began to penetrate the East.
This was the beginning of the conversion with the looming perspective of
from the Reformation and the diffusion of the book-printing); the ability to establish and maintain
colonies was the result of amplifi cation of naval and military-technical superiority of the Europeans;
whereas before the coal became a new industrial energy source, it would take many decades of
technical and scientifi c breakthroughs. The point that some of the California School representa-
tives tend to ignore that by the late eighteenth century the West was much more developed than the
East in some quite important respects is connected with their tendency to exaggerate the degree of
similarity of the development of China and Europe, even by the end of the eighteenth century,
based on the comparison of a very few (though, still, quite important) indicators (such as real wage
or per capita calorie intakes). Such comparisons do not take into account a number of other dimen-
sions where Europe overtook the East already in the Early Modern Period (like the science and
technology development rates, military organization, or development of fi nancial systems). The
fact is that the overall level of development is measured rather imperfectly with the level of societ-
ies’ wealth or per capita incomes. In the present-day world this point is well illustrated by some
oil-exporting states whose per capita incomes are often quite comparable with the ones of many
advanced Western states, whereas the overall level of development of the latter is still much higher
than the one of the former.
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
7
Convergence. In general, this contributed signifi cantly to the development of local
industry and economy and the growth of national consciousness.
In recent decades, this was the struggle of the West for the free movement of its
capital and goods that eventually led to a new and much more powerful wave of
economic globalization, a wave through which de-industrialization of the West and
industrialization in the East began—respectively, the growth rates in the West fell,
and in the East, they rose. This observation is not trivial. In fact, one of the main
accusations directed toward globalization is that it deepens the gap between the
developed and developing countries dooming the latter to eternal backwardness.
This quite common belief obscures the true picture of the world.
In the present monograph we demonstrate that the actual situation is quite the
opposite. Our studies show that it is due to the globalization that the developing
countries are generally growing much faster than the developed states, as this hap-
pens, the World System core is beginning to weaken and its periphery is beginning
to strengthen. In the third chapter of the book we provide substantial data to prove
this idea. In the fourth chapter we explain why the globalization was bound to lead
to the explosive rise of many developing countries and the relative weakening of the
developed economies.
The Great Divergence is not just a process of growing differences in the levels of
development of the West and the Rest, but also the process of the emergence of a new
type of global economic system in which the economies of various countries were
incorporated into a single world economic system (but with very different roles).
Similarly, the Great Convergence is changing the World System and nations’ roles
within it due to the new opportunities of the global division of labor.
But the Great Convergence has not only a purely economic, but also a techno-
logical basis, as it has accelerated as a result of the information revolution that
facilitated the movement of capital, information and the use of remote workforce
and educational resources. Thus, what caused the Great Divergence? The Industrial
Revolution did. What triggered the Great Convergence of our time? It was the
Information Revolution (that radically accelerated globalization processes).
Since the 1950s, economists [fi rst of all, Gerschenkron ( 1952 ) and Solow ( 1956 )]
started to speak about the possibility of convergence between developed and devel-
oping countries. However, later in the 1980s and 1990s, the Western economists
came to the general conclusion that this convergence is hardly possible at all.
Indeed, not so long ago many prominent economists still made such statements as:
Empirical studies have shown consistent evidence of a cross-country income distribution
displaying bimodality with a marked thinning in the middle. This result is interpreted as
showing that poor countries are not catching up with the rich, but rather that there is evi-
dence of club convergence, that is, polarization at the extremes of the income distribution
(Cetorelli 2002 : 30).
Unfortunately (from the perspective of the world’s poor countries), there is little empirical
support for unconditional convergence. Most studies have uncovered little tendency for
poor countries to catch up with rich ones (Abel and Bernanke 2005 : 235).
Great Convergence in the Past and in the Future
8
There is no evidence of convergence in the world income distribution over the postwar
era… We therefore need to understand how the poor economies fell behind and what pre-
vents them today from adopting and imitating the technologies and the organizations (and
importing the capital) of richer nations (Acemoglu 2009 : 17, 22).
And this was written at the time when the process of the Great Convergence was
already well on its way. In fact, economists largely overlooked the Great Convergence
exactly in that very period when it became irreversible. But the most surprising
point is that even today, when the developing countries are the major contributors to
global economic growth, the idea of the Great Convergence has not received appro-
priate recognition. It seems that here (as in many other cases) stereotypes prevailed
over the scientifi c approach.
Our conclusion that it is possible to speak about the Great Convergence as a
global process already since the 1980s and especially since the 1990s is signifi cant
not only because it is important to recognize this fact. The point is that, in our opin-
ion, this process will largely determine the course of global economic and even
political process in the forthcoming decades. Thus, the scientifi c theory of the Great
Convergence becomes a tool of scientifi c forecasting.
The Issues Covered in the Present Monograph
This book touches on many
important scientifi c matters, because both the Great Divergence and the Great
Convergence are very large-scale global processes. Of course, in this book we can
only very briefl y analyze many extremely important and relevant issues (such as the
structural and demographic cycles, the Malthusian trap and opportunities to escape
it, the variety of defi nitions of globalization and especially the collapse of the colo-
nial system, the success and failures of the Green Revolution, and the peculiarities
of the oil-exporting countries). But we have considered in substantial detail some
other issues that appear of no less relevance for the subject of this book—such as the
prerequisites for a breakthrough of the West in the Late Middle Ages (including a
comparison of Europe and the East with respect to their innovative dynamics in dif-
ferent periods of their history), the description of the structure of the industrial revo-
lution, the answer to the question why Britain became the birthplace of the industrial
breakthrough (including the development and analysis of the characteristics of the
British patent system), the infl uence of globalization on the deindustrialization of
developed countries and the industrialization of the developing ones, the role of
human capital dynamics, and so on. In addition, we believe it is essential to consider
the origins of the Great Convergence, starting from the conception of the process,
when even the possibility itself of convergence seemed very unlikely. Thus, we have
also attached two special appendices dealing with a more detailed analysis of some
of those issues.
The book’s structure generally follows its title. Recall that we considered two
major processes that are phases of a single superprocess, as well as an associated
range of scientifi c issues. However, the Great Divergence has been studied by now
much better than the Great Convergence; on the other hand, the notion of “the Great
Divergence” has been already more or less recognized by the academic community,
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
9
whereas we introduce the notion of “the Great Convergence” for the fi rst time right
in this book. This necessitates some amendments to the structure of our book.
Indeed, the idea of the Great Divergence in general has been recognized for quite
some time, and even in its present form, it was presented about 20 years ago. In fact,
virtually no one would dispute the fact that a sharp gap emerged between Europe
and Asia by the end of the nineteenth century. Of course, there are some debates
about rather important points, but still they occur within a generally recognized
framework: when did the European lead start? From the mid-nineteenth century?
From the beginning of the nineteenth century? Or earlier? In the eighteenth century?
In the seventeenth century? Or even earlier? In the fi fteenth century? In the four-
teenth century? What were the reasons for it? When did the Great Divergence
become irreversible? What causes determined the point that Britain became the
birthplace of modern industry? How high was the level of development of the Asian
societies in the early nineteenth century? And so on. All these and other issues are
quite thoroughly discussed in Chap. 2 of this book. But we think that one chapter is
suffi cient enough to give a systematic description of the Great Divergence, as well
as our interpretation of its phases, causes and driving forces. However, we discuss
some points additionally in the appendices.
The situation is different with respect to the idea of the Great Convergence
(let alone that this very term is only now being introduced). As has already been
mentioned, even now most economists are not ready—despite evidence to the
contrary—to recognize the reality or importance of this process (including the belief
that the empirical evidence does not support its reality in a convincing manner). In
this connection, we needed two chapters to prove the point.
5
In Chap. 3 we analyze to what extent the process of the Great Convergence has
advanced by now; in Chap. 4 we describe the causes and development of the process
of the Great Convergence and provide our explanation of various factors of the
Great Convergence. Finally, in Chap. 5 we offer forecasts of the geopolitical and
geo-economic development of the world in the forthcoming decades on the basis of
the proposed theory
Thus, the book consists of fi ve chapters (including the fi rst introductory one),
that are complemented with two appendices.
As has been mentioned above, in Chap. 2 ( The Great Divergence and the Rise of
the West ) we fi rst of all give a sketch of the whole process of the Great Divergence
and its transformation into the Great Convergence. This is followed by a detailed
analysis of those factors that allowed the West to overtake the East in the Modern
Period, as well as those factors that put in motion the process of the Great Divergence.
This necessitates the consideration of certain aspects of the development of the East
and the West from the mid-fi fteenth century (and even earlier in some respects) till
the late twentieth century.
Among the most important provisions that we develop in this chapter is the idea
that, starting with the early second millennium BC, one can distinguish the potential
5 In addition, we start discussing some processes that fi nally transformed the Great Divergence into
the Great Convergence already in Chap.
2 .
Great Convergence in the Past and in the Future
10
that later enabled Europe to overtake the East. However, for a long time Europe
lagged far behind the East, and it managed to develop its potential advantages only
in the Early Modern Period. We analyze in detail the reasons that enabled Europe to
achieve this. Another important idea in this chapter is that we believe it is much
more reasonable to consider the Industrial Revolution as a rather long-term process
that started in the late fi fteenth century and continued till the mid-nineteenth cen-
tury. This process went through several phases, and, in our understanding, the period
between the last third of the eighteenth and the fi rst third of the nineteenth century
(this period is traditionally denoted as the period of the “Industrial Revolution”) was
only the fi nal phase of the Industrial Revolution, at which an irreversible transition
to machine technology and at the same time to a new kind of energy occurred. But
it was the most prominent and visible phase of the industrial revolution.
We do not consider the European nineteenth-century breakthrough as a really
unexpected development, we rather view it as a fairly long process that continued
from the fi fteenth to the nineteenth century, during which in some respects (e.g.
military-technical and scientifi c) Europe was already ahead of the advanced coun-
tries of Asia, whereas in others (such as the level of craftsmanship) it still lagged
behind. But in general, we denote this period as “ catching up divergence ”. All of the
above said has allowed us to express our own opinion on the reasons for the Britain
leadership in that period. Although Britain was clearly the leader at that point, but
in that period we also observe a number of important processes that can be identi-
fi ed as pan-European (including the development of military technology, trade, sci-
ence, pan-European commercial and industrial crises of the second half of the
eighteenth century, and the beginning of the demographic transition). From this
perspective, we clearly trace in the Industrial Revolution the result of the collective
achievements of different European societies though that was a sort of relay-race of
achievements (see also Appendix A).
Chapter 3 ( Great Convergence and the Rise of the Rest ). In the 1980s, 1990s, and
even 2000s, many economists failed to detect behind the formal indicators the pro-
found changes in the Third World that prepared for fundamental changes and the
onset of the Great Convergence. In the meantime, as one can see from the fi gures in
this chapter, the symptoms of the movement from the trend of the Great Divergence
toward the Great Convergence already became apparent in the 1960s and 1970s. In
Chap. 4 we demonstrate how much the process of the Great Convergence has
advanced by now.
6
6 With its development the Great Convergence (like other similar comparable global processes)
becomes a more and more complex process. In fact, at present we can talk not about a single group
of developing countries (the Third World), but rather about a number of groups that differ in terms
of levels and potentials of their development. Accordingly, within these groups, development pro-
ceeds rather unevenly. In the third chapter we offer a comparative analysis across Asian, African,
Latin American, and Western welfare states, focused on a systematic comparison between the
First, Second, Third, and Fourth (the “Bottom Billion”) World. It shows that the widely used divi-
sion of the world into the developed and developing countries becomes more and more obsolete
every year. However, for a better understanding of how the processes of convergence and new
divergence (among the middle income economies and low income countries) unfold, it is necessary
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
11
Chapter 4 ( The Great Convergence and Globalization: How Former Colonies
Became the World Economic Locomotives ). Quite paradoxically, retrospectively
one can trace the beginning of the process of the Great Convergence already in the
nineteenth century when the European and Western domination seemed to have
become overwhelming. The main reason of such a change was the necessity to sup-
port the Western industrial output and export of goods. However, as it was said
above, this change caused a demand for the increase of the export of capital and
technologies to the non-European countries. As a result, these encouraged both the
growth of national movements for political and economic independence and the rise
of a stratum of entrepreneurs with new business ethics. In the late nineteenth and
early twentieth centuries, the increasing export of British and European capital also
marked the start of the formation of the contemporary World System. The chapter
traces the development of a number of colonial and dependent countries, the impacts
of the two world wars on this process, as well as the collapse of the colonial system.
We describe in detail the various factors that contributed to the process of conver-
gence. We also offer a detailed analysis of the development of views on this conver-
gence and explain why Western economists actually overlooked it.
Chapter 5 ( Afterword : The Great Convergence and Possible Increase in Global
Instability, or the World without an Absolute Leader ). We want the fi nal chapter of
the present monograph not just to summarize our research; we would also like to
offer forecasts of the geopolitical and geo-economic development of the world in
the forthcoming decades on the basis of the proposed theory (which, incidentally,
accounts for the concluding chapter’s title). One of the important lessons that we
have learnt is that, on the one hand, in the foreseeable future, we will observe the
processes of economic and socio-cultural convergence between developing and
developed countries, and, consequently, the reduction of poverty and illiteracy in
many developing countries. However, on the other hand, this process will not go
smoothly and without any setbacks; what is more, it will require a deep reconfi gura-
tion of the World System. This may mean a possible increase in instability and
intensity of crises in the world in the forthcoming decades. Instability will be
expressed globally due to increased confrontation and the search for a new balance
of power and new alliances; but it will also be manifested at regional and national
levels, due to the fact that the increased level of technology, culture and expectations
may enter into confl ict with the existing shortcomings of social and state systems,
inequality and injustice. Of course, there are a number of other factors that can
increase instability—like the upsetting of ethnic balance in the USA and European
countries or the growth of national consciousness and anti-globalization feelings in
those world regions that have been only weakly touched by the globalization pro-
cesses by now. The problem of instability in the foreseeable future is closely linked
to clarify the structure of the modern convergence, to elucidate the peculiarities of the world’s
countries distribution according to their GDP, per capita incomes and other important parameters.
To a large extent this task is performed by a Statistical addendum (“On the Structure of the Present-
Day Convergence”) to Chap.
3 . In the fi fth chapter we also discuss the processes of divergence
between the non-Western countries.
Great Convergence in the Past and in the Future
12
with the need to search for the principles of the new world order, as the change in
the balance of economic forces in connection with the Great Convergence and
increasing globalization will inevitably pose such a problem. However, it is impor-
tant to note that future instability and clash of forces in the global fi eld is likely to
become noticeably dissimilar to the original confrontation between the First and
Third World, between the former imperial centers and their former colonies. Neither
will it be the clash of civilizations in Huntington’s sense (although the ethnic and
civilizational component will always be present in global tensions). It is the tension
between the old and new players on the “global chessboard”, which in the end (we
hope) will not be a fi eld of perpetual confrontation of geopolitical players, but, a
fi eld for the maintenance of a new fi eld and somewhat more equitable world order.
One of the novel ideas developed in the concluding chapter of this book is that the
passing of the USA’s hegemony will not lead to the emergence of a new global
hegemon. We believe that in a direct connection with the development of globaliza-
tion processes the hegemony cyclic pattern is likely to come to its end, which will
lead to a World System reconfi guration and the emergence of its new structure that
will allow the World System to continue its further development without a hege-
mon. We also suggest that the world middle class (that is growing primarily due to
the Great Convergence) may create new possibilities for the political globalization
and a fairer world order.
The Great Divergence and the Great Convergence are further scrutinized in the
appendices.
Appendix A ( Technological Innovation Activities in Britain and Other Western
Countries (1400–1900) : A Quantitative Analysis ) is devoted to the study of the
dynamics of technical inventions in Europe from the fi fteenth to the nineteenth cen-
turies. Our quantitative analysis suggests that it is much more productive to regard
the Industrial Revolution as a pan-European (or Western European) phenomenon,
whereas the industrial breakthrough of the second half of the eighteenth century was
just its fi nal, although extremely important part. In fact, we had to develop this per-
spective, since this aspect of research has been scarcely studied. Our analysis of the
technical innovation dynamics shows that:
• fi rstly, the British lead began to show up only in the second half of the seven-
teenth century; before that time Britain had clearly lagged behind Italy and
Germany. Thus, during the two initial centuries of the Industrial Revolution
Britain absorbed the achievements of European societies, and only then did it
succeed to start its own innovative climb;
• secondly, though we observe the British evident leadership in the technological
innovation from the second half of the seventeenth century to the fi rst half of the
nineteenth century, for a greater part of that period, the overall innovation activ-
ity of “the rest of the West” was higher than that of Britain. The primacy of
Britain in the fi eld of technological invention was absolute only during a rela-
tively short period in the second half of the eighteenth century and the early
nineteenth century—i.e., the period of the fi nal phase of the Industrial Revolution;
• thirdly, by the fi rst half of the nineteenth century the British endogenous techno-
logical growth rate virtually stagnated against the background of a very fast
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
13
increase of those rates in France, Germany and the USA, as a result of which
those countries caught up with Britain in a rather signifi cant way. Incidentally, it
is just the ability of the other European countries to quickly adopt the achieve-
ments of the Industrial Revolution in England that confi rms the idea that the
Industrial Revolution was a European process (whereas Asian countries were
able to undertake their modernization much later and mostly with great
diffi culties);
• fourthly, in the second half of the nineteenth century Britain fi nally lost its techno-
logical lead, as in the late nineteenth century the number of major inventions made
in the USA, Germany, and France exceeded the number of British inventions.
Appendix B ( A Mathematical Model of Great Divergence and Great
Convergence: Demography, Literacy, and the Spirit of Capitalism ) consists of three
sections. In its fi rst section (“Reconsidering Weber”) we study the main assump-
tions behind the proposed model. One can hardly speak about any single reason
which appeared to be the determinant of the change of the vector of development
from the Great Divergence to Great Convergence. If the task was to defi ne the most
important reason (or rather a set of reasons) then, in our opinion, it would consist of
the fact that the process of the growing connectedness of different countries aimed
at supporting further innovative development sooner or later would demand equal-
ization (at least to a certain level) of the developmental levels of different regions of
the world. One can call this a “law of communicative vessels” in the global econ-
omy (this idea is developed in much detail in Chap. 4 ). Up to a certain moment this
law did not work to its full extent as there were some social and cultural, and tech-
nological and political impediments required for its implementation. The fi rst sec-
tion of Appendix B demonstrates that the most important among these was the low
level of human capital development (and especially with regard to modern formal
education) in the World System periphery which did not allow any really effective
diffusion of capital and technologies from the World System core. It is demon-
strated with formal cross-national tests that during the period of the Great Divergence
these were the countries with higher levels of literacy that tended to join the club of
developed countries, as literate workers, soldiers, inventors and so on turned out to
be more effective than illiterate ones not only due to their ability to read instruc-
tions, manuals, and textbooks, but also because of the developed skills of abstract
thinking. By the way, this could explain to a considerable extent the differences
between the economic performance of the Protestants and the Catholics in the late
nineteenth–early twentieth centuries in Europe recognized by Weber. One of
Weber’s research goals was to show that religion can have independent infl uence on
economic processes. The results of our study support this point. Indeed, the spiritual
leaders of Protestantism persuaded their followers to read the Bible not to support
the economic growth but for religious reasons, which were formulated as a result of
ideological processes that were rather independent of economic life. We do not
question that specifi c features of Protestant ethics could have facilitated economic
development. However, we believe that we found another (and probably more
powerful) channel of Protestantism's infl uence on the economic growth of the
Western countries.
Great Convergence in the Past and in the Future
14
The second section (“A Mathematical Model of Great Divergence and Great
Convergence”) is devoted to the presentation of the model itself. As we said above
it is very important to comprehend the Great Divergence and the Great Convergence
as a single process. However, this idea demands examination in different dimen-
sions. In this section we propose a simple mathematical model that is capable of
describing mathematically both the process of the Great Divergence and the one of
the Great Convergence. In this two-component model, the world is divided into the
core and the periphery. For each of the two macro-zones the dynamics of three sub-
systems are modeled: (1) population; (2) the technological-economic sub-system;
(3) the education-cultural (human capital) subsystem. With regard to initial condi-
tions, the level of the development of sub-system 3 for the core is set to be signifi -
cantly higher than the one in the periphery. According to the model, the value of this
variable positively affects economic growth while it affects negatively population
growth (refl ecting the negative impact of the female education on fertility). On the
one hand, the model describes the technological transfer from the core to the periph-
ery (the catch-up term)—according to the model, the higher is the level of human
capital in the periphery, the easier that the technological transfer takes place; on the
other hand, the larger that the gap is between the core and the periphery, the higher
the value of the catch-up term is; hence, the catch-up force is a very low at the initial
phase with the very low level of human capital in the periphery. It becomes highest
at the advanced phase when a wide gap between the core and the periphery is com-
bined with a rather high level development of human capital in the periphery; and it
decreases again at the fi nal phase with the decrease of the gap between the devel-
oped and developing countries. Note also that within the model population growth
is assumed to be affected positively by economic growth, but economic growth
(both in the model and the real life) also promotes the development of education
that fi nally leads to the decline of population growth rates. Within the model, in the
fi rst phase the core’s GDP grows much faster than in the periphery because of the
high level of human capital in the core (which stimulates the economic growth
there) and the low level of human capital in the periphery (which inhibits both
endogenous economic growth and the diffusion of high technologies from the core).
Within the model this generates the Great Divergence. Note that at this phase within
the model the population in the core grows faster than in the periphery, because the
high economic growth rates outweigh there the infl uence of education that is not
high enough in the core to inhibit suffi ciently the population growth rates. In the
second phase, the economic growth rates in the periphery increase mainly due to the
development of the human capital there, as this promotes both endogenous eco-
nomic growth and the transfer of advanced technologies from the core. However, at
this phase the level of education in the periphery is not suffi ciently high enough to
decisively inhibit population growth and to raise economic growth rates to the core
countries’ levels; hence, in this phase economic growth in the periphery leads to a
very substantial population growth, but as regards the GDP per capita, the gap
between the core and the periphery continues to increase. Finally, in the third phase,
human capital in the periphery develops to such an extent that it allows the periph-
eral states simultaneously to achieve both substantially higher endogenous economic
1 Introduction. And Yet the Twain Meet: Great Convergence Brings the East Closer…
15
growth rates, and very high levels of technological transfers (refl ected in the high
value of the catch- up term), and a signifi cant slowdown of population growth rates.
As a result, in the third phase the GDP per capita growth rates of the periphery start
to exceed substantially the ones of the core, and, as a result, the explicit Great
Convergence begins within the model (note that the model also describes the fourth
phase when the convergence rate slows down due to the reduction of the gap
between the developing and developed countries, which leads to the decrease of the
value of the catch-up term).
The dynamics generated by the model demonstrate a rather good fi t with histori-
cal data, which supports the idea that the Great Divergence and the Great
Convergence can be treated as a single process. The model also allows us to develop
a forecast that suggests that the Great Convergence process will continue in the
forthcoming decades, though its rate will experience a defi nite slowdown. Note also
that the model suggests that we should expect a rather high correlation between the
gap in GDP per capita between the First and Third World, on the one hand, and the
growth rates of world population, on the other.
The empirical test that we have performed in the third section of the appendix
(“Phases of Global Demographic Transition Correlate with Phases of the Great
Divergence and Great Convergence”) has rather unequivocally supported this
hypothesis confi rming the idea that the Great Divergence and Great Convergence
constitute two phases of a single Global Modernization process being tightly inter-
twined with the other dimensions of Global Modernization. In fact, the correlation
has turned out even stronger than we expected. We can hardly say that the dynamics
of the Great Divergence and Great Convergence are determined entirely by the
dynamics of the global demographic transition. The onset of the modernization pro-
cess, including the reorganization of politics, economy, and social life, occurred due
to many factors. However, we are quite ready to claim that, once begun, the impact
of modernization on incomes was strongly dependent on the timing of the phases of
the demographic transition in different regions. The dynamics of global population
growth and the Great Divergence and Great Convergence therefore may be consid-
ered to be so closely coupled as to be two sides of the same coin. Note also that our
empirical analysis has confi rmed the accuracy of interaction between the phases of
the global demographic transition, the Great Divergence, and the Great Convergence
generated by the mathematical model presented in this Appendix.
Great Convergence in the Past and in the Future
17© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9_2
Chapter 2
Great Divergence and the Rise of the West
In this chapter we will analyze those factors that allowed the West to overtake the
East in the Modern Period, as well as those factors that put in motion the Great
Divergence process. This necessitates the consideration of certain aspects of the
development of the East and the West since the mid-fi fteenth century (and even
earlier in some respects) till the late twentieth century.
A General Analysis of the Development of Asia and Europe
As is widely accepted at present, by the early second millennium CE Europe lagged
far behind the main eastern countries in terms of development of the productive
forces, statehood, urbanization, consumer culture, scientifi c achievements and other
relevant parameters (e.g., Crone 1989 ; Abu-Lughod 1991 ; Pomeranz 2000 ;
Maddison 2001 , 2010 ; Christian 2004 ; Goldstone 2009a ; Lucas 2005 ; Saliba 2007 ;
Reinert 2007 ; Vries 2013 ), whereas, according to some estimates, the per capita
GDP in the advanced economies of the East was at least twice as high as in Western
Europe (e.g., Мельянцев 1996 : 74). According to some other estimates, even in the
eleventh century, Western Europe did not reach the level of production of the fi rst
century CE Roman Empire (e.g., Cameron 1989 ; Maddison 2001 , 2010 ). The items
that prevailed within the export of European countries to the East were fur, silver,
and timber (Abu-Lughod 1991 : 47; Postan 1987 ). Eastern Europe, in addition to
valuable furs, also exported honey and wax, as well as skins, and considerable num-
bers of slaves (Gieysztor 1987 ; Postan 1987 ; Ali 1999 ), whereas the Eastern exports
to Europe consisted mostly of fi nished industrial (handicraft) products and luxury
goods (Abu-Lughod 1991 : 47; Postan 1987 ; Ali 1999 ). In short, in the early second
millennium CE Europe looked like a backward periphery of the Asian and North
African core.
18
Consider specially, how Europe, that is Western Europe or the “West”, lagged
behind “the East” as regards such an extremely important indicator as the intensity
of innovation in science and technology. In order to insure the compatibility of the
analysis results we will use here and elsewhere
1 the database on scientifi c discover-
ies and technological inventions created by Hellemans and Bunch ( 1988 ). To start
with, consider the levels of innovation activity in the East and the West during the
fi rst eleven centuries CE (Fig. 2.1 ):
As we see, in the early fi rst millennium CE the levels of innovative activities in
the East and the West were rather comparable. Both in the East and in the West the
World System crisis that started in the second half of the second century CE with the
“Antonin Plague” pandemic (see, e.g., Korotayev 2006 ) led to a very signifi cant
decrease of the rate of innovation within science and technology. However, in the
second half of the fi rst millennium in the East (but not in the West) one could
observe a rather signifi cant increase in the number of serious inventions and dis-
coveries; as a result, the East managed to recover its scientifi c-technological activity
to the pre-crisis level—and to exceed it substantially by the eleventh century.
As regards this indicator, in the fi rst eleven centuries CE one can observe a rather
clear divergence between Europe, on the one hand, and Asia and North Africa, on
the other (and not in favor of Europe), which, no doubt, contributed rather strongly
1 With some exceptions that will be mentioned specially below.
0
5
10
15
20
25
0 200 400 600 800 1000
West East
Fig. 2.1 Inventions and discoveries in the West and the East per century, 1 – 1100 CE (The
Divergence of the fi rst millennium CE). Note : For the period between 1 and 1000 CE the diagram
indicates the average number of inventions and discoveries made per century within the respective
pair of centuries. For example, the number “11” corresponding to the European datapoint for year
100 indicates that the average number of inventions and discoveries made in the fi rst and second
centuries CE was 11. Two last datapoints (at 1050 CE) correspond to the number of inventions and
discoveries made in Europe and the East in the eleventh century
2 Great Divergence and the Rise of the West
19
to the retardation of the West (in comparison with the East) that became so salient
by the eleventh century CE.
However, while Europe lagged far behind Asia, by the eleventh century it had
some potential advantages—fi rst of all, it had more stimuli to invest in labor-saving
technologies, and it was better provided with sources of energy (e.g., Chaunu 1979 ;
Wigelsworth 2006 ). Of course, those potential benefi ts could be realized only under
certain conditions. Such conditions began to take shape in Europe in the centuries
that followed; an important role was played by the readiness of some Western
European societies to borrow technologies from the East and to improve them. At
the same time in the East in the Early Modern Period, even long-known methods of
mechanization could not be applied widely, and their application even sometimes
declined (see, for example, Ванина 1991 : 96–98 with respect to India; Landes 2006
about China, and Allen 2011 as regards Japan).
Technical and Scientifi c Upswing of the Late Medieval Period in Europe and
the Question of the “Early Industrial Revolution” In the period between 1100
and 1400, but especially in the fi fteenth and sixteenth centuries, the European labor-
saving tendencies became implemented to a suffi ciently large degree (see, about the
sixteenth and the next centuries, e.g., Huang 2002 ), which resulted in a fairly rapid
development of technologies and a number of key inventions (more about them see
below and also in Fig. 2.2 ) and the development of the process of division of labor.
This technological upswing that took place in Europe between 1100 and 1600 was
noticed long ago—back in the 1930s—starting with the work of Lewis Mumford
( 1934 ), Bloch ( 1935 ), Carus-Wilson ( 1941 ) and was actively studied by economic
historians in around 1950–1980 (Lilley 1976 ; Forbes 1956 ; Armytage 1961 ; Gille
1969 ; White 1978 ; Gimpel 1992 ; see also Hill 1955 ; Johnson 1955 ; Bernal 1965 ;
Braudel 1973 ; see Lucas 2005 for more details). This period also quite rightly con-
sidered as the time of scientifi c breakthrough, or rather a number of revolutionary
breakthroughs in such areas as mathematics, astronomy, geography, cartography,
etc. (see, e.g., Singer 1941 ).
The analysis of the Hellemans—Bunch database may suggest that with respect
to scientifi c-technological growth rates the West caught up with the East as early as
in the twelfth century, whereas in the second half of the thirteenth century the West
might have already somehow outrun the East (see Fig. 2.2 ).
However, one should take at this point into account the following consideration.
The point is that, starting from the twelfth century, Hellemans and Bunch appear to
have become obsessed with the registration of the explosively growing stream of the
European inventions, and that is why they start to pay much less attention to the
registration of the Eastern scientifi c-technological innovations. That is why there is
good cause to suppose that the decline of the scientifi c-technological activity rates
suggested by Fig. 2.2 may actually be an artefact of such an underregistration. In
this respect, it has turned out to be necessary to use a data survey on the dynamics
of the number of innovations in science and technology in China in the period
between the tenth and nineteenth centuries (Goldstone 2009a : 122).
2 Its application
2 Note that in his turn Goldstone based himself on the survey produced by Li and Soylu ( 2004 ).
A General Analysis of the Development of Asia and Europe
20
produces the following result (see Fig. 2.3 ) that appears more reliable than the one
presented above in Fig. 2.2 .
According to these data, Europe failed to outrun China (as regards scientifi c-
technological growth rates) not only in the twelfth or thirteenth, but even in four-
teenth century. On the other hand, the fi gures above suggest a rather vigorous
acceleration of those rates in Europe in the twelfth century with one more such
acceleration in the thirteenth century (when Medieval Europe produced its fi rst par-
adigm changing inventions—initially, the invention of the spectacles and the
mechanical clock).
Thus, it is clear that the theory of early industrial revolutions that preceded the
Industrial Revolution of the eighteenth century has rather solid foundations (Lilley
1976 ; Forbes 1956 ; Armytage 1961 ; Gille 1969 ; White 1978 ; Gimpel 1992 ; Lucas
2005 ; see also Hill 1955 ; Johnson 1955 ; Bernal 1965 ; Braudel 1973 ]). However,
later this theory was (without any reasonable grounds) relegated to the periphery of
0
2
4
6
8
10
12
14
16
18
1000 1050 1100 1150 1200 1250 1300 1350 1400
Europe The East
Fig. 2.2 Inventions and discoveries in Europe and the East per half a century, 1000 – 1400
CE. Note : each datapoint indicates the number of inventions and discoveries made in a respective
half of a century. For example, the number “14” corresponding to the European datapoint for the
year 1325 indicates that the number of inventions and discoveries made between 1300 and 1350 in
Europe was 14. Data source : Hellemans and Bunch ( 1988 )
2 Great Divergence and the Rise of the West
21
the historical mainstream (for example, researchers belonging to the California
School hardly mention the early European industrial revolution). However, ignoring
the early European industrial revolution, we believe, appears to be counterproduc-
tive in solving many important problems, including the search for reasons why the
Industrial Revolution occurred in Britain (see below for more details). In addition,
this question is somewhat artifi cially separated from the more general question
about the causes of the technological breakthrough in the West in the Early Modern
Period. Our view is that the idea of the early industrial revolution in explanatory
terms is very useful, but it requires its own conceptual development from a perspec-
tive that allows treating this early revolution not so much as a separate isolated
phenomenon, but as the initial phase of the Industrial Revolution. Then in fact the
industrial breakthrough of the eighteenth century must be regarded as the fi nal
phase of the Industrial Revolution. We would say that the Industrial Revolution
continued for at least three centuries; and against the background of many millennia
that preceded those three centuries—this was a rather short, quite revolutionary
period.
Very schematically, this approach may be outlined as follows. The period
between 1100 and 1450 may be regarded as a preparatory period of the Industrial
Revolution with quite a vivid manifestation of early capitalist relations and forms of
production in some regions of Europe (Northern Italy, Southern Germany, the
Netherlands, Southern France (see, e.g., Pirenne 1920 –1932; Wallerstein 1974 ;
Postan 1987 ; Мильская and Рутенбург 1991 ; Lucas 2005 ).
The period from the late fi fteenth century till the early seventeenth century (often
denoted as “the long sixteenth century”) is the initial phase of the Industrial
Revolution, associated with the development of navigation, engineering and the
0
2
4
6
8
10
12
14
16
18
20
900 1000 1100 1200 1300 1400
Europe
China
Fig. 2.3 Number of innovations in science and technology in Europe and China per half a century,
900–1400 CE. Data sources : Hellemans and Bunch ( 1988 ) and Goldstone ( 2009a : 122)
A General Analysis of the Development of Asia and Europe
22
mechanization on the watermill basis, the diffusion and the improvement of differ-
ent machines, and the development of division of labor. At this time, in different
parts of Europe, there were signifi cant breakthroughs in a variety of directions,
which by the end of the period are synthesized into the general Western European
system (Johnson 1955 ; Braudel 1973 ; Wallerstein 1974 ; Барг 1993 ; Ястребицкая
1993б ; Davis 1996 ). Changes in one country tended to produce substantial impact
on the economy and the lives in other countries—through the spread of innovations,
through the publication of special technical books, through the movement of techni-
cal experts to different countries, through the introduction of various advances and
innovations by kings and emperors to their realms, etc. Thus, we fi nd impressive
achievements in the fi eld of mechanization in mining operations in Southern
Germany and Bohemia; major contributions to the development of navigation, geo-
graphical discoveries and world trade accomplished by the Spanish and Portuguese,
but also by the British; signifi cant developments of technologies of manufacturing
in Italian and Flemish cities; signifi cant shifts in agriculture in Northern France and
the Netherlands; important scientifi c and mathematical discoveries made by scien-
tists in Italy, France, Poland, England; and fi nally, new fi nancial technologies devel-
oped in Italy (Hale 1993 ; Davis 1996 , 2001 ; Collins and Taylor 2006 ; Goldstone
2009a , 2012b ; Ferguson 2011 ; Porter 2012 ). But all of this, anyway, quickly became
the common heritage of Europe.
The period from the early seventeenth century to the second third of the eigh-
teenth century is the middle phase, when one could observe the formation of a
complex industrial sector and the capitalist economy with increased mechanization
and the deepening division of labor. This is the age of trade leadership by the Dutch,
the successor to the hegemony of Spain and Portugal. The Netherlands created an
unprecedented industry of shipbuilding, mechanized port facilities and fi shing
(Boxer 1965 ; Jones 1996 ; de Vries and van der Woude 1997 ; Rietbergen 2002 ;
Israel 1995 ; Allen 2009 ). But the seventeenth century was a century of very large
changes in military technology, science, and engineering; whereas as a result of
wars and other processes the Netherlands lost its leadership, which was gradually
moving to Britain (Rayner 1964 ; Boxer 1965 ; Snooks 1997 ; Jones 1996 ; de Vries
and van der Woude 1997 ; Rietbergen 2002 ).
Finally, the period between 1760 and 1830 may be identifi ed as the fi nal phase of
the Industrial Revolution, which was also accompanied by the creation of the sec-
tors of the machine cycle of production and the use of steam power. Although
Britain was here clearly the leader, we also observe in this period a number of
important processes that can be identifi ed as pan-European (including the develop-
ment of military technology, trade, science, pan-European commercial and indus-
trial crisis of the second half of the eighteenth century, the beginning of the
demographic transition—see below). In this concept, we clearly see in the Industrial
Revolution the result of the collective achievements of different societies of Europe,
a sort of relay-race of achievements (see also Appendix A).
Three Peaks of the Filling of the Ecological Niche: 1300–1880
The recent
research (whether it belongs to the California School, or not) justly pays much
2 Great Divergence and the Rise of the West
23
attention to the standards of living in different periods and in different countries
(Allen 2009 , 2011 ; Clark 2007 ; Pomeranz 2000 ; Huang 2002 ; Goldstone 2009a ;
Vries 2013 ). However, in our view, it is not completely correct to reduce all the
measurement of pre-industrial history to the assessment of quality of living [as is
done, for example, by Clark ( 2007 )], presenting this assessment in the form of a
Sisyphean labor of technological progress in the fi ght against the Malthusian Trap,
when all the societies’ efforts were in vain, as the growth of the population “ate” the
growth of production. Clark ( 2007 ) has repeatedly pointed out that in 1500–1800
the standard of living (or rather the workers’ wages) fl uctuated below the fi fteenth
century level that emerged after the fourteenth century Black Death. He uses this to
support an idea that there was no real economic growth until the early nineteenth
century, as any economic growth that is not resulted in the growth of the standards
of living cannot be regarded as real. He does not seem to see the connection between
population growth and qualitative development including the growth of sociocul-
tural complexity. We believe that in terms of macroevolutionary approach what was
more important for the industrial breakthrough of the ongoing Industrial Revolution
was not the rise of the standards of living, but rather simply population growth that
also stimulated the development of institutions and the statehood, systems of knowl-
edge, social culture, and methods of preventing mass disasters (such as counter-
epidemic measures, public grain stocks, etc.). On the other hand, the development
of institutions and the suffi cient complexity of social systems are essential for any
signifi cant sustained population growth.
The Neolithic (agricultural) revolution allowed human populations to move very
signifi cantly over the naturally determined carrying capacity limit, to widen their
ecological niches through various technological innovations, which (in combination
with the development of complex sociopolitical structures) already present in the
pre-Industrial era resulted in the formation of societies with populations in the
millions, dozens of millions, and even hundreds of millions. Yes, in the pre-Industrial
epoch there was no continuous sustained growth as regards per capita calorie con-
sumption or the diet quality of the majority of population, but there was very
considerable growth as regards the global population and global GDP (e.g.,
Maddison 2001 , 2010 ; Korotayev et al. 2006a ; Livi-Bacci 2012 ). According to vari-
ous estimates, the world population increased from 225–300 million in the fi rst
century AD to almost a billion people by 1800 (Durand 1960 ; McEvedy and Jones
1978 ; North 1993 ; Kremer 1993 ; Maddison 2001 , 2010 ; Korotayev et al. 2006a ;
Livi-Bacci 2012 ; Grinin et al. 2013 ). In our opinion, from general evolutionary per-
spective, the Industrial Revolution, in principle, could not begin until the world
population had reached a high enough level. Indeed, when there were signifi cant
reserves of the territory in which the surplus population could move, there was no
need for radical change in the type of production that existed. This type of produc-
tion could not change radically until the world population (together with production
and trade) had reached a certain critical level. Clark ( 2007 : 318) wonders why the
Industrial Revolution could not happen in ancient Babylonia around 1800 BCE or
in ancient Greece around 500 BCE. In fact, it could not happen there, because a
critical mass of population and technologies that was necessary for the Industrial
A General Analysis of the Development of Asia and Europe
24
Revolution had not accumulated to any suffi cient extent either by 1800 BCE, or by
500 BCE.
Only the fi lling of the global ecological niche and the simultaneous fi lling of the
global political niche (that is the coexistence of a large number of highly complex
polities having suffi ciently close contacts with each other) led to a suffi cient intensifi -
cation of production, and consequently a suffi cient need in innovations (Grinin 2008a ,
2011a , 2012a ; Grinin and Korotayev 2006 ; Korotayev and Grinin 2006 , 2012a ).
However, after the fi lling of a given niche, the transition to a new higher attractor
does not happen automatically. In some cases (that are much more frequent) the
fi lling of an ecological niche resulted in socio-demographic collapses (see, e.g.,
Turchin 2003 , 2005 ; Turchin and Korotayev 2006 ; Turchin and Nefedov 2009 ;
Korotayev and Komarova 2004 ; Korotayev et al. 2006b ; Korotayev and Khaltourina
2006 ; Korotayev et al. 2011a , b ; Grinin 2012b ), and only in very rare cases did the
transition to a new higher attractor take place (Korotayev et al. 2006b ; Grinin 2012a ,
b ). In this regard, if we look at the dynamics of the population in Europe, then we
can talk about three peaks, and three evolutionary attempts to escape from the
Malthusian trap and to move to a new type of economy.
According to some estimates, by 1300 the population of Western Europe had
reached the level of 55–60 million, in 1500 (after the catastrophic depopulation
produced by the Black Death and subsequent recovery) it turned out to be basically
the same— c . 55–60 million, but by 1600 it increased to 70–75 million. In Europe
(as well as in most other parts of the world) the population growth rates declined
very substantially (sometimes even to negative values) in the seventeenth century
(see, e.g., Parker 2013 ), however, they accelerated rather signifi cantly in the eigh-
teenth century, and by 1800 the population of Western Europe reached the level of
115–120 million (Clark 1968 : 64; Russell 1972 ; Cipolla 1972 : 36, 1981 : 4; Maddison
1991 : 226–227, 2001 , 2010 ; McEvedy and Jones 1978 : 49, 51, 107) (see Fig. 2.4 ).
Thus, after 1300 one could observe the fi rst attempt to surpass the carrying
capacity ceiling that resulted in socio-demographic collapse in connection with the
Black Death epidemic, crop failures, socio-political destabilization, and also the
change of climate that became colder and moister (Flohn and Fantechi 1984 : 37, 39;
McNeill 1998 ; Клименко 2009 ; Livi-Bacci 2012 ); the decline of population in
England, France, Germany, Spain and Italy between 1347 and the fi rst half of the
fi fteenth century is estimated at 30–40 % (Livi-Bacci 2012 : 44).
3
However, this socio-demographic collapse was not a complete return to the old,
but an important transition that strengthened labor-saving processes, started the
process of technological innovation, and paved the way for the start of the industrial
revolution (Herlihy 1997 ). The beginning of the next evolutionary attempt can be
dated to the end of the fi fteenth century, when we fi nd in Europe approximately the
same population as two centuries before. As a result, one can speak about the start
3 “There are no precise data on the scale of the decline between the period before 1348 and the
population nadir reached during the fi rst half of the fi fteenth century, but a loss of 30–40 % is cor-
roborated by local studies in Piedmont and Tuscany, and in France, Spain, England, and Germany”
(Livi-Bacci 2012 : 44).
2 Great Divergence and the Rise of the West
25
of the Industrial Revolution since the late fi fteenth century. This attempt to get out
of the Malthusian trap was more (but not yet fully) successful than the previous one,
thanks to innovations in agriculture, protoglobalization, and the rapid growth of
international trade (Гринин et al. 2009 ; Гринин and Коротаев 2012 ). A time
around 1750 can be considered as the beginning of the third evolutionary attempt,
which ended with the industrial breakthrough and—fi nally—secured the escape
from the Malthusian trap (for more details on those three attempts see Мельянцев
1996 : 99). 4
The Period Between 1400 and 1800: Divergence or Convergence Between
Europe and Asia? In the nineteenth century the Industrial Revolution put into
motion the process of the Great Divergence, which lasted for more than a century.
The Great Divergence led to the predominance of the West as regards almost all the
standard indicators (except population)—thus it is possible to speak of a compre-
hensive divergence. However, the process of divergence began several centuries
before this, when the West was in some ways ahead of Asia, in some other ways the
West was standing with Asia at approximately the same level, and as regards a
number of important parameters, the West still lagged behind the East. Therefore,
the process of divergence at this time did not cover all dimensions, but only some of
them (such as, say, military and technological development, science, methods and
the scope of dissemination of information, etc.). In the Early Modern Period, some
technological points in which the West was ahead of the East, were not too signifi -
cant for the economy as a whole (such as larger scale of application of “inorganic”
energy), but later their importance increased.
4 It should be also noted (though it goes beyond the scope of our research) that all three picks of the
fi lling of the ecological niche, as well as their regression, were connected with the climate change
(e.g., Flohn and Fantechi 1984 ; Мельянцев 1996 : 85–88; Клименко 2009 ; Parker 2013 ).
0
20
40
60
80
100
120
1000 1200 1400 1600 1800
Millions
Fig. 2.4 Population dynamics of Western Europe, millions, 1000–1800
A General Analysis of the Development of Asia and Europe
26
Jack Goldstone suggests an interesting idea implying that it makes sense to
“decompose the notion of the ‘Great Divergence’ into a number of distinct smaller
‘divergences’ that arose in different times and places, and which eventually led to
the critical advances in science, technology, and productivity that powered nine-
teenth century European dominance” (Goldstone 2013 : 59). Additional research is
needed to identify such “smaller divergences”. Goldstone suggests his own version
of such an identifi cation in a number of his publications ( 2008b , 2009a , 2013 ),
whereas below we will outline a version of ours.
However, it appears essential to emphasize that this period was at the same time a
period of convergence (catch-up), as in this period the West was rather actively catch-
ing up with the most advanced societies of the East as regards a number of very impor-
tant dimensions (such as the level of the development of statehood, urbanization,
literacy, some sciences, ship tonnage, quality of manufactured goods, and so on).
Note that Europe caught up with the advanced societies of the East at different
points of time with respect to different indicators. Note also that in some narrow
technical aspects (such as the technology of printed calico fabrics) the West could
simply borrow technology or expertise, but in many other respects the process of
catching up by the West was carried out in entirely different ways in comparison
with what was previously observed in the East, so the reduction of the gap (that is
convergence/catch-up) was achieved through the development of a different trajectory
(i.e., through divergence).
5
Therefore—in view of the fact that at the same time we could observe processes
of both divergence and convergence—we would suggest to denote the period
between 1450 and 1750 as a period of catching up divergence . Further we will
return to the additional explanation of this concept. Here we will comment on only
one of its aspects. The discovery of the New World signifi cantly changed the situa-
tion not only for Europe but also for Asia and Africa. The most important conse-
quences for Europe were the infl ux of precious metals, the use of the New World
colonies for the production of industrial crops, as well as strong growth in trade on
this basis. However, for Asia the main consequence was not the growth of trade with
Europeans (which did not have a large share in the total trade of the Asians) and
even not the infl uence of the infl ux of the New World silver. For Asia the most
important consequence was the borrowing of a number of very important American
crops (the latter proved to be also immensely important for a number of societies in
Sub-Saharan Africa). Note that they diffused throughout Asia even faster than
throughout Europe. It is diffi cult to overestimate the importance of corn, potato,
sweet potato, cassava, peanuts, etc. for population growth in Asia (and Africa).
Thus, for Europe the discovery of America meant the growth of wealth, for Asia it
meant the possibility of the continuation of the previous course to ensure the condi-
tions for the maximum growth of the population. In this regard, the old divergence
increased.
5 Generally, by the end of the Middle Ages the West was superior to the East only in certain mili-
tary, navigation and a few other technologies (e.g., Parker 1997 ), whereas in most respects the East
was more developed than the West.
2 Great Divergence and the Rise of the West
27
Divergence as a Synthesis of Various Revolutions Both the catching up (incom-
plete), and the full (Great) divergence can be understood more profoundly, if we
consider them as a result of several interrelated revolutions that produced a truly
synergistic effect. Within this set of revolutions, each revolution made a signifi cant
contribution to the process of divergence . First of all, this is the Industrial Revolution
in its initial, middle and fi nal phases. Each phase marked a change of technology
and the development of powerful means of production, of change in an energy base,
communications, etc. Note also that in the second half of the eighteenth century we
already observe the beginning of the demographic revolution (the demographic
transition) (see, e.g., Armengaud 1976 ; Minghinton 1976 : 85–89; Cipolla 1976 : 15;
Вишневский 1976 , 2005 ). However, even earlier, in fact, since the fi fteenth century,
we observe in Europe cultural and information revolutions, which manifested
themselves in the spread of printing, the achievements of the Renaissance, the
Reformation, and the Great Geographical Discoveries. It is diffi cult to overestimate
the importance of the proliferation of practical knowledge and literacy. It is also
necessary to mention the fi rst scientifi c revolution in the seventeenth and eighteenth
centuries, the harbingers of which were already visible in the sixteenth century.
Without science, the Industrial Revolution would not have had a lasting basis (see
Goldstone 2009a ; Allen 2009 ; Рейснер 1986 , on the scientifi c revolution). Finally,
all this was accompanied by a military revolution [or more precisely, military revo-
lutions (Duffy 1980 ; Downing 1992 ; McNeill 1963 ; Parker 1996 )] whose impor-
tance tends to be underestimated by the California School. Meanwhile, the processes
that in the European countries resulted in the formation of regular armies, continu-
ously improving artillery and other weapons, and fortifi cation and supply systems
can hardly be overestimated in terms not only of technology (and science), but also
in terms of the development of European statehood (Гринин 2010 ; Grinin 2012a );
note also that the “colonies”, to which Pomeranz ( 2000 ) pays so much attention, did
not appear from nowhere). After all, the regular army can neither be created nor
supported without a developed state apparatus, the development of literacy, enhance-
ments of the taxation system, the fi nancial system, the development of
communications, social reforms, etc. Constant war, with all its negative aspects,
demanded reforms, it demanded to learn from the achievements of rivals, which was
a powerful source of development. Some aspects of some particular revolutions will
be discussed below, but, of course, each of them requires a special study in terms of
their impact on the Divergence.
History of Foreign Trade and the Great Divergence Nowadays, the foreign
trade structure can tell us a lot about how developed the economies of the respective
trade partners are. It is also important to understand which partner needs trade
relationships more. The same can be said about the economies of the past. It appears
necessary to immediately note that till the last third of the nineteenth century Europe
needed the trade with the East (especially with the Far East) more than vice versa;
though those countries that had close contacts with Europe (such as Turkey or
Egypt) felt this need much earlier.
A General Analysis of the Development of Asia and Europe
28
On the other hand, in less complex societies, e.g., in Sub-Saharan Africa (not to
mention stateless Amerindian societies) the need for European goods was originally
much more. The history of foreign trade in Europe and Asia is rather telling in terms
of our theme. In the eleventh, twelfth, and thirteenth centuries, in connection with
the Crusades, Europeans were actively drawn into the trade with the East. In this
and the subsequent period up to the Great Geographical Discoveries, the main
European imports from the East included—in addition to manufactured products—
spices; but Europe itself had almost nothing to offer in return. At the same time, the
process of import substitution began in Europe, as Europeans learned how to make
paper, silk, etc. (see, e.g., Burns 1996 ). During the period of the Great Geographical
Discoveries the scale of trade between the West and the East enormously increased;
trading routes changed; and—what appears to be especially important—the
European trade got tightly connected with the naval advantage of Europeans
(although it was not enough yet to change the balance of power dramatically).
However, the imbalance in trade with the East was huge, and to cover a huge trade
defi cit the Europeans had to increase their silver productions several times—as the
silver was the main thing the Europeans could offer in order to be able to buy desired
Eastern goods. The fi rst serious increase in silver production was achieved in Central
Europe (in particular in Bohemia and Saxony) in the 1460–1530 period (Nef 1987 :
735), which was a response to the “Silver Famines” of the 1320s to the 1460s
(Spufford 1987 ), then great quantities of silver started to be produced in the Spanish
colonies; a substantial role in covering the trade defi cit between the West and East
was played by gold obtained by the Europeans in West Africa. However, the fact
that the West was a worldwide leader in the production of silver was, in reality, one
of the main sources of its power.
At the same time, with the emergence of East India Companies, imports of man-
ufactured goods from the East further increased—especially fabrics from India,
which were famous for their quality for centuries. Thus, still Asia surpassed Europe
in terms of volume, value, quality of manufactured products, and—in some
respects—in terms of technology (see, e.g., Ванина 1991 ). The fact that the most
developed countries of the East (China, Japan, and others) did not need European
goods was confi rmed by their seclusion policy, which since the seventeenth century
was pursued by the East Asian countries—China, Japan, Korea, and Vietnam.
Import substitution in Europe was a process that started in the late Middle Ages.
With the emergence of American colonies, it acquired new dimensions, as this
allowed an opportunity to grow important technical crops that previously had to be
imported (sugar cane, coffee, cotton, tea). In the seventeenth century Britain (and a
little earlier France) began to independently produce cotton fabrics.
6
6 However, in the late seventeenth in France, under the pressure of manufacturers and sellers of silk
and woolen cloth, Colbert imposed a total ban on production of cotton cloth as it rivaled strongly
the former; in England (for the same reason) it was prohibited partially (Mantoux 1929 ; Чичеров
1965 ; Allen 2009 ; Аллен 2014 ). It is important, that in Europe the textile industry needed raw
materials, while for silk and porcelain production there was a complete circle (from raw stuff to
fi nish goods). Cotton seems to be the only popular article supplied by Asia in that time.
2 Great Divergence and the Rise of the West
29
Thus, in the trade between Europe and Asia, there was an important change,
which was the forerunner of the Great Divergence. Asia became a supplier of raw
materials in bulk; these exports started growing rapidly since the late 1730s (which
coincided with the weakening of bans on the production of cotton fabrics in Britain
and with the invention of Kaye’s loom). But even after 40 years from the beginning
of the industrial revolution, in spite of the tremendous progress in reducing the cost
of production, as late as in 1802, exports of yarn and fabrics to India from Britain in
this period was not reasonable yet, because the cost of a pound of the British fortieth
number yarn was 60 pence, almost one and a half times higher than in India (Allen
2009 ). On the other hand, imports of cotton were growing.
7
Finally, the powerful extension of the English textile exports to India started; this
marked the fi nal victory of Europe over Asian manual manufacturing and the transi-
tion of the Divergence to an open and vigorous form of separation. Yet even in the
mid-nineteenth century, for establishing large-scale trade with the Far East countries,
Britain, France, and the United States still had to use military means (including
threats of war or even explicit warfare). European goods fl ooded Asia, and Asian
agriculture started to readjust more and more to fi t the European demand; the share
of industrial crops in Asia grew rather substantially.
The Great Convergence process also got under way, but almost immediately the
process of opening and expanding markets (that was an integral part of this process)
started to require export of capital in general and massive investments in infrastruc-
ture in particular, as well as in the expansion of production of raw materials in the
countries of the World System Periphery. Large-scale construction of communica-
tions in some colonies, including telegraph and postal service, was rather impressive.
The development of communications, infrastructure, and education also opened an
opportunity for the export of industrial capital. Western technology began to pene-
trate the East. This was the beginning of the turning point—with the looming
perspective of Convergence (for more details on this process see Chap. 4 of this
monograph; in this paragraph we discuss it very briefl y).
8
Great Divergence in the Apogee The Great Divergence is also an important part
of the process of globalization, which was largely infl uenced by European powers,
and European coercion, but eventually induced the Eastern countries to start the
process of modernization to catch up with the West, a successful model of which—
Japan—became an indicator suggesting that the ways of the East and the West are
not fatally different. The period before the First World War can be seen as the
7 From 1750 to 1850, Britain raised its consumption of raw cotton from one thousand to 267 thou-
sand metric tons (Mitchell 1978 : 253). But by 1850 the rest of Europe also imported about 130
thousand metric tons more (Mitchell 1978 : 253).
8 In this respect, the period from 1870 to 1990 seems to be to a certain extent a refl ection of the
sixteenth and eighteenth centuries. In the sixteenth-eighteenth centuries, one could observe a
powerful hidden divergence between the West and the East which showed up after the 1800s. The
period between 1870 and 1990 can be characterized as a period of hidden convergence which in
the form of vector of the converging per capita GDP production started to show up only after the
late 1980s.
A General Analysis of the Development of Asia and Europe
30
apogee of the divergence, whereas afterwards one could observe more active
processes that were preparing for the Great Convergence . Moreover, a sort of syn-
ergetic process started: the more active colonies began to demand independence, the
more that the center tried to do for them. The process of development of the colonial
and semi-colonial periphery accelerated as a result of two world wars. We can say
that in general, they contributed signifi cantly to the development of local industry
and economy, and the growth of national consciousness.
The Great Divergence is not just a process of growing differences in the levels of
development of the West and the Rest, but also the process of the emergence of a new
type of global economic system in which economies of various countries were incor-
porated into a single world economic system (but with very different roles). This
aspect of the process of the Great Divergence has been widely studied by the world-
system analysts (Wallerstein 1974 , 1980, 1988; Frank 1979 ; So 1984 ; Arrighi 1994 ;
Chase-Dunn 1998 ; Chase-Dunn et al. 2000 ; Amin 2010 ; Chase-Dunn and Lerro
2013 , see also Grinin and Korotayev 2012a , 2013a , b ); however, some of them have
failed to notice the transition from the Great Divergence to the Great Convergence
that happened in recent decades.
The Last Stage of Divergence and Globalization Finally, the post-war period can
be regarded as a new stage of relations between the East and the West. Several revo-
lutions converged here that in a few decades turned the trend of Divergence toward
Convergence, that in the last decades was largely connected with the upswing of
globalization:
1. the liberation of developing countries from colonial and semi-colonial depen-
dence, which contributed to the emergence of different models of development,
to the formation of modern extracting and manufacturing industries in many of
these countries, as well as to the development of national intelligentsia;
2. the 1950s and the 1960s are traditionally considered as a period of new techno-
logical revolution (scientifi c-technical, and information revolution (Grinin
2012a ; Grinin 2013 ), see also Bernal 1965 ; Benson and Lloyd 1983 ). On the
one hand, this acceleration even intensifi ed the process of divergence. But, on
the other hand, the results of this revolution were actively applied in developing
countries;
3. in the 1960s a new wave of fertility decline began in the First World (the so-
called “second demographic transition” (Lesthaeghe and van de Kaa 1986 ; van
de Kaa 1987 , 1994 ; Lesthaeghe 1995 ), whereas in the developing world, in the
1950s and 1960s one could observe an even more rapid decline in mortality
against the background of still rather high fertility levels. By the end of the
1980s this led to a reduction in the working age population in the World System
center against the background of its rapid growth in the World System Periphery,
creating a particularly strong incentives to transfer labor-intensive industries
from developed to developing countries;
4. one may also mention the so-called Green Revolution in a number of countries,
which helped to provide their populations with the necessary minimum of food
on a rather secure basis—this increased substantially food security in those
countries creating a good basis for the start of a successful catching up;
2 Great Divergence and the Rise of the West
31
5. an important role in the development of a number of countries was played by
the oil crisis of the 1970s that resulted in huge fi nancial resources being invested
in the development of oil-producing countries and their neighbors;
6. one may speak about the transition to a new (“post-industrial”) type of econ-
omy in Western countries, where the services sector started playing a dominant
role. Accordingly, this paved the way for the transfer of industries to developing
countries;
7. many countries adopted the idea of catch-up modernization, which contributed
to the development of their industry, education, etc.;
8. globalization, which increased the “transparency” of economic borders signifi -
cantly by the early 1990s, thus raising the intensity of the fl ow of capitals and
technologies from the Center to the Periphery of the World System to critical
values;
9. to a high degree, this was supported by the development of new information
technologies.
10. fi nally, also largely due to globalization, the majority of developing countries in
the early 1990s managed to reduce the gap with developed countries in terms of
the development of human capital to a critically low level, which provided a
real possibility to transfer a very large number of industries from the Center to
the Periphery of the World System, providing a dramatic increase in the fl ow of
technologies and capitals from the First World to the Third World, and trigger-
ing the onset of the Great Convergence. In this regard, we can say that the Great
Convergence was launched by a new wave of globalization that began in the
late 1980s and the early 1990s.
The courses and processes that prepared the transition from the Great Divergence
to the Great Convergence will be discussed in more detail below in Chap. 4 .
Some Preconditions of the Great Divergence in the Early
Modern Period
As has already been mentioned, the Early Modern Period is the period of catching
up divergence when the foundations of the Great Divergence were laid. But before
considering these processes, it is necessary to look at those factors that contributed
to the breakthrough of the West. We agree with Goldstone ( 2013 : 59) that it is nec-
essary “to abandon… the notion of Europe as having an inherent, durable advantage
or superiority in some respect that goes back thousands of years”. However, it would
not be reasonable either to deny that certain prerequisites for a breakthrough in
Europe already existed in the Early Modern Period (and even prior to it).
9
9 In fact, the abovementioned statement of Goldstone in its full form looks as follows: “the only
way forward is to abandon both the notion of Europe as having an inherent, durable advantage or
superiority in some respect that goes back thousands of years, and the notion that there was no
essential difference between Europe and other major civilizations until relatively late, around
1800” (Goldstone 2013 : 59).
Some Preconditions of the Great Divergence in the Early Modern Period
32
Consider some of the features that helped Europe outstrip Asia (of course, fi rst
and foremost in terms of production and economic performance). First, we will list
them, then take a closer look:
1. Technological features
1a. A higher level of labor-saving and mechanization;
1b. The propensity to borrow and to develop borrowed technologies;
2. Structural features of the economy
2a. The relatively high proportion of a non-agricultural population in some
countries of Western Europe in the Early Modern Period;
2b. The greater role of trade and the fi nancial sector in the economy;
3. Socio-economic features
3a. Lower levels of government intervention and larger levels of private
initiative;
3b. Greater autonomy of European cities and the higher prestige of trade and
fi nancial nobility;
4. Evolutionary features
4a. The East outgrew suitable demographic proportions for a revolutionary
breakthrough.
Some Comparisons Between the West and the East:
Technological Peculiarities
Higher Levels of Labor-Saving and Mechanization For a long time there was no
clear advantage of the West in this respect, that is why, before the thirteenth century
it appears more correct to speak rather of the inclination to labor-saving (in connec-
tion with a sparse population, on average less fertile soils and generally with a
smaller defi cit of cultivable land than in the East). But we must remember that for
a long time, it was a sort of latent advantage that in many respects looked rather as
a defect.
In this capacity, labour-saving and mechanization became noticeable only in the
sixteenth to seventeenth centuries and later. Signifi cant elements of the growth in
labor productivity due to the appearance of new mechanisms could be found in the
Middle Ages in the eastern countries too (see, for example, Боголюбов 1988 : 19).
This was particularly important in relation to irrigation (and in this respect for a very
long time the West clearly lagged far behind the East).
Some Features of Agriculture in the West and East What were the factors that
contributed to the development of the situation when the process of labor-saving
through mechanization in Europe became considerably stronger than that in the
2 Great Divergence and the Rise of the West
33
East?
10 Population and its density in Europe were much smaller than in the densely-
populated countries in Asia (see more about this below).
11 As a result, Europe for a
long time (up to about the eleventh and twelfth centuries CE) had a considerable
reserve of unused land, but also in later periods many European countries often
dealt with a direct shortage of workers. The growth of labor-saving was supported
not only by a sparse population, but also by relatively poor soils [Meliantsev
(Мельянцев 1996 : 77)] believes that the overall productivity of the land in Europe
in the Middle Ages was fi ve times lower than in the countries of the East, cf. Huang
2002 ). In other words, even when the shortage of land in Europe increased and
farmers started to apply more effort in order to increase the productivity of land
(using multiple tillage, crop rotation, etc.), the price of labor as a factor of produc-
tion was still higher (due to demographic and other reasons) than in the East, espe-
cially in China. Therefore, Europe paid more attention to labor-saving. It is important
to also take into account a higher share of wage labor in agriculture in North-Western
Europe as compared to China (e.g., Goldstone 2007 : 213), which increased the
demand for labor-saving—it does not make much sense to save the labor of family
members who are not paid specifi cally, but it makes sense to hire fewer workers.
12
Some researchers do not quite distinguish between the productivity of labor and
productivity of land. As is noted by Huang with respect to one of the founding
fathers of the California School, “what Pomeranz has done, here and elsewhere in
his book, is to fail to grasp the crucial distinction between land productivity and
labor productivity and between labor intensifi cation per unit of land and capitaliza-
tion per unit of labor” (Huang 2002 : 507). However, this is critically important
when we consider the difference between these two regions. Thus, for the eighteenth
century, according to Huang’s ( 2002 : 509) calculations,
13 the cultivation of one acre
of rice in the Yangzi needed 2.4 times more labor hours than the cultivation of an
acre of wheat in England. “In terms of pound weight, the Yangzi delta yield was
roughly 3,432 pounds per acre, while the English was roughly 1,290 pounds. That
is a differential in grain output between the Yangzi Delta and England of about 2.7
to 1 per unit of land” (Huang 2002 : 511). This difference accounts for the difference
in population densities up to a considerable degree. Note also that the abovemen-
tioned difference was observed in the eighteenth century, after the Agrarian
Revolution in England that brought about a very signifi cant growth of both the
productivity of land and the productivity of labor.
10 One of such reasons was a prohibition of slavery in Western Europe while there were comparable
many slaves in eastern countries especially in the Near and Middle East.
11 A larger population density in Asia as compared to Europe was promoted by the fact that in
Europe the share of arable lands was relatively larger, namely, 45 % of total territory compared to
23 % in Asia (Галич 1986 : 188; Рябчиков 1976 : 124, 342).
12 For example, “in England c. 1750, more than half the population engaged in wage labor either
full-time or part time; farmers and freeholders in agriculture were only about a quarter of house-
holds. In Japan and China… a much smaller proportion of the population were laborers” (Goldstone
2007 : 213).
13 In their turn, Huang’s calculations are based on Buck’s ( 1937 : 314) data.
Some Preconditions of the Great Divergence in the Early Modern Period
34
As regards China, Huang ( 2002 : 513) calls this “involuted economy”: “that same
involuted economy, however, for reasons to be made clear below, meant counter-
incentives against modern labor-saving capitalization of agriculture, and the conse-
quent persistence of low agricultural labor productivity, and therefore also of low
rural incomes”. That was the heart of his idea of growth without development. We
are not ready at all to identify the pre-Modern Chinese development pattern as a true
“involution”, “growth without development”. However, we would agree that this
pattern in the Early Modern Period did not lead to new evolutionary levels because
sooner or later it led a society to the Malthusian trap, though every time this process
widened its ecological niche.
Labor-Saving Through the Introduction of Energy Technologies So, although
the mechanization of work developed both in the East and in the West, ultimately,
due to the above mentioned reasons, in the West labor-saving technologies developed
more actively. Therefore, in the Medieval West one could observe a rather active
diffusion of both old labor-saving inventions and new technologies, including those
borrowed from the East. Thus, the water mill was invented a 100 years before our
era, but within the Roman Empire slave labor prevented its spread, although the
vertical wheeled water mill was used as a preferred technology for some industrial
applications (Wikander 2000 ).
But already in the Early Middle Ages, watermills quickly and widely spread in
the West. For example, in England in the eleventh century, according to the census
of William the Conqueror (“Domesday Book”), there were 5,600 watermills in
3,000 villages (Hodgen 1939 ; Cameron 1989 ). According to other reports, in France
at that time, there were about 20 thousand watermills (Debeir et al. 1991 : 75).
Taking into account the difference in population in both countries, there was one
mill per every 250 people (Мельянцев 1996 : 81). In the eleventh century the total
per capita energy potential of mills in Europe (at least in England and France) was
higher than, for example, in the Near East (from where the mill came to Europe)
1.5–3 times (Мельянцев 1996 ; Léon 1977 ; Issawi 1991 ).
In Europe, mechanization was also expressed in a more complete use of animal
power. Thus, according to Persson, in England in the eleventh century about 70 %
of the consumed energy was produced by domestic animals (Persson 1988 : 28; see
also Cipolla 1978 : 53). The use of improved harnessed for horses, horseshoes, and
other improvements allowed making the overland freight in Europe suffi ciently
profi table to do business at a relatively long distance. According to some estimates
(see, e.g., Lilley 1966 ), the cost of land transport in comparison with the period of
the Roman Empire fell three times. According to some researchers, horse effi ciency
increased greatly with only the use of the clamp increased very much (4–5 times),
this in general contributed to the progress in a number of areas of the economy
(e.g., Мельянцев 1996 ; Cipolla 1981 ; North and Thomas 1973 ; Scott 1989 ; White
1962 ; Bolich 2005 ; Chamberlain 2006 ; Wigelsworth 2006 ). As a result, the level of
energy consumption per labor input in Europe was growing, and by the mid-twelfth
century, it caught up with the countries of the Muslim world and China (Мельянцев
1996 : 82; Pacey 1990 : 44), and in the thirteenth century, according to Chaunu, it
exceeded the corresponding indicator by 2.5 times, and then the gap could only
2 Great Divergence and the Rise of the West
35
increase, reaching a 4–5 time difference in the sixteenth century (Chaunu 1979 :
288). True, we should also take into account the colder climate of Europe, which
requires heating (on the use of wood and coal in Britain see Allen 2009 , on general
state of the transport see Postan 1987 ).
Labor-Saving in Craft Technologies: The Role of Epidemics Finally, the crises
of the fourteenth and fi fteenth centuries (especially the Black Death) strengthened
labor shortages to a critical degree; on the other hand in a few parts of Western
Europe (including England this was accompanied by the actual emancipation of the
serfs, which greatly transformed the feudal structure (North 1996 ). Labor became
not only scarcer, but also freer, which created especially strong stimuli for the devel-
opment and introduction of labor-saving technologies. No wonder that since the
fourteenth century the process of dissemination and improvement of various mecha-
nisms (presses, wheels, mills etc.) accelerated (e.g., Lucas 2005 ).
But, of course, such epidemics themselves could often also lead to economic
degradation (see, e.g., Borsch 2004 , 2005 with respect to Egypt). And only the
special circumstances (in which some countries of Western Europe found themselves
during the epidemic) transformed the terrible disaster into a factor of the subsequent
breakthrough. At the same time, in countries where consumption was relatively low
and the labor was relatively cheap, the motivation for labor-saving was weaker
(see, e.g., Huang 2002 ; Allen 2011 ).
Inclination to Borrow Technologies and to Develop Them It is very well-known
that in the Middle Ages the West borrowed numerous technologies from the Middle
East, North Africa, China, India and the other Asian societies (Al-Hasan and Hill
1991 : 278–280; Ashtor 1978 : 295; Raychaudhuri and Habib 1982 : 47–52, 285;
Elvin 1973 : 85, 113–130, 167; Lal 1988 : 48; Mokyr 1990a : 23–24; Needham 1981 :
13–14; Watson 1981 : 29–30; Pacey 1990 ; Hall 1980 ; Goldstone 2009a ). As Epstein
notes, “Medieval Europeans may have been the fi rst of the great free riders benefi t-
ing from borrowing the best practices of others” (Epstein 2009 : 192).
However, an important feature of Europe was not only the ability to borrow inno-
vations (and not only in the technical fi eld) but also their creative development.
Somehow it turned out that these innovations in the developing Europe began to
play a more important role than in their homelands (this applies to such borrowings
as mills, watches, mechanical printing, gunpowder and fi rearms, the compass and
others; even the wheelbarrow was made more effective by Europeans with the front
wheel, and not under the platform, as in China). For example, in the thirteenth
century, Leonardo Fibonacci introduced the use of Arabic numerals that found their
main application in trading accounts. Already in only a few decades each merchant’s
apprentice had to know the four rules of arithmetic, which had previously been
known only to a handful of scientists.
The reasons why many innovations acquired a greater importance in Europe than
in their homelands are varied, and in addition to the above mentioned need in
labor- saving and relatively high military, political and economic competition, there
was a whole system of interrelated and mutually re-enforcing factors, providing a
higher degree of adaptation and diffusion of innovations. Some factors will be
discussed below.
Some Preconditions of the Great Divergence in the Early Modern Period
36
Some Comparisons Between Europe and the East: Structural
Features of Economic Systems
A Relatively High Proportion of the Non-agricultural Population In Early Modern
North-West Europe one could fi nd a rather high proportion of the population living
in rural areas, but engaged in non-agricultural activities (see, e.g., Allen 2009 ;
Carus-Wilson 1987 ; Postan 1987 ). One of the reasons was the geographical position
that allowed active use of fi shing and sailing (Gieysztor 1987 ; Postan 1987 ); lower
agricultural productivity (so that the intensifi cation of work in it did not bring much,
thus stimulating non-agricultural activities) and a higher level of the development of
animal husbandry, providing industrial raw materials and fertilizers. And with the
growth of urbanization, in some Western European countries the total share of all
the non-farming populations grew and eventually overtook the level of the advanced
Eastern countries. The non-farming population provided a large labor pool for the
emerging hand and then machine industry.
The more Important Role of Trade and the Financial Sector in the Economy The
fast growing role of trade (and, especially, foreign trade) in the economy of a num-
ber of European countries appears to be of extreme importance starting from the
eleventh century—even in comparison with the situation in the Arab world.
14
Trade in Europe grew continuously in volume and geographical expansion from
the tenth century to the fi rst decades of the fourteenth century (Postan 1987 : 208),
and then, after a period of epidemics and wars, again began its growth in the late
fi fteenth century (Van der Wee 1990 , 1994 ; Monro 1994 ; Snooks 1996 , 1997 ). Note
also the higher the role of maritime transport. And as we will show below, the trade
often led any industrial enterprise. According to some of Chaunu’s estimates, in the
sixteenth century the amount of land transport in North-Western Europe doubled,
and the sea transportation increased 5–10 times (Chaunu 1979 ; Léon 1977 ). In the
period between 1500 and 1700, the foreign trade in the Western European states
increased 3–5 times, whereas the trade with the countries of the East and the South
grew more than 15 times (Bairoch 1985 : 174; Gould 1972 : 221; Mann 1986 : 472;
O’Rourke et al. 2010 ; Parry 1980 ).
In Europe, as perhaps nowhere else in the world, there were many trade-oriented
polities, as well as their unions of those polities, which has been noted by many
researchers (see, for example, Dobb 1963b ; Snooks 1996 ; Mielants 2007 ). These
potential advantages became especially visible due to changes arising as a result of
the Great Geographic Discoveries. It should also be noted that nowhere else in the
world was the fi shing and hunting of large aquatic mammals carried out at such
large distances from the coast, and similarly as industrial processes, as in Europe in
the late Middle Ages and the Early Modern Period (see Braudel 1973 ; Чистозвонов
1978 : 147; Зингер 1981 : 42–43; see also Kehoe 1992 : 243; Keller 2010 ).
14 On the large role of trade in the Arab world see, for example, Abu-Lughod ( 1991 ), Goldstone
( 2009a ).
2 Great Divergence and the Rise of the West
37
Trade, which played an increasingly important role in the Western world, could
not develop without the development of the fi nancial sector. And in this area, Europe
was ahead of Asia already in the thirteenth to fourteenth centuries. Of course, fi nan-
cial credit systems were quite well developed in the East, and paper money fi rst
appeared in China, but nowhere were credit systems were developed so fi rmly and
permanently as in Europe. Fernand Braudel devoted a special place to this process,
believing that capitalism began to develop in the fi eld of fi nance and credit (Braudel
1973 ). Note, that in all cultures this process was hindered by religious or ideological
dogma. But in the world of Islam and Confucianism these values were stronger than
in the Christian world, especially after the spread of Protestantism (Kuran 2011 ;
Goldstone 2012a ).
No wonder, that fi nancial crises caused by disorder of credit or defaults began to
shake Europe since the sixteenth century. We can assume that the divergence
between Europe and Asia began in the fi nancial sphere earlier than in other areas,
which can be compared with the fact that the recent wave of globalization also
began primarily in the fi nancial sector.
Some Comparisons Between the West and the East:
Socioeconomic Peculiarities
The Lower Level of Government Intervention and Stronger Private Initiative The
factor of high private initiative (which existed before the twelfth to thirteenth centu-
ries when free lands were available) had important signifi cance. It was also espe-
cially important that for a very long period it coexisted with little state intervention—at
fi rst just because of the weakness of the European states and the particular infl uence
of the Catholic Church, which contested political supremacy. Plow farming in
Western Europe was less productive than in the East, but nevertheless, unlike a
number of eastern states, European states did not take part in raising the productiv-
ity of land. It was a private matter. However, this combination of private initiative
and less state regulation really emerged much later, probably already in the Early
Modern Period (though state regulation by this period had increased, it never was so
strong in Western Europe in many respects as in China and some other Asian
countries). As a result, in the late Middle Ages and the Early Modern Period, the
share of savings, which came in the form of private investment in land in Europe
began to grow (Trevelyan 1978 ; Wilson in 1980; more on that below).
15
15 In the East, especially in China, Mesopotamia, or Egypt sometimes the state could invest large
amounts of money in the land amelioration, but since the state itself developed in a cyclic manner,
the process of such improvements was not sustained and sometimes the irrigation amelioration
declined completely. In the West, starting from the Modern Age, the investments in land or agricul-
tural technology generally increased.
Some Preconditions of the Great Divergence in the Early Modern Period
38
One could observe a gradual development of specifi c and favorable balance in
some western countries: the state protected property owners and did not allow over
oppression of them, of the owners, including former feudal lords who had lost
political rights, and who could not substitute for the state and destroy it (see, for
example, Acemoglu and Robinson 2012 ). In some cases, the alliances of owners
could effectively infl uence the behavior of the authorities, forcing them to pursue
policies that supported trade (Greif 2006 ). The institution of private property was
further improved. In conditions of a more stimulating legal environment and greater
economic freedom, the economy begins to grow faster. We agree with those
scholars who believe that without such a development of the institution of private
property, industrialization could not have taken place. Therefore, it seems not quite
right, that a number of economic historians, fascinated by comparing quantitative
indicators such as the level of consumption, labor productivity, etc., began to attach
less importance to the fact that the institution of private property in Europe was
better developed than in the East (for example, Clark 2007 ; Allen 2009 ; Popov
2014 ). We do not agree with such a position. Without such institutions, above all the
institutions of private property and intellectual property, the industrial revolution
simply could not start (North 1981 ; North et al. 2009 ; Acemoglu and Robinson
2012 ; Greif 2006 ).
In contrast to what was often the case in the East (especially in China), where the
state could sometimes develop production of their own, accumulating huge material
and human resources, or by using direct commands, prohibitions, and orders, in
Early Modern Europe and in the nineteenth century direction was gradually estab-
lished: the state started paying more and more attention not to the direct impact on
the economy, but rather the administration of it indirectly.
16
European Cities as Centers of Self-development An often noted feature of European
cities is their role as centers of industry and commerce that economically and some-
times politically dominated the surrounding countryside. But, of course, many cities
in the East were primarily centers of crafts and trade (see, for example, Ванина
1991 on the Indian case; about the rise of some new towns as centers for cotton and
silk processing and marketing in the Yangzi Delta of the eighteenth century see, e.g.,
Huang 2002 : 519). Therefore, perhaps a more important role was played by the
considerable independence of the inner life of the cities. Of course, in the beginning
of the second millennium the degree of urbanization of Europe lagged behind that
of the East, but the growth of cities there proceeded very actively. Already by
1500 in Europe, there were more than 150 cities with a population of ten thousand
16 It is quite natural that there was an abundant evidence of the direct impact of the prohibitions that
were spread in the seventeenth-century France during Colbert’s times (see Rayner 1964 : 42–44;
Малов 1994 : 142–150) as well as in other parts of Europe in general. We also do not consider here
the epoch of catching modernization in Europe and Japan in the second half of the nineteenth
century, when industrialization (including the construction of railways and telegraph) was to a
large extent directed and fi nanced by the state (see, e.g., Supple 1976 : 329–330, 340–351).
2 Great Divergence and the Rise of the West
39
and more (Blockmans 1989 : 734). In some places, Europe reached an unprece-
dented level of urbanization.
17
Besides, in general, Western European cities had much higher levels of self-
government and urban freedoms in the law-making [with respect to property, eco-
nomic circulation, forms of government, taxation, and regulation on its territory
(e.g., Greif 2006 )]. Note also that almost all the Western European cities were
small. Thus, according to Issawi’s estimates (Issawi 1980 ), large (with population
of more than ten thousand) cities of such Middle Eastern countries as Turkey,
Iran, Egypt concentrated 10–20 % of their population (see also Галич 1986 ;
Мейер 1978 ).
In general, in the Middle Ages, most countries of Western Europe did not have
practically any really large cities (see, for example, Chandler 1987 ).
Correspondently, almost all city-dwellers lived there in small towns. On the one
hand, they looked small, disorganized and unsanitary compared to their large east-
ern counterparts. On the other hand, smaller European towns were more fl exible;
they had a higher evolutionary potential. The presence of a large number of small
towns increased evolutionary diversity and opportunities to develop specialization.
In addition, one may notice similar features in some European trade communities
and their alliances as trade-military expansion (Mielants 2007 ; see also Pearson
1997 ; Brady 1997 ).
Indeed, the military and commercial expansion was typical both for the period of
the Great Geographical Discoveries, and for the later period, but one can still agree
with Goldstone that the signifi cance of this factor is often exaggerated (Goldstone
2009b ). However, another point might be more important. In Europe one could fi nd,
as nowhere else, a very large number of societies (Italian merchant republics, the
Netherlands, Hanseatic cities, some cantons of Switzerland, etc.), in which the
fi nancial and commercial bourgeoisie (merchants) had a very high social rank and
prestige and nobility could consist of a range of aristocratic families deeply engaged
in trade, where trade was the focus of public policy. All this created the conditions
for the growing importance of the merchant class, which increased the effi ciency of
the merchants’ corporate strategies (Greif 2006 ). Note that for a long time the devel-
opment of industry could not go beyond the trade movement, so the development of
industries was often concentrated in the hands of the same commercial-industrial
nobility, since the capitals that were necessary for the development of industry were
accumulated by trade activities.
17 In the Southern Netherlands, half the population or even more lived in towns (Bruges, Ghent, and
Antwerp), the share of the urban population was still larger in Northern Italy in the Po valley where
Venice, Milan, and Genoa were situated (Blockmans 1989 : 734). Such a high share of the urban
population could be supported only by profi table trade. That is why its decline in the Italian
Republics (as well as in the Southern Netherlands as a result of the destruction of Antwerp (the
Spanish Fury) led to their transformation and stunted development.
Some Preconditions of the Great Divergence in the Early Modern Period
40
Territorial and Demographic Proportions
The East Overgrew Suitable Proportions for a Breakthrough In addition to a num-
ber of conditions outlined above for the transition to new economic forms, a social
system also needed some optimum proportions as regards its territory and popula-
tion (Sanderson 1995 , 1999 ; Allen 2009 ; Grinin 2012a ). This required a large over-
all territory (which Europe had in the aggregate), but the population of individual
societies should not have been very large.
It is obvious that the leading countries of the East with their huge (by European
standards) populations did not fi t in the right proportions for the evolutionary transi-
tion to the industrial society. The difference between the societies with their popula-
tion in millions and the ones with their population in hundreds of millions is
enormous. Like ancient slavery, the excessive population of the East also led the
development of a deadlock, since it could only be reproduced under the control of
very sturdy and developed states or other comparable rigid systems (such as the
Indian caste communities) that did not provide conditions for breakthroughs to new
levels of complexity, since the main task of such institutions was precisely to ensure
stability in spite of all the changes.
In addition, the state that controls the lives of tens and hundreds of millions, on
the one hand, tends to have more developed political and administrative forms, but
on the other—it is much more diffi cult to change such a society than a society with
population in millions. That is why, in the seventeenth century even in France, with
its 20 million population, it was more diffi cult to achieve a radical restructuration
than in England with its fi ve million. The Netherlands only had a population of
three million, but this country had a very high percentage of urban population. Back
in the early sixteenth century, more than half of the Dutch population lived in cities
(Hart 1989 : 664), and in contrast to Flanders and Italy, this country was able to keep
such a structure. Note that in the seventeenth century it had to cover by imports a
quarter of its demand for bread (Cameron 1989 ; Якубский 1975 ; Сказкин 1968 ).
It is clear that in the Early Modern Period such a large percentage of urban popula-
tion was not possible with a huge Chinese population. Note also that the shift to
more intensive agriculture in England associated with fencing led to the situation
when in this not very large country (that in the fi fteenth century was still in an acute
need of working hands) an excess number of people suddenly appeared (part of
them left the country, and the other part came under severe repression of the Tudors’
Poor Laws). And where would tens of millions of “unnecessary” people in China or
members of numerous artisan castes in India go? And did it make sense for large
Asian states to contribute to such processes? In a sense, by the time when Europe
groped a breakthrough of technological development, the Eastern systems had
already lost this chance.
2 Great Divergence and the Rise of the West
41
Catching Up Divergence of the Early Modern Period
Above, we have identifi ed some signifi cant differences between Europe and the
East (but not all differences, for a full analysis would require a special study). Of
course, both Western and Eastern societies constantly changed. However, the
overall trend appeared as follows: the most developed European countries were
constantly catching up with the most developed countries of the East, and in certain
respects they even left them behind. And in those respects (which included science,
military/navy technologies, and some fi elds of engineering) the gap between the
West and the East was constantly increasing in the Early Modern Period. However,
up to a point, this superiority had not yet materialized in the West’s overwhelming
dominance.
Thus, the Early Modern Period in relation to the theme of our study is character-
ized by a twofold process. On the one hand, we observe a process of convergence,
but we also observe a partial advance of the West in comparison with the most
developed Eastern countries in many ways. This duality (on the one hand, a higher
level of overall development in the East, on the other—the growth of partial advan-
tages of the West) has led to numerous disputes in which each party is in its own
right. That is why we prefer to denote the Early Modern Period as the period of
“catching up divergence”. Indeed, during this period, on the one hand, Europe was
still lagging behind the East, it was catching up with it in many respects. Thus, this
was a convergence in a number of respects (such as literacy, urbanization, national
culture, productivity, industrial production volumes), and a divergence with respect
to some military-technical and scientifi c aspects, the dissemination of knowledge,
and so on. It is very important to take into account the point that in the Early Modern
Period the convergence could not be achieved by the West by rapid population
growth (on the contrary, until the mid-nineteenth century, the gap in population
between China and Western Europe only increased, see Fig. 2.5 ).
Also, we have seen that the difference in population (a relatively small population
in European countries) was an important advantage. Convergence was mainly due
to the development of technologies. An important role was played by the so- called
military revolution, which, on the one hand, was a part of the development of new
technologies, and, on the other hand, this revolution deeply restructured European
states, making them bureaucratic, transforming them into a new type of state—
developed and mature (see Grinin 2012a ; Grinin and Korotayev 2006 ; Korotayev
and Grinin 2006 , 2012a , 2013 ). 18
That is why we call this period of the Early Modern European history the period
of catching up divergence , because Europe both caught up with the East in those
18 With respect to the early (gunpowder) military revolution, one should note that the matter was
rather ambiguous. The Ottoman Empire was among leaders in this sphere and produced a signifi -
cant impact on its neighboring countries, both European and Eastern (Iran and India). But unlike
Europe, the further development of military revolution failed there. Moreover, starting from the
late eighteenth century fi rst Turkey and later all other Oriental countries began to adopt the
European achievements.
Catching Up Divergence of the Early Modern Period
42
respects in which Europe lagged behind it, and Europe simultaneously already
started diverging from the East in many other respects until conditions had been
created for the Great Divergence.
19
Conditions, Driving Forces and Consequences We have seen that in the West
there were quite serious prerequisites to overtake the East. But conditions could
remain potencies for a long time, and would have a chance to be realized only in
certain, quite unusual circumstances. The most important of these conditions are:
(1) the thirst for wealth and the increasing concentration of effort to get hold of the
wealth of the East. Note that the rich Eastern societies simply could not have such a
stimulus; (2) the Age of Discovery, which became an unexpectedly successful result
of the search for wealth; (3) changing ideas about the world and the rupture with the
intellectual traditions of the past (Goldstone 2009a ), which amplifi ed the process of
accumulation of knowledge that already clearly manifested itself in the fourteenth
century and the fi rst half of the fi fteenth century, but which later was transformed
into a systematically accelerating process of the production of scientifi c and techni-
cal knowledge.
It is important to understand that these conditions in an unprepared society could
not become a source of major transformations that we see in Europe in the Modern
Period. Processes of change in commerce, industry, agriculture, intellectual activity,
in the accumulation of knowledge and science, in changing attitudes towards mon-
etary wealth, in military organization and technology, shipping, and so on were
already very evident in Europe even before the Great Geographical Discoveries. It
is obvious that, although Europe generally lagged behind Asia, between 1000 and
1500 CE, the gap declined signifi cantly, and, on the other hand, Europe in this
19 Kuran ( 2011 ) denotes the period between the sixteenth and eighteenth centuries as “the Long
Divergence”. But in our opinion, this defi nition fails to refl ect the actual signifi cance of that period.
0
50
100
150
200
250
300
350
400
450
1700 1720 1740 1760 1780 1800 1820 1840
China W.Europe
Fig. 2.5 Population
dynamics in China and
Western Europe, 1700–1840,
millions. Data sources :
Durand ( 1960 ), Zhao and Xie
( 1988 ), Korotayev et al.
( 2006b ), Cipolla ( 1972 : 36,
1981 : 4), Clark ( 1968 : 64),
Maddison ( 1991 : 226–227),
McEvedy and Jones ( 1978 :
49, 51, 107) and Maddison
( 2001 , 2010 )
2 Great Divergence and the Rise of the West
43
period produced a number of its own extremely important innovations (including in
such fi elds as optics, chronometry, and artillery). But without these innovations, this
economic and cultural progress could quickly exhaust its momentum, and with
them it received a powerful reinforcement and expansion of the base.
Desire for Wealth, Its Diffusion in Society, and the Growth of Expansionism The
relative poverty of European countries together with the abundance of the elite and
primogeniture became the initial mover for the European attempts to conquer the
world (clearly manifesting itself in the Crusades).
Geographical discoveries and colonial acquisitions, the growth of trade and
industry, and the dissemination of knowledge about the successes—all these con-
tributed to the expansion of this desire in Europe. And when this was accompanied
by the “sanctifi cation” of wealth by a new reformist religion, the desire for enrich-
ment affected all sectors of respective societies.
And since the possibility of enriching was increasingly associated with the new
lands and trade with them, the course toward expansionism and globalization
became an essential condition and the engine of the catching up divergence .
Rich East Asia (which did not have any real need in the expansion of trade with
the West) fi nally responded to western globalization in a somehow inadequate way.
With increasing contacts with Europeans, who, together with the promotion of
trade, tried to diffuse Western values (especially religious ones); all the major East
Asian countries opted to pursue strict seclusion policies with respect to the
Europeans (leaving only restricted, rigorously controlled channels for contacts
with them).
On the Role of Sudden Wealth for European Development W e fi nd it appropriate
at this point to discuss important consequence of the abovementioned changes,
which is not so often debated, as it should be. One of the most important parameters,
where Europe was much inferior to Asia, was the amount of resources that govern-
ments could concentrate for specifi c purposes. This difference stemmed from the
enormous differences in population density, and the level of political centralization
and economic-ecological potential. Europe was a relatively poor part of the world
where it was rather diffi cult to concentrate massive resources. By contrast, the mag-
nitude of the concentration of resources in China (when the government really
wanted to) could be staggering. With proper organization of the state, the Chinese
government could achieve impressive results. That is why the eastern monarchs did
not have such an acute need to look for means to make the state richer, as it was rich
enough already, the question was more in the proper organization of resource col-
lection and utilization. Not surprisingly, the fl eet of Zheng He and the size of his
ships were so superior as compared with the fl eet of Columbus (Goldstone 2009a ).
Note that in this case it was not a result of the technological backwardness of the
European states. It is known that in the fi fteenth century the Europeans could build
very large ships of a thousand and even more ton displacement. The problem was
rather the relative poverty of the Medieval European kingdoms. For the expedition
of Columbus the Spanish government could only provide rather small ships simply
because it could not fi nd funds to support a larger-scale expedition supplied with
Catching Up Divergence of the Early Modern Period
44
larger ships (which were generally quite available in Europe at that time). But the
Great Armada that the Spanish state managed to dispatch 100 years later was
already much closer in its size to the fl eet of Zheng He. The point is that during that
century the wealth of European monarchs (and especially the Spanish ones) grew in
a very considerable way indeed.
Starting from the 1530s, the fl ood of precious metals, which fl owed into Europe
from the New World, dramatically changed this situation. Since the Spanish gold
and silver anyway spread over the whole of Europe anyway [in particular, by 1600
no less than 40 % of state revenues in Spain was directed to service old debts
(McNeill 1982 )], a situation of a sudden enrichment of Europe emerged. But in
contrast to this enrichment, which was realized in the additional production of food
(which within the pre-Modern Malthusian systems tended to encourage the popula-
tion growth), the wealth came in Europe in a rather concrete form of precious
metals, as monetary wealth. To some extent, it was like a sudden enrichment of a
conquering country, similar to what was, for example, in the empire of Tamerlane.
However, this conqueror spent the captured wealth on such things as embellishment
of Samarkand, whereas in North-West Europe it went into business and produced an
immediate increase in the volume of investments in many sectors; this wealth was
turned into a growing fl ow of goods from the rich East.
The growth fl ywheel was already running. According to McNeill, the rise in
prices began to act as a social solvent, which facilitated the rise of the middle classes
to the political heights in North-Western Europe (McNeill 1963 ). And it turned out
to be impossible to stop this fl ywheel (in particular, it was fueled by the ever-
increasing volume of colonial exploitation of the New World). The power of the
growth fl ywheel was such that in the eighteenth century, many European countries
(with a small population size by Asian standards) could support huge armies and
keep them on a permanent basis, to build huge fl eets, fortresses and the like, that is,
they were already comparable with large Asian societies as regards their ability to
concentrate resources. This could occur as a result of the overall growth of wealth,
which the increasing part was expressed in due to the accumulation of money and
could be monetized, but also due to the development of the giant credit business, in
particular the institute of national debt and the development of the tax system (see,
for example, Bogart et al. 2010 ). Thus, in many ways it was the rapid growth of
wealth in the form of money in the sixteenth century that started the process of the
catching up divergence at a much higher rate than before. We also note that Spain
and Portugal (and other European countries—through various transactions with
them) acquired a unique position in the world, as they became the owners of
resources for the production of the world currency. This also allowed increasing the
real wealth of European societies, due to the constant excess of imports over exports.
Desire for Import Substitution in the West As already stated, it was the West that
needed goods of the East (and not vice versa)—the West had little to offer Asia
(wool and glass products, iron tools, fur, and even African ivory—that is almost the
whole list). Throughout the Early Modern Period exports from Asia to Europe
2 Great Divergence and the Rise of the West
45
defi nitely prevailed over the exports from Europe to Asia (see, for example, Frank
1998 ; Held et al. 1999 ; Pomeranz 2000 ; Goldstone 2009a ; So 2012 ).
20
Imbalance in trade with the East intensifi ed pursuit of import substitutions in
Europe. This implied the search for possibilities to produce various valuable orien-
tal goods: silks, porcelain, sugar, coffee, tea and so on. And what was the import
substitution in the prevailing conditions of the Early Modern Period when respec-
tive technologies could not simply be bought? Within such a context import substi-
tution implies a search for innovation. So it is not surprising that import substitution
in respect to cotton fabrics was one of the incentives for the industrial revolution.
Between 1614 and 1725 the volume of import of cotton textiles in England had
increased by more than 13 times (Чичеров 1965 : 137).
Goldstone rightly notes that “almost all of Europe’s early technical achievements
were inspired by a desire to catch up to superior Asian technology. Whether in the
production of steel, cotton cloth, ceramics, ships, or even cast iron, in 1500
Europeans could only dream of producing goods that would approximate Asian
quality. Efforts to realize those dreams eventually led to machines and inventions
that allowed Europeans to catch and eventually surpass Asian achievements”
(Goldstone 2009a : 171). Western European countries (especially Britain) sought to
what is today called import substitution. Import substitution had important implica-
tions in the framework of intra-European trade, because, due to the doctrine of mer-
cantilism and the propagation of the idea of the so-called “emulation” (that is, the
desire to catch up with others or surpass them in the development of certain eco-
nomic advances), more and more countries developed their own industries (Reinert
2007 ). Import substitution of manufactured goods from Asia became a major source
of technological growth.
Accumulation of Scientifi c and Practical Knowledge Striving for success and
wealth was highly correlated with the desire to create more knowledge, which sig-
nifi cantly manifested itself in Europe during the Renaissance. However, in this
regard, by the Early Modern Period the Confucian countries were well ahead of
Europe, as there the tradition of accumulation, systematization, and increasing
knowledge was very strong.
Growth of literacy in North-Eastern Europe (see, for example, Allen 2009 , as
well as Appendix B below) was greatly supported by the increase in the production
of books in the period in question, the growth of, the need for knowledge, and the
rise of Protestantism (see Appendix B for more details). So during this period of
emergence and the strengthening of Protestantism in Europe with 500 million
copies of the Bible being printed (Назарчук 2006 : 79)—an incredible number in
comparison with the previous manuscript technologies. However, the growth of
literacy had a variety of consequences. In particular, it is possible to trace the
20 For example, in the fi rst half of the eighteenth century, the ratio between goods and silver carried
on the British vessels that traded with China (Port of Guangzhou) was 10–90 %, or at best 75–25 %
( Симоновская and Юрьев 1974: 175; see also Чичеров 1965 : 135. 139; Петров 1986 : 171;
Goldstone 2013 ).
Catching Up Divergence of the Early Modern Period
46
following positive nonlinear feedback: the growth of education—the increase in
volume and effectiveness of special technical literature—the increase in the use of
new technologies—production growth—growth of resources spent on the develop-
ment of education—accelerated development of the education system, and so on.
Thus, from a given moment the factor of literacy became an important factor in the
growth of production in general.
The growth of science and mathematics in Europe in this period is very well-
known (e.g., Singer 1941 ; Goldstone 2009a , and also Figs. 2.6 and 2.7 ). Already by
the seventeenth century, hydropower development, engineering and ballistics were
fi rmly based on scientifi c achievements (see also Рейснер 1986 : 225).
It has been shown that the invention of the steam engines by Denis Papin and
Thomas Newcomen had a direct connection with the achievements of science (e.g.,
Allen 2009 ). On the other hand, the demand for precise scientifi c devices and
instruments substantially advanced technological development, promoting the use
of techniques used for the production of scientifi c instruments in industrial engi-
neering (see Рейснер 1986 : 228–230; Goldstone 2009a ; Mokyr 2002 ).
Innovation Diffusion Rate in Europe
As is well known the Taagepera—Kremer
mathematical model of global technological and demographic development is based
0
10
20
30
40
50
60
70
80
900 1000 1100 1200 1300 1400 1500 1600
Europe
China
Fig. 2.6 Number of innovations in science and technology in Europe and China per half a century,
900–1600 CE. Data sources : Hellemans and Bunch ( 1988 ) and Goldstone ( 2009a : 122)
2 Great Divergence and the Rise of the West
47
on the assumption that “high population spurs technological change because it
increases the number of potential inventors…—all else equal, each person’s chance
of inventing something is independent of population—thus, in a larger population
there will be proportionally more people lucky or smart enough to come up with
new ideas” (Kremer 1993 : 685; see also Taagepera 1976 , 1979 , 2014 ; Tsirel 2004 ;
Korotayev et al. 2006a ; Korotayev 2005 , 2006 , 2007 , 2008 , 2009 , 2012 ).
It adequately describes the dynamics of the process of growth at the World
System level, while the adequacy of applying this idea to individual societies is a
subject of some debate. But in relation to individual societies it appears rather clear
that the more a society contacts with other societies, the more actively it accumu-
lates innovations from the outside, and the faster it respectively grows. In any case,
the increase in the external activity of the European countries led to a very rapid
increase in the accumulation of innovations.
Therefore, we can talk about the rule, according to which the more contacts a
society has and the greater their diversity is, the more innovation occurs in those
well connected societies .
This is even more relevant for the contacts within Europe itself. Here you can
talk about the competition of peers , which was not found in the most advanced parts
of Asia, particularly in the Far East, since there was mostly a struggle there with the
“barbarians”. Competition of peers is the most powerful engine of development.
21
It is thanks to this that there were such phenomena as protectionism and Mercantilism
that contributed greatly to industrial and commercial development of Europe
21 This was observed by Eric Jones ( 1987 ) and David Landes ( 1998 , 2006 ) and some other
scholars.
0
100
200
300
400
500
600
700
800
900
900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900
Europe
China
Fig. 2.7 Number of innovations in science and technology in Europe and China per half a century,
900–1900 CE. Data sources : Hellemans and Bunch ( 1988 ) and Goldstone ( 2009a : 122)
Catching Up Divergence of the Early Modern Period
48
(e.g., Reinert 2007 ), there were military technologies, methods of government,
literacy development and the introduction of new laws. In conjunction with the
abovementioned abundance of contacts and the dissemination of knowledge and
discovery, it is easy to understand that the engine of development worked in Europe
much faster than in Asia. The speed of diffusion of innovation in Europe was
signifi cantly higher than in Asia. Perhaps within such an Eastern society as China
innovations (due to political centralization and other achievements) could spread
fairly quickly, but one cannot see any acceleration of the diffusion of innovations
among Asian and North African countries in the Early Modern Period. In general,
these rates remained the same as in many centuries before (see Fig. 2.6 ). Moreover,
differences in the rate of diffusion of innovations in the European societies, on the
one hand, and in the Asian societies, on the other, were already apparent in the Late
Middle Ages (see Fig. 2.7 ), which was additionally explained by a greater peer-
polity competition that was typical for Western Europe.
If we take the example of the development of fi rearms and protective devices
against them, then we will see that, according to McNeill ( 1982 ), fi rst guns appeared
almost simultaneously in Europe and Asia (the fi rst evidence relates to 1326 and
1332). It is possible that the Europeans borrowed not only gunpowder, but the idea
of guns from China. However, in the second half of the fi fteenth century Europeans
overtook the rest of the world in all that is concerned with the technology of guns
(McNeill 1982 ). It is important to note that in the last third of the fi fteenth century
as a result of the wars of France and Burgundy major improvements in artillery were
achieved (stone balls were replaced by iron ones, calibers and weights of guns were
reduced, and, most importantly, the European artillery got wheels and carriages that
made artillery much more maneuverable (McNeill 1982 ).
There is, of course, some exaggeration in the McNeill statement, but there is
some hard core of truth in his assertion that, in general, the siege gun scheme that
was developed in 1465–1477 in France and Burgundy continued to be used until the
1840s, with only one minor improvement (McNeill 1982 ; see also Cipolla 1965 ).
Artillery of the Eastern countries lagged far behind. And although in the sixteenth
century, following the Turkish example, it was to some extent improved, as a whole
the rate of innovation in the development of fi rearms in the East was much lower,
especially in the navy. In this connection, we note, in passing, that the emergence of
the early modern European industry in the fi fteenth and early sixteenth century was
largely due to the fi rst (powder) military revolution. The huge demand for copper
for casting bronze guns was a powerful incentive for the development of mining
(and mechanization) in Central Europe, including Southern Germany and Bohemia
(see, e.g., Бакс 1986 ; Nef 1987 ); whereas a growing demand for iron caused a shift
to the pig iron casting and construction of the fi rst blast furnaces (Ibid). The second
military revolution began in Europe in the late sixteenth century, when one could
observe the formation of new highly organized, disciplined, agile, constantly train-
ing armies that were capable of fulfi lling rigorously the orders of commanders, with
a clear interaction of all the branches of the armed forces (McNeill 1982 ).
2 Great Divergence and the Rise of the West
49
It was in the seventeenth century when Turkey lost the ability to wage war on an
equal footing with European countries. Thus, starting already from the seventeenth
century, and especially in the eighteenth century there was no army in the East to
face the European armies (this is confi rmed by numerous victories of the Russian
army over the Turkish armies in the eighteenth century, by victories of European-
trained and equipped armies, consisting of native soldiers led by European offi cers
of the East India companies in Java and India, and the famous Egyptian campaign
of Napoleon). Meanwhile, the development of military technologies and methods of
organization at all times was a very important source of growth and innovation.
Thus, the process of divergence was particularly pronounced as regards the
development of military technology and organization; it appears possible to
compare its speed only with the matching speed of development of divergence in the
domain of scientifi c knowledge. It is also important that military divergence was a
pan-European phenomenon (and not a purely British one) .
Continuous Changes in the West At the end of this section, we would like to
point out that many of the lines of change in Europe, which emerged in the late
Middle Ages, can be traced continuously through the Early Modern Period. And
some even had a tendency to accelerate. Jack Goldstone rightly notes with respect
to the pre-Industrial epoch that “the… important thing to recognize about… techno-
logical and organizational changes is that they were widely scattered over space and
time and tended to be isolated, rather than generating continuous and cumulative
further change” (Goldstone 2009a : 27). In addition, after their emergence the tradi-
tional system of knowledge could decline or stagnate for long periods of time. In
Goldstone’s view, “the best way to describe technological innovation and change
before 1800 is to say that it was sporadic—different technologies were developed at
different times and in different places and then not developed much further if at all”
(Goldstone 2009a : 28–29).
We see more or less clear lines of development of agricultural technologies and
technologies of governance in China, that is the development of such technologies
that were most important to maintain stability and prosperity in a supercomplex
agrarian empire (see, e.g., Wright 2001 ; Korotayev et al. 2006b ; Гринин 2010 ). At
the same time, China and other Eastern societies knew many technologies and had
good opportunities to develop them further, but they did not have such a need.
22
And Europe, as we have seen, had. We can take many lines of technological devel-
opment in Europe to see this. For example, the development of shipbuilding and
ship navigation gives us a continuous line of improvements. The same applies to
optical devices, military technology in the fi eld of guns and rifl es, as well as in the
fi eld of fortifi cation, to fi nancial technologies and many others. And what about the
continuous development of science? This continuity of many developmental lines
also suggests that the rate of technological and common development in Europe was
22 Thus, having constructed a powerful and advanced navy in the fi fteenth century, later China gave
up developing it and the Chinese lost the skills of shipbuilding.
Catching Up Divergence of the Early Modern Period
50
accelerating during the Early Modern Period, whereby whole complex sectors of
the economy were emerging.
Jack Goldstone rightly notes that “from the early 1600s onward Europe expe-
rienced a striking increase in the number of scientifi c and technological innova-
tions, becoming the world’s leading center of technical change” ( 2009a : 121). Here
it still appears necessary to add an important clarifi cation. Our comparative analy-
sis of the dynamics of scientifi c-technological innovation activities in Europe and
China in 1400–1800 (see Figs. 2.6 and 2.7 ) has demonstrated that the “striking
increase in the number of scientifi c and technological innovations” in Europe
was observed since the second half of the fi fteenth century rather than since the
early seventeenth century.
As we can see, the rapidly increasing scientifi c and technological innovation
activity was already observed in the second half of the fi fteenth century, and in the
sixteenth century Europe outstripped China rather noticeably as regards this very
important indicator. However, one should bear in mind the point that we are consid-
ering an indicator that measures not the absolute level of scientifi c and technologi-
cal development but the rate of this growth. Therefore, it would be wrong to interpret
the above picture in the sense that already in the sixteenth century Europe, in terms
of its scientifi c and technological development, was far ahead of China. By 1800,
Europe broke very far away from China (and the East in general) as regards the
absolute level of scientifi c and technological development, and with respect to this
indicator by the end of the eightteenth century divergence between East and West
had already taken place. Thus, starting from the fi fteenth century Europe began to
catch up with China on different parameters rather quickly but by this time the gap
between China and Europe was so great that even after three centuries of a very
rapid catch-up development, by 1800, most of Europe was still unable to exceed
China as regards characteristic levels of earnings of the population (Allen 2001 ;
Goldstone 2009a ; Allen et al. 2005a , 2011 ).
The following point appears here to be equally important. In the second half of
the fi fteenth century in Europe the very pattern of scientifi c and technological
growth there radically changed, which earlier was just slightly different from the
traditional pattern of scientifi c and technological growth that was characteristic of
complex agrarian civilizations. It was characterized by the predominance of the
cyclical component the component of a trend. It is this pattern that was characteris-
tic of Chinese civilization during the period under review, as well as for Europe until
the second half of the fi fteenth century, when it was replaced by a completely differ-
ent pattern of constant acceleration of the growth of scientifi c-technological innova-
tion. However, it is worth recalling that Figs. 2.6 and 2.7 do not depict the dynamics
of the absolute level of scientifi c and technological development; rather they depict
the dynamics of change in the growth rate of this level. Therefore, even what
appears in Fig. 2.7 as a certain slowdown in the scientifi c and technological growth
in the fi rst half of the eighteenth century, is a “graphical aberration”. Indeed, if,
according to Hellemans and Bunch, in 1650–1699 Europe made 202 important
inventions and discoveries, in the fi rst half of the eighteenth century they actually
2 Great Divergence and the Rise of the West
51
made far more—244. Thus, in the fi rst half of the eighteenth century in Europe there
was a very signifi cant acceleration of the growth of scientifi c and technological
innovation, but this is “dwarfed” by even higher rates of acceleration typical of the
period 1600–1649 and also for the period 1750–1799. Thus, in the second half of
the fi fteenth century, Europe moved from a predominantly cyclic pattern of scien-
tifi c and technological growth (characteristic of pre-modern complex agrarian soci-
eties) to modern constantly accelerating scientifi c and technological growth where
the trend component prevails over the cyclical one.
Joel Mokyr notes very correctly that the “the true key to the timing of the
Industrial Revolution has to be sought in the scientifi c revolution of the seventeenth
century” (Mokyr 2002 : 29). Indeed, the industrial revolution can be considered as
quite a logical continuation of the process of the rapid acceleration of scientifi c and
technological innovation observed in Europe since the second half of the fi fteenth
century, within which the scientifi c revolution of the seventeenth century played a
major role. However, one can look at this process somewhat more broadly. We can
say that since the middle of the fi fteenth century in Europe one can observe a transi-
tion to a trajectory of modern scientifi c and technological growth that by the nine-
teenth century prepared Europe to the transition to the trajectory of modern
economic growth. The “small” scientifi c-technological divergence between the East
and the West that took place in c . 1450–1800 largely produced the Great Divergence
of the nineteenth century.
Thus, the point that science and technology were developing in Europe since the
second half of the fi fteenth century in a rather stable and progressive way appears to
support our idea about catching up divergence as well as the idea that the Industrial
Revolution started in Europe since the late fi fteenth century, whereas its fi nal and
most important phase was realized in 1760–1830 in Britain, and then in the other
Western countries. In addition, on the whole, one could observe in Western Europe
(and in Britain and the Netherlands in particular) the strengthening of the commer-
cial spirit that infected all levels of society, even monarchs (e.g., Elizabeth of
England). It seems enough to read some books of that time, especially in English
(for example, works of Defoe or Swift) to feel this. It is not accidental that the doc-
trine of mercantilism emerged in the seventeenth century, whereas European mon-
archs became sure that trade and industry served as main sources of wealth for the
state. In the eighteenth century almost all the European monarchs cared more about
commerce and industry, and it was a common vector of European development. For
example, the entire foreign policy of Peter the Great (the roots of which can be
traced in the reign of Ivan the Terrible in the 1560s–1580s) was aimed at getting
access to the sea for the expansion of trade. Though in the East one could also fi nd
a lot of enterprising people, yet the general vector toward commercialization of the
life in Europe was much stronger.
Next we look at the industrial revolution, which ultimately transformed the
process of “catching up divergence” into the Great Divergence.
Catching Up Divergence of the Early Modern Period
52
Industrial Revolution and Its Three Phases
Why Does It Make Sense to Consider the Industrial Revolution
as a Long-Term Process?
Huge changes associated with the transition to the machines and steam power
attracted the attention of researchers since the late eighteenth century. But a system-
atic study of the Industrial Revolution took place nearer to the end of the nineteenth
century, possibly with the works of Arnold Toynbee
23 ( 1927 [1884], 1956 [1884]). 24
However, as we have already mentioned above, since the 1930s, it became clear
that the process of rapid technological innovation began several centuries earlier.
This raises such questions as:
– How can we date the beginning of the Industrial Revolution?
– How can we treat the enormous changes that took place in Europe since the
fi fteenth century (and even before)?
We do not think those developments were not different from the one that took
place in the Early Modern Period in the East in essence. At the same time it is clear
that the period of technological change that started in the 1760s, compared to the
previous centuries, was exceptional by a number of parameters.
That is why we believe it is much more reasonable to consider the Industrial
Revolution as a rather long-term process that started in the late fi fteenth century and
continued till the mid-nineteenth century.
25
This process went through several phases, and, in our understanding, the last
third of the eighteenth and the fi rst third of the nineteenth century (this period is
traditionally denoted as the period of the “Industrial Revolution”) is only the fi nal
phase of the Industrial Revolution, at which irreversible transition to machine tech-
nology and at the same time to a new kind of energy occurred. But it was the most
prominent and visible phase of the industrial revolution.
Based on this, we consider the industrial revolution as a process of active devel-
opment of technology, especially designed to save labor in different areas, the most
important of which was the mechanization of manual labor in manufacturing, which
23 Not to be mixed with his nephew, the famous British historian Arnold Joseph Toynbee
(1889–1975).
24 However, today assumption is that the term “industrial revolution” ( la révolution industrielle )
was introduced as early as in 1837 by the French economist Jerome-Adolphe Blanqui to describe
the social and technological transformation that had occurred in Britain within the previous
decades (Mokyr 1999 : 4).
25 For example, in the sixteenth century, the average tonnage of ships increased tenfold in compari-
son with the fi fteenth century (Чистозвонов 1991 : 15).
2 Great Divergence and the Rise of the West
53
led to a shift from manual labor to machine labor and replacement of biological
energy with abiotic energy (water fi rst, and then steam) . 26
Thus, most phases of industrial revolution took place within this period, which in
this book is called as the period of catching-up divergence, whereas its completion
occurred at the beginning of the era of the Great Divergence. To distinguish between
the terms, we will denote the period of the last third of the eighteenth century and
the fi rst third of the nineteenth century as the fi nal (machine) phase of the Industrial
Revolution.
Within this approach, the signifi cance of the technological breakthrough that
began in the 1760s is not underestimated, but at the same time, this breakthrough
does not look so unexpected and sudden, as sometimes seems. Many researchers
had to move the time of the start of the Industrial Revolution far back in order to
take into account the organic connection between the Industrial Revolution of the
eighteenth century and the previous transformations. For example, Clark ( 2007 ),
having considered some of the views on the causes of the Industrial Revolution in
Britain, further writes that the Industrial Revolution did not mean a sudden start, it
was rather a continuation and acceleration of a process that began in 1600 and after-
wards went faster, then slower, then faster again.
27
We agree with this, but we believe that it is more logical to say that the industrial
breakthrough of the eighteenth century is the fi nal phase of the Industrial Revolution,
which began in Europe in the late fi fteenth century (in England it started a little
later, but much earlier than 1600). Allen ( 2009 ) writes that the Industrial Revolution
can be seen as a continuation of the fi rst phase of globalization. If this is the case
then it is logical to imagine the period of early modern history as the period of the
Industrial Revolution, this being based on the basis of a number of primary global-
ization and other processes. Below, we will return to the question of why the fi nal
phase of the Industrial Revolution began precisely in Britain. However, for us it is
clear that it is only a part of the general question of the causes of Europe’s leader-
ship in the Modern Period.
It makes sense to discuss how to treat the Industrial Revolution: as the period,
which resulted in a complete change of technological ways, or as a period, which
resulted in the development of new technologies, but not in their absolute domina-
tion. In this study, this is quite an important issue. Thus, even in 1850 new industries
accounted for only a small part of the British economy, and in 1800, the woolen
26 Note also, that, according to Wrigley ( 1988 ), the industrial revolution is a transition from the
organic economy (energy resource) to inorganic, from organic production to inorganic one (that is
from the agrarian production with its usage of land, plants and animals to the usage of mineral
resources). Wrigley implied steam energy, yet, generally speaking, water energy also refers to
inorganic energy resources (as we will further show just this energy resource promoted the machin-
ery phase of the industrial revolution in the USA). Thus, already from the fi fteenth century, we
observe an obvious transition to inorganic energy resources and during the subsequent centuries
the distribution of these energy resources proceeded at impressive rates.
27 A bit earlier he also notes that the industrial revolution extended over 100 years and represented
a gradual evolutionary process (Clark 2007 : 232, 239), although unfortunately, he does not denote
any landmarks in this process.
Industrial Revolution and Its Three Phases
54
industry in terms of consumption of raw materials exceeded the cotton industry by
a factor of two (see Goldstone 2009a : 125–126).
We believe that the Industrial Revolution is a major macrosocial transformation,
but this transformation was fi rst of all qualitative rather than quantitative; its main
result was expressed in the formation of a certain sector, in the emergence of a cer-
tain model of the economy, which provided a new perspective as regards the use of
new resources, increasing productivity of labor etc. But quantitatively the Industrial
Revolution did not produce dramatic changes immediately. It only opened up the
way to them.
28
However, the most dramatic changes occurred after the Industrial Revolution.
Thus, in theory, on the one hand, we should single out a period of very important
quality (innovation) changes that affected only certain sectors of the economy; this
would be the period of the industrial breakthrough. But, on the other hand, we
should single out a “post-revolutionary period”, when the innovations with impor-
tant modifi cations and improvements begin their expansion (≈ period of expansion
of innovations).
The concept of the Great Divergence of the California School as a sudden sharp
change in the vector of the entire preceding development arose from the observation
that the modern type of economic growth and a fundamental divergence in living
standards between Britain and the countries of the East only developed in the nine-
teenth century. Hence there emerged the assertion that Britain (and even more so the
rest of Europe that lagged behind Britain in the eighteenth century) as a whole was
not so different from the Eastern societies. Of course, much depends on what is
meant by the Industrial Revolution (Goldstone 2009a : 123). And also of course, “if
the term ‘Industrial Revolution’ is taken to mean ‘a rise in living standards to higher
levels than anything seen in previous world history,’ then no such thing occurred
before 1850” (Ibidem).
Actually, a number of researchers date the Industrial Revolution to the nineteenth
century, but then it turns out that the most important qualitative changes, the begin-
ning of a phase transition in the last third of the eighteenth happened behind the
scenes (note the sharp spurt in innovation in Britain compared to other European
countries precisely during this period in the fi gures in Appendix A). The same
applies to the type of economic growth associated with the Industrial Revolution.
29
However, the rising standard of living, and the transition to a new type of eco-
nomic growth, according to our understanding, is already the result of the revolu-
tion, not the revolution itself. So the changes in the type of economic growth, and
28 One can take the liberty to draw an analogу between the epoch of revolution and the period from
the creation of the fi rst samples of a new seminal invention in an inventor’s workshop to the cre-
ation of the fi rst working production prototypes. And from this stage there can be a long way to the
further large-scale implementation of the invention.
29 However, we should note that during 300 years (from the sixteenth to the eighteenth century) the
Western Europe demonstrated a close to contemporary type of economic growth in the foreign
trade averaging to 1.06 % per year (O’Rourke et al. 2010 ), which provided a basis for a transition
to such a type of economic growth.
2 Great Divergence and the Rise of the West
55
especially growth in living standards required many decades in order to be mani-
fested in a really explicit way.
It is right that “the Industrial Revolution was something of a slow-motion pro-
cess, rather than a sudden change” (Goldstone 2009a : 94), and the preparation of the
actual industrial-machine breakthrough took centuries. This implied the necessity
of a long chain of innovations in technology, science and other areas of life, as well
as very large changes in the society.
The Initial Phase of the Industrial Revolution
Preconditions As has already been mentioned, in the twefth to fi fteenth centuries
technologies started to develop rather actively in Europe, there was a shift to
rather complex technological processes, improvements of already known mecha-
nisms as well as some really new breakthrough inventions—like the mechanical
clock and spectacles (the general rise of the innovation is clearly visible in
Figs. 2.2 , 2.3 and 2.6 ).
Among these achievements one must note a mining hoist driven by a water wheel
and a horse haulage of ore, horse-powered drilling machines, the port rotary valve,
the fulling-mill, iron smelting, rolling and drawing of nonferrous metals (see
Эйххорн etal. 1977; Goff 1988 ; Lilley 1966 , 1976 ; Blair and Ramsay 1991 ; Mokyr
2002 : 48). Also considerable progress was made in the development of mechaniza-
tion with a water wheel.
30
One should also mention various foot or water-driven metalworking lathes,
drills, mechanical saws, and so on. In the fourteenth century Europeans began to use
the press for the production of paper, which had been used before for the extraction
of oil, and in woolen textile production (Lucas 2005 ). The fi rst mechanical clocks
appeared in Europe in the late thirteenth century. But there were also a lot of quite
simple labor-saving innovations, such as wheel-borrows.
Inland waterways improved very substantially in the fourteenth century. Water
locks with upper and lower gates (Lilley 1976 : 189) appeared in the Netherlands in
the fourteenth century, and later (in the fi fteenth century) they appeared in Italy. Big
improvements occurred in the nautical technologies, starting from the thirteenth
century with the introduction of the compass (probably borrowed from Byzantium)
and modern steering control (see Lilley 1966 ; about the history of shipbuilding and
the ships’ role in the economy see Unger 2008 ). One could also observe the
diffusion of the fore-and-aft Lateen sail, which allowed sailing upwind.
31
30 Nevertheless, one should make a distinction between “agricultural” mills, which grind grain, and
“industrial” mills, which were devoted to what are now commonly thought of as industrial applica-
tions, such as fulling of cloth, forging iron, and sharpening tools (Lucas 2005 ), which were
obviously less in number (Ibid.).
31 It is widely assumed that the Lateen sail was actually adopted from the Arab navigators who
used it in the Indian Ocean and brought to the Mediterranean in the ninth century (see, e.g.,
Шумовский 2010 ).
Industrial Revolution and Its Three Phases
56
All this prepared the technical possibilities for great discoveries, especially after
the famous Portuguese Prince Henry the Navigator combined the achievements of
Spanish shipbuilders and Arab constructors of dhows, producing the famous caravel—
the fi rst complex rigged ship (Russell 2000 ; Diffi e and Winius 1977 ).
It should be noted that many innovations that emerged in those and the following
centuries in Europe took place at different times in China and other Asian countries,
some were borrowed directly from there (see above), while other technological
changes were invented in Europe (e.g., wheelbarrows and gateways, pig iron, and
even matches). The difference, however, was the fact that in Europe, all these gener-
ated the technological revolution, and in Asia this did not happen.
Technological Changes During the Early Phase of the Industrial Revolution This
phase continued for more than a century and a half: it started in the second third of
the fi fteenth century and continued till the late sixteenth century. In the second third
of the fi fteenth century an economic expansion started in Western Europe (Бакс
1986 ; Ястребицкая 1993a : 74; Эйххорн и др 1977; Сванидзе 1990 : 412; Nef
1987 ; Postan 1987 ; Jones 1987b ), and it grew into the early phase of the Industrial
Revolution. The Great Geographical Discoveries made those changes irreversible.
During this period (the so-called “long sixteenth century”), the capitalist world-
economy developed (Braudel 1973 ; Wallerstein 1974 , 1980, 1988; Arrighi 1994 ).
Mechanization spread wider and wider through various modifi cations of the
water wheel. It (as well as wind turbines, but to a lesser extent) was already used in
a variety of industries (Lilley 1966 ; Lucas 2005 ): in fulleries; for grinding oak bark,
paint, woad (a plant that was used for the production of the blue dye); in metallurgy
(e.g., to secure the air supply), in paper mills, in spinning machines, in sawmills,
etc. This dramatic increase of the capacity of machines used for the production of
metal parts and to increase the productivity of labor. This contributed to the emer-
gence of metal-cutting lathes for the manufacture of axles, shafts, and propellers
(Загорский 1960 : 33), which greatly improved opportunities for the development
of mechanical engineering (see also Hellemans and Bunch 1988 ). A signifi cant
impetus for technological development was provided (as we have already men-
tioned) by the change in the nature of European wars. The invention and diffusion
of fi rearms increased sharply the demand for metals, which stimulated greatly the
development of new methods for their production and processing (blast furnaces,
power hammer, rolling mills, tools for pulling wire and cutting metal and so on
(Cameron 1989 ; Загорский and Загорская 1989 ; Ламан 1989 ; King 2005 ; Nef
1987 ). The invention of the printing press in the fi fteenth century created a new
typographic industry (Heaton 1948 ; Tylecote 2002 ; Man 2002 ; King 2005 ). By the
beginning of the sixteenth century in some places, especially in the mining opera-
tions, it became possible to speak of a primary, albeit primitive, industry (see, for
example, Бакс 1986 : 199; Lilley 1976 : 189–190; Миткевич 1936 : 403–404; Nef
1987 ). One could also observe the formation of general theoretical concepts of the
structure of mechanisms, and even an idea of perpetual motion (see, for example,
Орд-Хьюм 1980 ).
2 Great Divergence and the Rise of the West
57
The Industrial Revolution as a Process of Intensive Economy of Labor The
Industrial Revolution in the Early Modern Period should be seen as a phenomenon
of a much broader plan, rather than just a change in the technical fi eld. Moreover,
despite the important and notable technical progress, at the initial phase of the
Industrial Revolution, changes in technology (as regards their results and conse-
quences) were not the most signifi cant . The most relevant consequences were the
ones caused by the transformations in the maritime business, which led to the geo-
graphical discoveries, as well as changes in continental and intercontinental trade
(see, for example, Braudel 1973 ). In the Early Modern Period ( c . 1500–1800) one
could observe 1–1.2 % average annual growth of the tonnage of commercial mari-
time operations. These changes gave rise to the formation of the global World
System and the impetus for a breakthrough of the maritime countries of Europe—
especially the North-Western Europe (O’Rourke et al. 2010 ).
But we point out these changes in technology as the most compelling evidence
in support of the statement that the Industrial Revolution (its initial phase) began in
the very beginning of the Early Modern Period and not in the eighteenth century
(when the Industrial Revolution entered its fi nal phase). For if the whole Industrial
Revolution was associated with the replacement of manual labor by machines, then
retrospectively technology is of particular importance.
If we speak of the Industrial Revolution as a process that started in the late fi f-
teenth century and continued till the early nineteenth century, then the common
feature of the whole process can be identifi ed as the continuous economy of human
labor (and energy of animal work) in various fi elds and forms . Already at the
initial phase of the Industrial Revolution, in addition to improving the productivity
of physical labor due to mechanization, specialization, rationalization, there was an
economy of biological energy and skilled labor by replacing it with simple labor,
both in industry and in commerce, accounting, and other areas. One can only
imagine how many hours of scribes’ work was saved by the printing press, or how
much the development of credit reduced the cost of transportation and protection of
money.
Middle Phase of the Industrial Revolution
Some Processes that were Important for Divergence The formation in different
locations of specifi c types of businesses (the colonial economy of Spain, the manufac-
tories of Italy and Flanders, the mechanization of mining in Southern Germany and
Bohemia, the trade and shipbuilding industry in the Netherlands, and the agro-
industrial complex of England) should be noted as a very important characteristic of
the initial phase of the Industrial Revolution. Note also that all of these complexes
served the whole of Europe (and even the World System) as a major part of their out-
put was exported. For example, half of all ships built in the Netherlands were exported,
whereas in the fi rst half of the seventeenth century this country itself had about 15
thousand ships (Ханке 1976 : 106, 109; see also Israel 1995 ; Roekholt 2004 ).
Industrial Revolution and Its Three Phases
58
Innovations and achievements accumulated within such sectors gradually dif-
fused through a major part of Western Europe. It is not surprising that, due to the
mutual borrowing of innovations, in the Western European countries the process of
diffusion of new forms of production proceeded along with their constant improve-
ment, but at very different rates. A more complex integrated early capitalist
commodity economy with special sectors in industry, mining, fi sheries, agriculture,
navigation, trade and colonial economy was gradually emerging. This was an
important point which increased divergence. In fact, one can speak of a constant
strengthening of the exploitation by the West of its world-system periphery (Africa
and America) and the emergence of new features in this process.
In the seventeenth and eighteenth centuries, due to the devaluation of silver and
attempts by Far Eastern countries to achieve their seclusion from the European
infl uence, there took place the processes of more active penetration of Western trad-
ing companies into the Eastern trade and the beginning of direct subordination of
certain Asian territories (and at the same time the growth of the colonial economy,
trade and the slave trade in Africa (Rich 1980 ; Masefi eld 1980 ).
Of course, the rise of colonialism could not cause the machine phase of the
Industrial Revolution by itself, but it amplifi ed the process of the accumulation of
capital and enhanced its investment. According to some estimates, the outfl ow and
the transfer of resources from India to Britain for two or three decades before and
during the “industrial leap” could provide (in the case of productive application),
respectively, almost 20–25 % of the net domestic investment of Britain (Мельянцев
1996 : 113).
It is estimated that in the second half of the eighteenth century, the net transfer of
resources to Europe from Latin America (excluding smuggling) reached approxi-
mately 3 % of their GDP, and for such large countries like India and Indonesia it was
0.6–1.2 % of GDP (Braudel 1985 ; Chaunu 1984 : 273; Maddison 1989 : 465;
Мельянцев 1996 : 126). We note, in passing, that during the period in question the
most developed countries of Asia (unlike Europe) did not get any major benefi ts
from their peripheries.
Growth of Industry and Non-agricultural Sector: The English Agro-industrial
Complex In the Early Modern Period one could observe in Europe the formation of
a new industrial sector, which was already radically different from the traditional
pre- Industrial manual craft production. In general, it was still based on manual
labor, although for ancillary and secondary operations mechanization was applied
more and more widely. The seventeenth century and the fi rst third of the eighteenth
century was a period of growth and development of new sectors of the economy
until those sectors became leading in some West European societies (the Netherlands
and Britain; see below). It should be noted, incidentally, that the meaning of the
concept of the Industrial Revolution is the transition from the situation when the
dominant sector of the economy was agriculture to the situation when the dominant
role was played by industry and other related sectors, especially trade or the com-
mercial sector and agricultural sectors producing raw materials for industry. This
transition began to take place from the beginning of the Early Modern Period, and
2 Great Divergence and the Rise of the West
59
even earlier, but in the seventeenth century it had already produced very tangible
results in the Netherlands, where most of the population was employed in industry,
commerce, commercial fi shing, and the service sector, and in Britain where a huge
part of the population in one way or another was connected with either woolen tex-
tile production, or with other industrial and commercial enterprises (see, e.g.,
Dennison and Simpson 2010 : 149).
The diffusion of scattered manufactories and the growth of marketability led to
the fact that a very large proportion of people became involved in the process of
production of industrial products (Лавровский 1973 : 248; Лавровский and Барг
1958 : 64; see also Wilson 1980 ; Аллен 2014 : 36, 37). Of course, such agro-indus-
trial complexes emerged in some other countries (e.g., in India, where great quanti-
ties of fabrics were manufactured for domestic consumption and for export, and in
China, where silk exports were very large throughout history and in some European
countries, where fl ax was produced, etc.). But almost nowhere in the world could
we fi nd such a large percentage of the population employed in the agro-industrial
sector as in the English woolen industry. Hence, the growth of the non-agricultural
sector was observed not only in the cities, in commerce, navigation, fi sheries, etc.,
but also among actual villagers; as a result what could be called the agro-industrial
sector (albeit with a persistent predominance of manual labor in the scattered manu-
factories) emerged.
Thus, according to R. Allen (Allen 2009 ), in England villagers engaged in non-
agricultural sectors even in 1500 accounted for 18 %, and in 1750 they already
accounted for 32 % of total population, and in general, urban residents and non-
agricultural workers in 1500 constituted 25 % of all the workforce, and by 1750 this
fi gure grew to 55 %.
32
Growth of Volumes In the seventeenth century and in the fi rst two thirds of the
eighteenth century, one could observe in Europe a process of diffusion of new forms
of production with their constant improvement. There were a lot of qualitative
changes, important improving inventions and discoveries, but as regards their inno-
vative potential, they were less important than the changes in the initial phase.
The Europeans began to extract such great amounts of gold and silver that in the
late sixteenth and early seventeenth century, that caused a sharp infl ation in many
countries in Europe and Asia, the so-called “price revolution” (on some of its con-
sequences see, for example: Литаврина 1972 ; Barkan and McCarthy 1975 ;
Goldstone 1988 ; Fisher 1989 ; North 1994 ; Braudel and Spooner 1980 ). Silver
mines in Germany, Bohemia, and Hungary that had been of great importance in the
earlier period, fell into decay under the infl uence of competition on the part of
the American silver (Бакс 1986 , Braudel and Spooner 1980 ; Tylecote 2002 ).
32 Nevertheless, one should note that the non-farm sector of the world’s gross volume was primarily
concentrated in Asia. According to Allen ( 2009 ), in 1750 the bulk of craft production was concen-
trated in China (33 % of global output) and the Indian subcontinent (25 %). This has two important
implications: (1) The main amount of both general GDP and industrial GDP was concentrated
mostly in Asian countries. (2) Therefore, as we have pointed out, the primary divergence was at the
same time a catching up convergence.
Industrial Revolution and Its Three Phases
60
Monetary economy was developing very fast, cash was increasingly displaced from
the large-scale commercial operations; one could observe the formation of banks,
stock exchanges and insurance companies. Never before trade was conducted at such
a huge spatial scale, never before such large areas were dependent on industry, and
trade in industrial products had never been greater. First industrial crises happened in
relation to changes in technology, discovery of more powerful or cheaper natural
resources. Machines were becoming more and more widely-used. Never before one
could fi nd such a high concentration of machines and such high labor productivity in
industry. Some new industries demonstrated very impressive growth rates and produc-
tion volumes. For example, in England in 1640 (in comparison with 1540) the produc-
tion of lead, tin, copper, salt increased by 6–8 times, whereas the production of iron
tripled (Лавровский and Барг 1958 : 63; see also Tylecote 2002 ; Allen 2009 ).
The navigation technologies underwent tremendous changes, which helped to
develop strong trade fl ows. The development proceeded in the direction of continu-
ous improvement of ship design, which, as already mentioned above, can be consid-
ered rather effi cient machines that were outperforming any machines on the ground.
In the fi fteenth century, vessels with carrying capacity from 50 to 200 ton prevailed
in Europe, whereas in the sixteenth century, one could observe the emergence of
giant ships with capacity from 500 to 2,000 tons (Чистозвонов 1991 : 15). The
development of navigation technologies also resulted in the signifi cant growth of
fi sh production (see Braudel 1981 –1984; Чистозвонов 1978 : 147; Зингер 1981 :
42–43; Kehoe 1992 : 243). In fact, we can speak about the formation of a completely
unique marine commercial and industrial sector in the Netherlands, including the
production of thousands of ships per year, port and transport facilities (with fl oating
docks), fi shing and hunting large marine animals, long-distance trade and the main-
tenance of factories, and all this was closely linked to the fi nancial sector (Boxer
1965 ; Jones 1996 ; de Vries and van der Woude 1997 ; Rietbergen 2002 ; Israel 1995 ;
Roekholt 2004 ; Allen 2011 ).
Some Preconditions and Precursors of the Started Industrial
Breakthrough
Defi cit of Wood and the Started Transition to a New Energy Type The seventeenth
century and the fi rst two thirds of the eighteenth century was a period when the
scope and scale of the industrial production principle
33 exceeded everything that had
been observed earlier. As a result, on the one hand, it was the time of extensive
development, when the use of newly discovered or put into circulation resources
was constantly expanding. On the other hand, such an intense consumption of con-
ventional resources led to their defi cit in some countries. In particular, the powerful
fl eets and metallurgy required immense amount of wood. The iron production with
charcoal in many cases was beginning to slow down due to the lack of fuel. The
33 For more details on the “production principle” notion see Grinin ( 2007 , 2012a ) and Grinin and
Grinin ( 2013 ).
2 Great Divergence and the Rise of the West
61
production of iron pig required 20–30 large trees per ton ( Черноусов etal. 2005:
320). Therefore, in the late seventeenth century, exports of ferrous metals from
Sweden reached enormous volumes for that time, that is 30,000 tons (Cameron
1989 ; Aström 1963 ; Hall 1980 ; Wilson 1980 ). Shipbuilding required timber at an
ever increasing scale. The construction of a military sailing ship took up to 400 oak
trees. The Invincible Armada cost Spain more than half a million century-old trees
(Толстихин 1981 : 36). This was most noticeable in the Netherlands and England
that were forced to buy wood in large quantities. Thus, half of the physical import
of England in the late seventeenth century was wood (Cameron 1989 ). This situa-
tion led to the expansion of trade and such countries and regions, as Poland, the
Baltic States, Sweden, Russia and North America got strongly involved in the inter-
national division of labor. Several researchers, starting with the work of John Nef
( 1932 ; see also Hatcher 1993 ) call this situation a “timber crisis”, although other
authors (Flinn 1959 , Hammersley 1957 ) do not agree with this defi nition, and the
fi ndings of a specifi c study of this issue, conducted by Allen “call into question the
theory of the timber crisis as a European-wide phenomenon. There were some tim-
ber crises—London was a preeminent example and there are important, analogous
situations in the Low Countries. These crises were associated with rapid urban
expansion in the early modern period. Elsewhere, however, the price evidence is
inconsistent with the timber crisis as a general feature of economic life” (Allen
2003 : 470–471).
However, Allen acknowledges a certain shortage of wood in England during the
Industrial Revolution (Allen 2003 , 2009 ). And it contributed to a widespread adop-
tion of new types of raw materials and energy sources, including a special role
played by coal. It is not surprising that from 1560 to 1680, coal mining in England
increased by 14 times, reaching 3 million tons per year (Лавровский and Барг
1958 : 63, see also Allen 2009 ).
The First Economic Crises of the Modern Type Indirect evidence suggesting the
emergence of a fundamentally new type of economy (with a peculiar role of com-
plex trade, fi nancial sector and industry) is provided by the data on the fi rst stock
exchange and trade crises (Вирт 1877 ; Hansen 1951 ; Braudel and Spooner 1980;
Craig and Garcia-Iglesias 2010 ; Гринин and Коротаев 2009в; Гринин 2012 ). It is
important to note that they affected the European economy, and were not only
restricted to the national level. In the nineteenth century, the researchers of medium-
term cycles and crises often paid considerable attention to the crises of the eigh-
teenth century fi nding them very instructive, and most importantly—to a large
extent similar to the ones they witnessed themselves (see, for example, Вирт 1877 ).
Indeed, the similarities (excitement, excessive lending, unexpected spectacular
bankruptcies, credit crunch, and panic) are rather obvious. And it is no coincidence
that a number of elements necessary for the emergence of modern economic cycles
(of course, except for the system of machine manufacturing that dramatically
increased the supply of goods to the market) were already available at that time.
The imperative of constant expansion of production had already been formed.
Therefore, the cyclicality inherent in the industrial production principle was already
rather noticeable. The role of credit had also increased. And since the medium-term
Industrial Revolution and Its Three Phases
62
cycles are strongly connected to fl uctuations in credit, then a prototype of medium-
term cycles (with a characteristic period of about 10 years) could be already traced
in the eighteenth century, especially in its second half (Hansen 1951 ; Вирт 1877 ;
Braudel 1973 ; Braudel, Spooner 2008; Craig and Garcia-Iglesias 2010 ).
Emergence of Free Working Hands Changes in agriculture in Europe, the growth of
marketability and a tendency to the formation of modern farming are well known,
so we do not dwell on them (see, e.g., Trevelyan 1978 ; Goldstone 1984 ; Overton
1996 ; Apostolides et al. 2008 ). However, we fully agree with Jack Goldstone’ opin-
ion that advances and changes in British agriculture observed in the Early Modern
Period can hardly be called agrarian revolution, as they were not accompanied by a
transition to a fundamentally different labor productivity (Goldstone 2009a : 29–32).
Between 1600 and 1750, labor productivity noticeably increased approximately
twofold (see Dennison and Simpson 2010 : 150, Table 6.2); however, one can hardly
compare it with the breakthrough in labor productivity in industry during the
Industrial Revolution. On the other hand, one could observe a rather specifi c and in
relative terms extremely large-scale agro-industrial sector; and secondly, it is very
important that the increase in productivity and a reduction in the number of hired
farm workers (Goldstone 2009a : 30–32) gave rise to the growth of non-agricultural
sector in England. On the whole, in the seventeenth and eighteenth centuries, the
development of agriculture in Britain was in the general direction of the growing
labor-saving, which ultimately promoted the Industrial Revolution by helping to
provide the growing non-agricultural population with food and increasing the export
earnings of the country, as well as by reducing the number of agricultural workers
by one-third (Overton 1996 : 82; Goldstone 2009a : 30–32, see also Hill 1955 : Chap. 3 ).
Extra working hands emerged in the country; they were not needed in agriculture,
and they found their application in industry. According to the calculations carried
out already in the nineteenth century by Gibbins (Гиббинс 1898 : 147), in the fi rst
half of the eighteenth century in Britain, the pure product per person employed in
industry was ₤9 per year, and in agriculture it was ₤18.3 per year. Consequently,
such a situation could (in addition to the level of wages) stimulate the use of
machines, because without increasing productivity in industry investment in it
turned out to be less profi table than in agriculture.
Final Phase of the Industrial Revolution
The fi nal phase of the Industrial Revolution started in the second third of the
eighteenth century in Britain. It resulted in the emergence of machine industry and
transition to steam engines. Since the events of this technological breakthrough are
well known, we shall not dwell in detail on them. Some details will be discussed in
the following paragraphs. We have already said that the essence of the Industrial
Revolution can be defi ned as labor-saving. But the fi nal phase is particularly remark-
able as it is associated with the replacement of manual labor by machines.
The fastest process of mechanization started in the 1760s and the 1770s, that is,
2 Great Divergence and the Rise of the West
63
since the invention of spinning wheel “Jenny” by James Hargreaves and the inven-
tion of the apparatus for the mechanical fabrication of yarn by Richard Arkwright.
Arkwright created the fi rst spinning mill. Subsequently Arkwright’s machine was
named waterframe . At early stages both machines complemented each other. One
should also note that Hargreaves was subjected to harassment for his invention by
fellow craftsmen, and Arkwright had to defend his rights in court. Positive decision
in his favor opened a wide path for the Industrial Revolution. In the 1770s, Arkwright
managed to create a system of machine production of cotton fabric, capable of car-
rying out all the successive operations of this industry, however, with a very impor-
tant exception of weaving. But then this problem was resolved either (e.g., Mantoux
1929 ; Allen 2009 ). As a result, from 1780 to 1820, the output in the cotton industry
increased by more than 16 times (Шемякин 1978 : 51). The time of the fi nalization
of the industrial revolution in the cotton industry may be connected with the cre-
ation by Richard Roberts of a rather sophisticated mechanical loom in 1822. One
can, however, take as such a fi nal point James Smith’s invention (in 1834) of a
machine that made almost all operations (except for some minor ones) completely
automatically. Already in 1834, those machines were installed at 60 spinning mills
in Britain with 200,000 spindles (Цейтлин 1940 ), which illustrates rather well the
rapid pace of change in industrial production (see also Payne 1978 ; Allen 2009 ;
North 2002 ).
So, for the fi rst time one could observe the emergence of not just a particular
mechanized sector (in the Early Modern Period the degree of mechanization in the
mining or processing of timber was already high enough (see, for example, Бакс
1986 ; Райерсон 1963 : 207; see also Lucas 2005 ; Nef 1987 ; Hall 1980 ), but such
mechanization became a source of continuous and systematic expansion of the
scope of application of machine technology in one related industry after another .
Machine production opened up entirely new opportunities that allowed connecting
the production with science and education.
The steam engine , which became a symbol of industrialization, had been created
and perfected for over a 150 years, until it became universal. At the beginning of the
eighteenth century, an appliance (the famous Newcomen engine) had been used to
pump out the mine. Later, it was used for blast furnaces, and then to replace the
water wheel in power plants (see Allen 2009 for more details). By the time of the
invention of Watt steam engine, there were more than a hundred of such machines in
the north of England (Lilley 1966 ). After the 1770s, one could observe the start of
industrial use of already rather effective Watt steam engine, which was continuously
improved for a long time. Application of steam engines made people more indepen-
dent from nature, since it became unnecessary to build factories near water. Steam
engines gradually replaced the hydraulic ones. In 1810, there were about fi ve thou-
sand steam engines in Britain, and in 1826 there were 15 thousand (Куликов 1979 :
385; Шемякин 1978 : 51; see also Crafts 2004 ; Kanefsky 1979 ; Allen 2009 ). A pow-
erful industry emerged—that of mechanical engineering. Its development was also
greatly facilitated by the invention (around 1800) of the mechanical slide lathe
(Загорский and Загорская 1989 : 9; Кирилин 1986 : 288; Woodbury 1961 ; Cantrell
and Cookson 2002 ), that is a unit for mounting and moving the tool in the machine.
Industrial Revolution and Its Three Phases
64
Thus, in the fi nal phase of the industrial revolution in Britain, the initial mecha-
nization of textile industry developed in parallel with the invention and
implementation of an effective steam engine (Newcomen’s engine was extremely
ineffi cient), as well as a powerful expansion of coal mining and steel production.
But later, in the early decades of the nineteenth century, these trends merged into a
single stream and made the industrial revolution an irresistible process.
Why Britain?
General Factors There are many explanations why in the nineteenth century West
Europe (and West European offshoots) managed to outrun the other regions of the
world, as well as why the Industrial Revolution took place in Britain. Among the
proposed factors that are relevant for West (or North-West) Europe as a whole one
can mention a successful institutional protection for competitive markets in land,
labor, and intellectual property, respect for property and rule of law (North and
Thomas 1973 ; North 1981 ; North and Weingast 1989 ; De Long and Shleifer 1993 ;
La Porta et al. 1997 ; Acemoglu et al. 2005 ; Greif 2006 ; Ménard and Shirley 2008 ;
North et al. 2009 ; Ferguson 2011 ; Acemoglu and Robinson 2012 ), the dominant
role of merchants and commercial law in European city-states (Dobb 1963b ; Crone
1989 ; De Long and Shleifer 1993 ; Mielants 2007 ; Kuran 2011 ; Tracy 1997 ); multi-
plicity of competing states
34 (Wallerstein 1974 , 1980 ; Mann 1986 ; Jones 1987a , b ;
Crone 1989 ; Sanderson 1995 ; Christian 2004 ; Ferguson 2011 ); peculiar geography
with dispersed portfolio of resources and the high proportion of coastlines (Chirot
1985 , 1986 ; Jones 1987a , b ; Crone 1989 ; Sanderson 1995 , 1999 ), rich coal deposits
(Pomeranz 2000 ; Allen 2009 ), some peculiar climate features (Sanderson 1995 ,
1999 ; Crone 1989 ; Landes 1998 , 2006 ); pre-Industrial European colonial expansion
(Sherrat 1995 ; Pomeranz 2000 ; Christian 2004 ), special North- Western European
family structure (Jones 1987a , b ; Crone 1989 : Chapter 8; Allen 2009 ; De Moor and
van Zanden 2010 ), exceptionally high wages in North-Western Europe (Allen 2009 ;
Rosenthal and Wong 2011 ); development of modern health care (Armengaud 1976 :
28; Ferguson 2011 ), “Industrious Revolution” (Mathias 1979 ; de Vries 1994 , 2008 ),
and also Scientifi c Revolution that preceded the Industrial Revolution, in general
(Crone 1989 : Chapter 8; Inkster 1991 ; Allen 2009 ; Goldstone 2009a ), and the
spread of an industrial Enlightenment, in particular (Mokyr 2002 , 2010 ), Protestant
work ethic
35 (Landes 1998 ; Ferguson 2011 ), or some other features of Western
Christianity (Hall 1985 ; Mann 1986 ), the rise of “bourgeois”, market-based notions
34 This is often connected with the point that Medieval West Europe was very effectively shielded
from the invasions of the external barbarians in general and the nomadic world in particular (e.g.,
Crone 1989 : 150).
35 This thesis is often ascribed to Max Weber. Note, however, that Max Weber himself opposed it very
strongly: “… however, we have no intention whatever of maintaining such a foolish and doctrinaire
thesis as that the spirit of capitalism… could have only arisen as the result of certain effect of the
Reformation, or even that capitalism as an economic system is a creation of the Reformation” (Weber
1930 [1904]: 91). Hence, this thesis should be denoted as “pseudo-Weberian” rather than Weberian.
2 Great Divergence and the Rise of the West
65
of virtue and success (McCloskey 2007 ); and even an accumulated genetic advan-
tage in commercial skills among the urban merchant elite
36 (Clark 2007 ). In the
framework of the present study it is impossible to analyze all those opinions, as this
would require detailed comments regarding most factors mentioned above (note,
however, that we have already made some comment on some of them above).
Generally, we agree with Jack Goldstone when he maintains that “there are so many
of these features, each one identifi ed as the pivotal factor, that it is hard to credit any
of them as being an adequate explanation” (Goldstone 2013 : 56). We rather need a
systemic analysis which we have tried to perform via our interpretation of the causes
of the European breakthrough and the Great Divergence.
The Industrial Revolution as a World-Systemic Phenomenon We believe that
we must fi rst talk about the general features of Europe in comparison with Asia, and
only then look for specifi c features of Britain compared with the rest of Europe. At
the same time, it appears more productive to proceed from the fact that the explosion
of innovation in the late eighteenth century (see Appendix A) was not equal to the
Industrial Revolution, it was only a part of it, the fi nal phase; then the continuity of
the process and its “relay-race” nature (in particular the integration and development
by Britain of many European achievements) become clearer.
Thus, the reasons why the industrial breakthrough of the eighteenth century
started in Britain, are not a separate issue; they are rather a continuation of the ques-
tion about the causes of the Western Europe’s leadership in general. The initial
phase of the industrial revolution began in Southern Europe, Germany and
Flanders,
37 its intermediate phase was undoubtedly linked to the success of the
Netherlands, although in England we see in retrospect a very interesting agro-
industrial complex. Within this approach, it is clear that the fi nal phase of the
Industrial Revolution was to start somewhere in Europe. Therefore, to understand
why it took place in Britain in the second half of the eighteenth century, it is neces-
sary to compare it in the fi rst place with its European neighbors, rather than with
China or Japan. Such a direct comparison is very useful, but it can hardly answer the
question about Britain’s evolutionary advantages, as it had already been an evolu-
tionary advantage of the second (rather than the fi rst) order. To prove this, we have
made a numerical analysis of the level of technical innovation in Europe from the
fi fteenth century to the nineteenth century, in Appendix A. The comparison between
Britain and its European neighbors with respect to this indicator shows rather clearly
that the separation of Britain from other European countries became more or less
distinct only in the second half of the seventeenth century (before that time Britain
tended to lag behind Italy, Germany, France, and the Netherlands). Thus, it is clear
that Britain during the fi rst two centuries of the Industrial Revolution absorbed the
achievements of other European societies, and only later it became capable to start
its own innovative climbing. This British lead gradually increased until it reached its
36 Note that Jack Goldstone ( 2007 ) convincingly proved the irrelevance of this factor.
37 However, later it involved the other European countries due the fast diffusion of innovations, the
formation of the European market and maturing globalization.
Why Britain?
66
apogee in the second half of the eighteenth century. But this advantage could not
continue for too long. Already in the fi rst decades of the nineteenth century, it
became clear that some other European countries and the United States were trying
rather successfully to catch up with England, and in the second half of the nine-
teenth century (from the 1860s) England ceased to be a leader and its role in inven-
tion decreased from decade to decade (see Appendix A for more details).
In other words, the industrial revolution should be regarded as a global phenom-
enon one of whose phases began in Britain. Obviously, since the industrial revolu-
tion had already started and was going on for two and a half centuries, it was
supposed to end somewhere. Britain had the best conditions for this. But if not
Britain, then after a while it would have been a different place, like Belgium, for
example. This can be compared with the Information Revolution of the 1940s and
1950s. It started in the United States, but hardly anyone doubts that, if not in the
United States, then it would have started later elsewhere.
Thus, if there is something miraculous in the emergence of the Industrial
Revolution in Britain, it is an ordinary “evolutionary miracle”, the miracle of the
transition to a new level of complexity—as a result of the fact that all the necessary
conditions emerged, whereas those conditions had been prepared in different places
and during a long period of time—it is a success that could only happen after previ-
ous partial failures and numerous lessons learned. But the industrial revolution
could develop only because it was a world-systemic phenomenon. It absolutely
needed a wide market, which was, in fact, the whole world.
Indirect evidence of this is the fact that all the British economic crises of the fi rst
half of the nineteenth century, associated primarily with the deterioration of export
opportunities for fabrics, notwithstanding the fact that government and business
owners made enormous efforts for the development of export—up to giving large
credits to potential buyers ( Туган-Барановский 2008[1913]; Tooke 1838 –1857;
Juglar 1889; Tugan-Baranovsky 1954 ; Вирт 1877 ; see also Minsky 2005 ;
Kindleberger and Aliber 2005 ; Payne 1978 ; Craig and Garcia-Iglesias 2010 ; Bulter-
Thomas 1994 ; Гринин and Коротаев 2009в, 2010; Grinin 2012a ). On the other
hand, the development of industrial economy could proceed only with the expan-
sion of food imports from the periphery.
Peculiarities of Britain If we consider the reasons directly attributable to Britain,
then we can immediately point out some political and economic reasons. Britain
benefi ted from the religious wars in Europe in the sixteenth century (because they
stimulated the migration of skilled craftsmen from the continent); it also benefi ted
from the Great Geographical Discoveries, as it received a lot of American silver and
founded its own colonies. The British were able to defeat their main commercial
rival (the Netherlands), which gave a powerful impetus to maritime trade. The basis
for capitalism in Britain was wider than in other countries, because one way or
another it embraced the bulk of the population.
In contrast to the French nobility, the English gentry never considered commerce
as a sort of defamatory occupation and actively participated in it. Everywhere In the
Middle Ages ownership of land and/or service to a sovereign were more honorable
2 Great Divergence and the Rise of the West
67
than trade, but, for example, the role of trade in China was also belittled ideologi-
cally (Мугрузин 1986 ). Note that among European countries there were signifi cant
differences in the prestige of commercial occupations. In France, for a noble the
occupation “of industry or commerce was considered dishonorable. A nobleman
engaged in it was expelled from his class” (Гордон and Поршнев 1972 : 262),
whereas in England this was quite a decent occupation. Trevelyan ( 1978 ) notes that
England escaped a sharp division into a strictly closed caste of nobility and unprivi-
leged bourgeoisie. And that is one more reason why Britain and not France became
the birthplace of the Industrial Revolution. This resulted in less parasitism of the
ruling class and the growth of investment in British economy (see, for example,
Trevelyan 1978 ). Since the late fi fteenth century, after the introduction of prohibi-
tive export taxes on wool by Henry VII one can speak about rather sound economic
policies of England, which also contributed to the growth of its manufacturing
industry and wealth (see Reinert 2007 for more details).
But in general, it is important to bear in mind that here the reasons were acting
as a complex set that created a chain of events, each link of which determined sub-
sequent links. So, how important was the emigration of Huguenot craftsmen (spe-
cializing in cotton manufacturing) from France to England in the late seventeenth
century?
38 How important was the point that the British cotton industry developed
under the auspices of prohibitive tariffs and outright bans on the import of Indian
printed fabrics?
Note that these were woolen and silk fabric traders who were initiators of the
introduction of such bans (Mantoux 1929 ; Чичеров 1965 ; Allen 2009 ). Of course,
not only this eventuality was required to initiate the industrial breakthrough. And
yet, the British textile industry rise could hardly have happened, if the import of
Indian fabrics had not been banned.
39
But this was an ordinary protectionist measure (a lot of them were practiced in
Mercantilist Europe of that time). On the other hand, if in England loopholes had
been left for the production of its own cotton fabrics (as this happened in France as
a result of Colbert’s prohibition in 1681), the British cotton textile industry could
not have risen either. Meanwhile, we believe it is very remarkable that the Industrial
Revolution began in England in a new (cotton) industry, as in the old (wool) industry,
it could not start because of the conservatism of the organization of the latter
(Цейтлин 1940 ; Шейпак 2009 ).
Thus, in explaining the reasons why Britain was the birthplace of the Industrial
Revolution machine phase, we should take into account the combination of many
historical contingencies and peculiar features of the British economy. Of course,
38 The fi rst wave of this migration was caused by the ban of cotton fabric production in France,
whereas the second wave was produced by the abolition of the Edict of Nantes.
39 As has already been mentioned, the importation of such fabrics increased enormously. Hence, it
is not surprising that the woolen and silk traders struggled to impose such restrictions, whereas the
process of introduction and raising the import customs began already since 1660; however, the
importation of the Indian fabrics continued to grow (Чичеров 1965 : 141; Allen 2009 ), which
necessitated the introduction of the total ban of those imports.
Why Britain?
68
they should be regarded as a system, because, without even a single element, the
total could be signifi cantly different. Allen is right when he stresses that to under-
stand the causes of technological breakthroughs we need to study closer the techno-
logical development and not get carried away with talk of constitutions (Allen
2009 ), although here he underestimates the general conditions of development,
without which there can be no technological breakthrough. But on the other hand,
among the many reasons there are those without which the industrial breakthrough
clearly could not have happened. And we will pay our special attention to them.
Peculiarities of Natural Conditions of Britain and the Role of Steam Power in
the Industrial Revolution Sure, the important role was played by the presence of
large reserves of coal in England and lower prices for it (a number of researchers
draw attention to this point, including Pomeranz 2000 ; Allen 2009 ; Goldstone
2009a ).
It is diffi cult to overestimate the role of coal, as well as the one of emergence of
effi cient steam engines. However, it is recognized that the Industrial Revolution
began in the textile industry and in principle it could develop for a long period of
time without coal. In 1750, in Britain, according to some sources, hydraulic motors
used in industry had a total capacity of about 65 thousand horsepower (Goldstone
2009a : 164), is not so little to start the industrial breakthrough. For comparison, one
may note that even in 1850 the total capacity of steam engines used in the British
cotton plants was only 71 thousand horsepower ( Lilley 1966 ). The fi rst steam
engine in the cotton industry appeared only in 1785 (Allen 2009 ), when the mecha-
nization of the industry was in full swing. Even by 1800, the number of steam
engines was almost four times less than the number of hydraulic ones (Allen 2009 ),
and the bulk of the steam engines was used in mining and other (non-textile) indus-
tries.
40 On the other hand, without the steam engine and coal, the momentum of the
Industrial Revolution, which began in the cotton industry, would have been much
weaker; the same is true as regards opportunities to borrow its technologies, not to
mention the fact that the revolution in transport might just not have happened. You
can draw a parallel with the start of the Industrial Revolution in Europe in the last
third of the fi fteenth century. That rise had nothing to do with the Great Geographical
Discoveries, but without them it would be much weaker and could die out soon.
We must agree with the main idea of Allen, that the appearance of the steam
engine, the spinning and weaving machine was explained by the specifi c economic
conditions of Britain (cheap coal and expensive labor in particular). This is precisely
what happens: a global breakthrough occurs under specifi c conditions of a particu-
lar time and location.
However, one can hardly agree with his statement that the British success was
based on the technological innovations adapted to the country’s situation and use-
less beyond its borders (Allen 2009 ). Actually, further in his description he contra-
dicts this statement himself. The introduction of new technologies was delayed in
40 Even in 1850 the total power of the hydraulic engines in the cotton industry was 11,000 hp or
approximately 13 % of the total power of all the engines (Lilley 1966 ).
2 Great Divergence and the Rise of the West
69
Europe not due to the lack of cheap coal there and not due to cheap labour force
(actually, it was not that cheap) but due to complicated social circumstances (includ-
ing guild restrictions which were absent in Britain but were strong in Germany and
other countries), rather narrow sale market and an infl ow of English goods which
were diffi cult to compete with as well as the protection of works secrets in Britain
(Allen himself gives a number of examples of prosecution of those who tried to
export technologies; see Allen 2009 ). If the technologies were useless in Europe
why protect them and forbid the qualifi ed workers to leave the country? Also the
development of cotton industry proceeded at a rather fast pace. At the same time, as
we will see further, the cotton industry also developed rather fast in the USA
although without introduction of the steam engine. Besides, in spheres where tech-
nologies were really needed, as in transportation, the expensive coal was not an
issue, after all, the steamer was invented in the USA. Meanwhile, in Europe the
railway construction developed rather quickly and did not lag behind Britain. This
supports the idea that the English machine revolution was a part of the long European
industrial revolution. Thus, although the industrial revolution had started in Britain
which in certain respects surpassed other European countries, the latter were quite
prepared to quickly adopt and develop technologies.
Development of Technologies, Population Growth, and Living Standards Some
researchers regard the exceptionally high wages in northwestern Europe as a very
important factor (Allen 2009 ; Rosenthal and Wong 2011 ; Ferguson 2011 ). Relatively
high wages (see Allen 2009 for more details) made investment in labor- saving tech-
nologies rather profi table.
As research by Allen, Clark and their colleagues (Allen 2001 , 2007 , 2009 , 2011 ;
Allen et al. 2005a , b , 2011 ; Clark 2001 , 2003 , 2005 , 2007 ) suggests, in the second
half of the eighteenth century, real wages in Britain and the Netherlands were the
highest both in Europe and in the world (but by the early nineteenth century, the
Dutch real wages fell slightly below the British). In the fi fteenth century, wages in
Europe were about equally high in different countries, but then in countries such as
Austria and Italy their very marked decline took place. In Britain and the Netherlands
in 1725–1800 they also somewhat declined, but not as much as in the rest of the
world, and at the beginning of the nineteenth century, real wages in Britain (although
they did not exceed the maximum of the fi fteenth century) were the highest of all the
countries, for which have necessary data at our disposal; while in nominal terms (in
grams of silver without taking into account purchasing power parities) average
wages in London were in 1800, almost one and a half times higher than in
Amsterdam, and several times as high as in Vienna, Florence, Beijing or Delhi.
They have shown that the assertion that the British workers of the Industrial
Revolution era were very poor, did not correspond to reality; at the same time in
most European countries (including Italy, Austria and Germany) the level of wages
in the eighteenth century was quite comparable to the salaries in advanced areas of
China and India. However, all recognize the fact that until the nineteenth century,
wages and in England did not beat up the fi fteenth century maximum.
Why Britain?
70
As Goldstone notes, “the single most important fact is that there is no evidence
of any signifi cant rise in material living standards for average workers in any societ-
ies before 1830” (Goldstone 2007 : 208); however, on the other hand, “it is certainly
true that Britain had higher wages and lower capital costs than France, and even
more so than China” (Goldstone 2011 ).
41
It is quite obvious that, although the labor price in England at the end of the
eighteenth century did not exceed the maximum of the fi fteenth century, still labor
there by world standards, was very expensive, which facilitated its replacement with
machines. In addition, it is well known that after the invention of Kay’s loom in
1733 spinning technologies were not developing as fast as the weaving technolo-
gies, which resulted in a high demand for yarn. And the constant attempts to invent
productive spinning machines were really caused by the defi cit of yarn and yarn
spinners’ labor (Mantoux 1929 ; Цейтлин 1940 ).
Legal System and Patent Law At the end of this section we will discuss the
point, which is rarely discussed among the followers of the California School.
42 It
is associated with an explanation of an indisputable fact, namely the spirit of inno-
vation in Britain that increased dramatically in the seventeenth and eighteenth cen-
turies, (see, for example, Goldstone 2009a ). The reasons for this cannot be reduced
to a single cause; but among a number of such reasons, it is important not to forget
about the institute of intellectual property that was developing in Europe, and, espe-
cially, in Britain. More specifi cally, it is a question of the patent law, in which
England was in the lead as early as in the seventeenth century, although the begin-
ning of the technical patenting was laid much earlier. Note that no state will initiate
special acts concerning the rights to technical invention, if there are not enough
cases of actual inventions, if there are not enough legal disputes over the right for
the use of such inventions. Britain, of course, often had problems with the protec-
tion of patents from perpetrators of inventors’ rights since the adoption of these acts
(Dutton 1984 ; Khan and Sokoloff 1998 ), but these were already fundamentally
different legal cases in comparison with the earlier situation when the rights of
inventors were not protected at all (see, e.g., Dutton 1984 ; MacLeod 1988 ; MacLeod
and Nuvolari 2007).
There are discussions around how those laws contributed to the rise of innovative
activities (see Mokyr 2002 ; MacLeod 2009 for a review). Several authors believe
that the importance of patents for economic development in general and for British
industrialization in particular was really signifi cant (North and Thomas 1973 :
41 Bishnupriya Gupta and Debin Ma arrive at rather similar conclusions: “Chinese real wages were
far behind those in London or Amsterdam—only about 30–40 % of earning levels there in terms of
purchasing power… Unskilled laborers in the major cities of China and Japan—poor as they
were—had roughly the same standard of living as their counterparts in central and southern Europe
for the larger part of the eighteenth century” (Gupta and Ma 2010 : 272), whereas Mokyr notes that
“high real wages may simply have refl ected higher output per worker, not a cost disadvantage to
labor utilization that was absent elsewhere” (Mokyr 2010 : 270–271).
42 However, a very much attention is paid to this point by the institutionalist economic historians
(North and Thomas 1973 : 155–156; North 1981 : 164–166; Chang 2001 ).
2 Great Divergence and the Rise of the West
71
pp. 155–156; also North 1981 : 164–166, Chang 2001 ). Objections to their signifi -
cant infl uence are reduced to the fact that the actual inventors who created the basis
for the industrial breakthrough in the second half of the eighteenth century and the
early nineteenth century tended to get very little; they did not become very rich
men, and sometimes they got almost nothing for their inventions (see, for example,
Clark 2007 : 234–238). But even in the USA today, the share of income from inven-
tions retained by the inventor is only slightly more than 2 % (Mokyr and Foth 2010 ).
The second objection is that the patent laws were rather awkward and to obtain a
patent was quite expensive, so they were not so effective to signifi cantly stimulate
innovators and reliably protect their rights (MacLeod and Nuvolari 2007 ). However,
it is clear that medieval laws, although they were less effective than today, in gen-
eral, were quite consistent with the general level of the legal system, the rhythm of
life and the number of inventions (which was not comparable to the present-day
number at all). The third objection is that the law on monopolies was enacted in the
early seventeenth century, and the fi nal phase of the industrial revolution began only
a century and a half later, which apparently implies the absence of a direct connec-
tion between the events. On the other hand, for a stream of innovations to emerge it
was necessary that a need to obtain patents for inventions (together with a hope to
obtain some profi t for one’s invention) would become widespread, and this could
only be achieved in many decades of operation of the respective institution.
History of patent law begins with the privileges of the invention, which appeared
by the end of the Middle Ages, which were issued at the request of the monarch and
were monopolies granted to specifi c persons or companies (but not necessarily to
inventors themselves). Already in the thirteenth and fourteenth centuries so-called
“open letters” ( Letters Patent ) were issued; through them monarchs granted special
privileges to those who implemented new technologies; by the way, it was not nec-
essary to be an actual inventor of such a technology to obtain such a letter. Often
these privileges were given to immigrants. Such a person received the exclusive
right to use a respective technology for a period suffi cient to enable the assimilation
of this technology (see, for example, Михайлов 2007 ). Examples of such docu-
ments can be found in Hulme 1909 . It is believed that the world’s fi rst patent was
issued in 1421 by the City Government of Florence in the name of Filippo
Brunelleschi, who invented the ship’s crane. Another very old patent was granted by
the English King Henry VI in 1449 to a native of Flanders John for the manufacture
of stained glass for the windows of Eton College (Близнец 2001 ). But these were
still Letters Patent .
Patents in the modern sense of the word appeared in the late fi fteenth century in
the Venetian Republic (Machlup and Penrose 1950 , Мокир 2012 : 74). In 1474, a
decree was issued, according to which Venetians were to inform the Republican
authorities of the inventions implemented in practice. The patent term was 10 years;
it was issued by the Doge on the recommendation of the Republican Council. One
of the purposes of these privileges was the liberation of the inventor of the control
of the guilds. It is known that in 1594, Galileo received a patent of Venice for a new
design of the water pump. Thus, the patent laws emerged in different countries of
Europe in the late Middle Ages and reached a high enough level in the fi fteenth and
Why Britain?
72
sixteenth centuries in the Italian states. However, in England it continued to develop.
Experts in the fi eld of English law (including the famous W. S. Holdsworth, the
author of the 17 volume History of English Law ) believe that the moment from
which originated the current patent law is the sixteenth century [during the reign of
Henry VIII, or a little later (see, for example, Моллаева 1993 )]. Open letters were
replaced by new documents—royal charters Crown negotiating (Hulme 1909 ). 43
These charters were widely used to attract skilled foreigners, and the legal form
itself is most likely to have been borrowed by Tudors (Hulme 1909 ). However, the
development of patent law in Britain continued. In 1623, in Britain the “Statute of
Monopolies” was published, according to which patents were granted for projects
of new inventions, by which property and copyright of the inventor in various fi elds
were protected by a patent or charter (Орд-Хьюм 1980 : 205–206; Mokyr 2002 ).
It became the most famous document in the fi eld of the emergent patent law. Since
that time, Britain acted as a leader in this fi eld, and the most signifi cant events in
the fi eld of protection of the rights of inventors occurred in this country. For exam-
ple, in 1711, in Britain for the fi rst time it was required to provide a detailed
description of the invention (Михайлов 2007 ). In other European countries, the
patent law was introduced much later, but in the USA it was one of the fi rst legal
acts adopted in 1790.
Thus, we believe that the development of patent law in Britain was much more
pronounced than in other European countries and that was one of the major reasons
why it was Britain where the fi nal phase of Industrial Revolution took place. From
the history of the patent legislation it is clear that in Europe and in Britain in particu-
lar the urge toward innovations appeared several centuries before the completion of
the industrial revolution, and it was so pronounced that it required the development
of the legal protection of the inventors’ rights. In turn, the emergence of a possibility
to establish one’s right over a certain invention created a positive feedback with the
desire to innovate, making it a major driving force of development. The preparation
of a patent application was not a simple matter, at the same time the patent was a
guarantee that the investment in the invention can be recouped, and, therefore, there
could be hope to fi nd the funds (or investor) for bringing the invention to industrial
use. Thus—due to the patent laws—capitals, hopes for higher profi ts and talents of
inventors (who could potentially be rewarded not only by their monopolies, but also
by entrepreneurs, or even government agencies) were connected. Yes, Clark is right
that many of those who paved the way for the industrial revolution in Britain did not
become rich people (Clark 2007 : 234–238), but still most of them received at least
something. So it is no accident that the history of the fi rst decades of the industrial
breakthrough is associated with the acquisition, purchase and sale of patents as well
43 With the accession of the Tudor dynasty the patent system underwent a characteristic change.
In place of the open letters for the furtherance of the national industry, we now fi nd the Crown
negotiating for the purpose of attracting skilled foreigners (for example, German armourers, Italian
shipwrights and glass-makers, and French iron makers) (Hulme 1909 ). We also see that those
monopolies were not without foreign precedents. Throughout Western Europe the new art of print-
ing was being controlled and regulated by special licenses (Hulme 1909 ).
2 Great Divergence and the Rise of the West
73
as litigation around them. That is why we do not agree with the opinion that the pat-
ent system itself played a minor role in the most innovative times of the British
industrial revolution (Clark 2007 : 238). It cannot be regarded as the main cause of
this revolution (as the increase in the number of innovations was produced by a set
of interrelated factors), but without the presence of the developed patent system, the
industrial revolution could be signifi cantly delayed.
Beginning and Apogee of the Great Divergence
and the Emergence of the Capitalist World-System
Modernization of the West
Completion of the Industrial Revolution in Britain and Its Outcomes Roughly
speaking, we can assume that the industrial revolution in England was completed by
1830.
44 What does this mean? In any case this statement should not be interpreted in
such a way that by that time the main innovations had been already introduced.
Quite the opposite. Completion of the Industrial Revolution means that by this time
the industry, brought to life by the industrial revolution, had become a common
thing, creating a primary model of industrial (machine-) production, which was
spreading to new areas. In Britain one could fi nd tens of thousands of machines and
thousands of steam engines, steam was used in transport and the fi rst railroad (1825)
had been constructed. At the same time, by the early 1840s, the British economy
was still actually a hybrid that organically included new and old forms of produc-
tion. This can be seen in the fact that as late as in 1831, in Britain hand weavers were
more than 80 %, and factory ones constituted less than 20 % [respectively 225 and
50 thousand (Цейтлин 1940 )]. Completion of the Industrial Revolution was also
marked by the fi rst general cyclical economic crises in 1825 and 1837 (Мендельсон
1959 , т. 1; Туган-Барановский 2008; Tugan-Baranovsky 1954 ; Гринин and
Коротаев 2009в; Craig and Garcia- Iglesias 2010 ).
In Gellner’s ( 1984 ) words, after the Industrial Revolution the production forces
started feeling a great insatiable thirst for economic growth. Modern type of eco-
nomic growth developed; according to Kuznets estimates, such a growth implies an
increase in per capita average of not less than a per cent per year. Moreover, accord-
ing to an important conclusion of Kuznets, this quantitative characteristic is achieved
only when absolutely certain qualitative changes in the economy and in society’s
social and political structures are observed (Kuznets 1966 ). Thus, to ensure perma-
nent growth, the British and European society was forced to change. And these
changes were accompanied by intense social confl icts, which also became one of
44 One of the important indicators for it is that in those years the number of steam engines in the
British economy became equal to the number of the hydraulic engines—there were 160 thousand
of each (Crafts 2004 ; Kanefsky 1979 ; Allen 2009 ).
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
74
the important driving forces in the development and Divergence. In general, it
turned out that the movement to the modern trajectory of economic growth and the
need to make changes in order to support this, formed a feedback loop, which ulti-
mately strengthened the process of the Great Divergence.
Paradoxes of Economic Growth Now it is necessary to return to the question of
how industrialization and modern industrial growth, on the one hand, correlate with
rising living standards, on the other. Modern researchers have come to the conclu-
sion that we are dealing with “the paradox of early growth”, which means that
economic growth, expressed as an increase in GDP per capita, only after a few
decades leads to a marked increase in the wages of workers (Pamuk and van Zanden
2010 : 219). Indeed, for quite a long time (at least about two to four decades), the
growth of GDP and wages were in opposition. But in addition to the inequality in
the distribution (Ibid.: 220f.), in our view, it is important to consider another aspect.
The fact is that it is only possible to enter the modern economic growth through the
accelerated accumulation and investment, which can be achieved only through the
decrease in the share of consumption, including actual (absolute or more often rela-
tive) decline of earnings and the overall standard of living of certain segments
(greater use of cheap labor of women and children is one of the forms of such a rela-
tive reduction (Ibid.: 218, 228–229). It is not surprising that industrialization often
actually involved certain lowering in the population standard of living. And only a
gradual increase in the wealth of society or the emergence of other sources of
income could then lead to a real increase in living standards.
This gap between sustained economic growth and the rise of the standard of liv-
ing is associated with the fact that the industrial revolution brought about the so-
called demographic revolution (Armengaud 1976 ; Minghinton 1976 : 85–89; Cipolla
1976 : 15), or rather the fi rst phase of the so-called demographic transition, charac-
terized by a fall in mortality (particularly among children) while maintaining a high
birth rate. As many studies have shown, up to the nineteenth century the humankind
had been trapped in the Malthusian trap, whereby technical progress tended to lead
to small rises in income per capita; however, population thus increased, but living
standards remained the same (Artzrouni and Komlos 1985 ; Komlos and Artzrouni
1990 ; Steinmann et al. 1998 ; Kögel and Prskawetz 2001 ; Clark 2007 ; Goldstone
2007 ; Livi-Bacci 2012 ). The humankind (with some exceptions
45 ) managed to
escape this trap as a result of the global modernization, in general, and the Industrial
Revolution, in particular (see, e.g., Korotayev et al. 2006b , 2011d ; Grinin 2012b ).
This statement, however, needs substantial qualifi cations. Thus, we have come to
the conclusion that in fact the escape (albeit slow) from the Malthusian trap started
in such countries as the Netherlands and England back in the sixteenth century (see
Гринин et al. 2009). On the other hand, even after the industrial revolution in many
countries, the growth in the standard of living was hard and uneven, while for large
segments of population it even deteriorated. The problem was not that the society
45 See, e.g., Zinkina and Korotayev ( 2014 ).
2 Great Divergence and the Rise of the West
75
was technically unable to provide an adequate standard of living, but that the society
was still unable to smooth the resulting strong distortions in the allocation of
resources; and in conditions of the increase of accumulation rates against the back-
ground of the absolute dominance of the private property in absence of a system
of social insurance this inevitably led to the growth of inequality. We call this phe-
nomenon a post-Malthusian or modernization trap (see, e.g., Grinin 2012b ).
The increasing inequality was, incidentally, one of the major causes of the
European revolutions and reform movements, which accelerated the development
of countries and divergence, as they contributed to the formation of new societies
based on the rule of law and tending toward the modern social state, which at that
time was impossible in the East. Thus, the fi rm connection of the modern type of
economic growth with rising standards of living needed not just only a rather sig-
nifi cant period of time, it also needed a rather active social struggle both in violent
(revolutions) and especially non-violent (reforms) ways (which greatly accelerated
the search for sources of productivity growth and mechanization). It is not surpris-
ing that the nineteenth century in Europe was fi lled with such a strong political and
class struggle.
Two Versions of the Final Phase of the Industrial Revolution The British ver-
sion of the completion of the Industrial Revolution (which combined machines and
steam energy) was not the only one. In those countries that had abundant water
resources (in particular, the USA), hydraulic engines competed quite successfully
with the steam engine until the 1860s. Efi mov notes that “Machine and steam is the
formula for the technological revolution in England. Machine and water wheel is
the formula for the fi rst phase of the machine stage of the American capitalism”
(Ефимов 1955 , see also Болховитинов 1983 : 216; Allen 2009 ). In the United
States the industrial revolution in the textile industry occurred almost exclusively on
the basis of the use of water power. American industry (except railroads and steam-
ers) lagged behind the British with respect to the use of steam engines. But it is quite
natural if we recollect that North America has so many rivers whose energy was
cheap and easy to use, and how much more expensive was the production and trans-
portation of coal.
In general, even in 1860, water remained the main source of energy for American
industry, and in the 1850s the advantages of steam and water engines were a subject
of lively debate (Фостер 1955 : 301).
But in the spheres where it was impossible to go without steam, practical
Americans sometimes overtook the British even in the application of steam engines;
and it is not really coincidental that the fi rst steamboat was invented in North
America by Fulton in 1807. Note, incidentally, that the fi rst steamboats were fueled
with cheap (for the USA) wood, thus, expensive (for the USA) coal was not required.
However, though the energy base of the early nineteenth-century North American
industry might have looked primitive at fi rst glance, the overall level of the North
American technology was very high and in many respects superior to the British.
In 1820, the United States had 250 thousand mechanical spinning spindles.
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
76
But the greatest progress was made in the following decade. In 1830, the number of
mechanical spindles was equal to a million, in other words, it increased four times
in 10 years (Цейтлин 1940 : 237). American machines made such a sensation at an
exhibition in Britain in 1851, that British experts were sent to the United States to
study new American machines and to submit reports to the Government.
46
Thus, “the Industrial Revolution is always essentially the same but the method in
which it is accomplished varies according to the different historical conditions”
(Cipolla 1976 : 14).
At the beginning of the fi nal phase of the Industrial Revolution (as is evidenced
by the American version of industrialization), its main component should be identi-
fi ed with the introduction of machines replacing human labor, and the issue of
energy could be settled to a certain point and in different ways. But, of course, the
use of steam power is a more promising and versatile way, so it entrenched every-
where. Hence, steam engines gave to the new principle of production an energy
framework and central element around which to create all the industrial system.
Diffusion of Industrialization: Modernization of the West Specifi c processes
associated with industrialization, can be traced in Europe since the end of the eigh-
teenth century, and by 1830, the growth of industrialization (although not as obvious
as in Britain) was already visible in a number of countries. Then the modernization
of European industry and transport proceeded rather swiftly. The objective of our
study does not include a detailed analysis of the socioeconomic changes in Europe;
at this point it appears suffi cient to say that it was a profound revolution that trans-
formed the continent with societies based on agriculture and with predominantly
rural illiterate populations with high mortality and fertility into an urbanized indus-
trial region densely covered by railroads, telegraph and telephone lines; as a result of
this revolution Europe transformed from a society of peasants and landowners into a
society of the industrial bourgeoisie and proletariat, into a society of literate citizens
with low mortality rates (and, later, low birth rates) (see, for example, Broadberry
and O’Rourke 2010 ). The scale of construction was impressive even by today’s
standards.
47 At the same time, these societies were moving towards democratiza-
tion, equal rights and the gradual (though highly uneven and non-uniform) rise of
living standards.
46 The report quite adequately explained the exceptional success of the Americans in the production
of machinery fi rst of all by the acute shortage of workers in the country, the presence of a huge
domestic market, high level of education and the widespread use of foreign experience
(Болховитинов 1983 : 215–216).
47 It appears appropriate to mention here some quantitative data. The greatest scale of the railway
construction in Europe was observed between 1850 and 1870. During that period, the European
railway network grew from 14 thousand miles up to 65 thousand miles (Mosse 1974 : 23). And in the
decade between 1857 and 1866 the world’s total railway increased by 75,000 km. Between 1860 and
1887, the telegraph network in Europe grew from 126,000 to 652,000 km and worldwide its length
approached 1.5 million km, including 200,000 km of underwater lines (Мендельсон 1959 , т. 2: 194).
2 Great Divergence and the Rise of the West
77
The period from 1830 to the early 1890s is a period of complete victory of
machine production and its powerful diffusion in the West. Whole sectors of light
industry were transformed, but most importantly, heavy industry (coal mining, iron,
steel, rolled metal production) experienced radical transformations, a separate
industry emerged to produce machines for light and heavy engineering. The period
witnessed a huge number of the most important inventions in all fi elds of manufac-
turing, communications, transport and energy—including the new ways of steel
production: Bessemer, open-hearth; invention of the steam hammer by James
Nasmyth (which gave a new impetus to the machine producing industries); the
invention of a number of various rather accurate and convenient machine tools,
electric telegraph, the use of electricity for lighting and other purposes, etc. (Musson
and Robinson 1969 ; Hellemans and Bunch 1988 ; Davis 1998 ; Jonnes 2003 ). The
huge growth of invention activities in this period is vividly demonstrated in Fig. 2.7
and Appendix A. To represent the amount of invention activities during this period
it also appears appropriate to mention the following facts. Between 1851 and 1890,
the United States issued about 470 thousand patents for inventions in various fi elds
of science and technology (Kirkland 1961 ; Джинчарадзе 1973 : 44–45). It was dur-
ing that period the talent of Thomas Edison fl ourished (his brain was assessed in
1920 at $15 billion, counting his contribution to the development of the industry, in
fact, this contribution was even more (Белькинд 1964 : 7).
But the victory of the machine mode of production brought enormous changes
in social and professional terms and meant depriving many millions of people of
their usual activities, a quick growth of cities and a lot of acute problems associated
with these.
By the end of this period, the balance of economic power in the West changed
signifi cantly. In general, by 1890, the balance in the world of industry looked as
follows: Britain gave 18 % of the world pro-industrial production, the United
States—31 %; Germany—16 %, France—7 % (Гинцберг 1960 : 46). In the nine-
teenth century and early twentieth century, the European countries showed a rather
rapid population growth, reaching the population of 468 million in 1913 (Armengaud
1976 : 28; Maddison 2001 , 2010 ; Livi-Bacci 2012 ). And a particularly rapid accel-
eration of population growth was observed in Western Europe (see. Fig. 2.8 ).
However, with respect to this (and perhaps, the only) indicator, Europe remained
still very far behind the East (see Chap. 3 for details). But this was compensated by
an unprecedented increase in the mechanical energy and power that was equivalent
to manual labor of many hundreds of millions of people. In Britain, the total con-
sumption of coal and wood in 1700 constituted only a twelfth part of the energy
consumption of the same fuels in China. But by 1850, after a nearly twenty-fold
increase in coal production, 18 million residents of Britain consumed 1.5 times
more energy than 400 million Chinese (Smil 1994 : 186–187; Goldstone 2009a :
164). Speaking about that period, R. Jones points that in Britain the steam engine
performed the work of 600 million people, while the actual number of employees
was 4 million (Джонс 1937 : 351).
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
78
Subjugation of the East and the Start of Its Transformation
Globalization and Antiglobalization Now we return again to the preceding
period. Representatives of the California school (Blaut 1993 , 2000 ; Goody 1996 ,
2004 ; Wong 1997 ; Frank 1998 ; Lee and Wang 1999 ; Lieberman 1999 , 2003 ;
Pomeranz 2000 , 2002 ; Goldstone 1991 , 2000 , 2002 , 2009a , 2013 ; Hobson 2004 ;
Rosenthal and Wong 2011 ; Vries 2013 ) are right when they point out that before the
nineteenth century one cannot speak (especially with regard to the Far Eastern
countries), that Europe played a crucial role in the affairs of the East, especially in
economic terms (with the obvious exception of India and Java after their subjuga-
tion by the East India companies). Intra-Asian trade was of a larger scale than trade
with Europe. The latter was more interested in this trade, but they could not offer
much in exchange (except for American silver). They are right that Europe, fi rstly,
fi t into the existing trade relations (and did not create them), and secondly, that this
trade generally had no great effect on Asia. However, the infl uence of Europe on
Turkey, Iran and especially India and Indonesia gradually increased. However, with
respect to the most developed countries of the Far East, the infl uence of Europe was
reducing. To a very considerable extent this was caused by a rather effective policy
of self-isolation, which the rulers of these countries started to pursue in the seven-
teenth century [partly due to the infl uence of Christian missionaries (Симоновская
and Юрьев 1974 ; Gunn 2003 ; Laver 2011 )]. Since those were centralized and
rather strong states, European companies and countries did not have enough power
to impose their will (and, of course, to conquer them). They were content with the
possibility to trade, but trade was controlled by the East Asian governments and
0
50
100
150
200
250
300
1600 1650 1700 1750 1800 1850 1900
Millions
Fig. 2.8 Population growth
in Western Europe, 1600–
1913. Data source : Maddison
( 2010 )
2 Great Divergence and the Rise of the West
79
conducted only in specifi c places. Thus, with respect to East Asia of that period, we
can talk about anti-globalization, when communication with the outside world was
limited and strictly controlled; respectively, the opportunities to learn from
European innovations were minimal. According to Braudel’s ( 1973 ) defi nition,
China remained a world-system by itself, not particularly in need of any active
external contacts.
For a very long time, antiglobalization was quite an effective policy, which the
Far Eastern governments used to control their territory and isolate them from exter-
nal infl uences (which generally, indeed, produced negative rather than positive
infl uences on the East Asian societies). The seclusion policy was facilitated by the
fact that foreign trade played a minor role in the economies of the Early Modern Far
Eastern countries. For example, foreign trade in China in the eighteenth century,
according to some estimates, accounted for only a per cent of its GDP (Непомнин
and Меньшиков 1986 : 55; Feuerwerker 1969 : 2; Chang 1962 : 291–317). Compare
this with the fact that in 1720 the share of foreign trade in the overall GDP in
France was 5.5 %; in Britain it was 19 %, while in the Netherlands it constituted
82 % (O’Rourke et al. 2010 : 106). Fundamental differences in the structure of the
economies of China and European societies are quite clear. However, objectively,
this seclusion policy strongly contributed to the Great Divergence. While Britain
(and the West in general) had been modernized, those Eastern countries that
remained independent from the Europeans (with the exception of Turkey and Egypt)
were basically following the same course, with the result that China and Japan,
having exhausted the available resources, had reached the limits of demographic
capacity of socio- ecological niche and that resulted in increasing social tensions.
Not surprisingly, the encounter with the powerful West caused a deep crisis (which
led, however, in China and Japan to qualitatively different results). Thus, the policy
of the anti- globalization became, ultimately, one of the main causes of the deep
crisis in the Far Eastern countries.
Forced Opening of China, Japan and Other Countries. Different Trajectories
of Development of the East and Other Regions. Echoes of the Great Divergence
All relations between Europe and Asia between 1500 and 1900, can be generally
expressed in two concepts: trade and colonial conquests, which often went hand in
hand. The forced opening of China, which caused a deep crisis in the country, as is
well known, started in trade (whereas the main subject of trade was the Indian
opium). The Chinese government’s attempts to stop this destructive trade led to the
Opium War, as a result of which China had to open a number of ports for trade with
the West. And then the country that was already on the edge of social and demo-
graphic crisis (e.g., Korotayev et al. 2006b ), was shaken by the long and catastrophic
Taiping Rebellion, during which, because of the lack of suffi cient funding and con-
trol the Yellow River dams were broken and the river radically changed its course.
All this led to disaster and according to some estimates, to the death of 118 million
people (Cao 2001 , 5: 455–689; Huang 2002 : 528). Against this background, it is
important to note that the gross domestic product of China’s economy in the middle
of the nineteenth century was still the largest in the world (see. Fig.
2.9 ).
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
80
Thus, the forced opening caused great damage to China. At fi rst, China adopted
a policy of self-empowerment and tried to modernize. Although China’s fi rst
modernization ended rather unsuccessfully, nevertheless it changed the country
rather considerably (Непомнин 2005 ; Liu and Smith 1980 ; Feuerwerker 1980 ;
Chu and Liu 1994 ).
The opening of other countries (Vietnam, Siam) ultimately led to their transfor-
mation into colonies and semi-colonies. Colonial status, which was spread fi rst to
India and Indonesia, in the nineteenth century, became one of the main development
paths for the East. For all its tragedy, nevertheless, it opened the way to a certain
modernization of society (of course, diffi cult and fl awed).
A rare case of successful modernization was Japan, which managed to make
necessary reforms and create up-to-date army and navy. The reasons for this success
are a subject of continuous discussions (see, e.g., Sanderson 1995 , 1999 ),
48 but
48 Among the reasons one could mention a larger willingness to learn from the West than was found
among the Chinese, as the Japanese traditionally borrowed much more from abroad, as was noted
by the Japanese researchers (Ōkuma Shigenobu) already at the beginning of the twentieth century
(Загорский 1991 : 68). Allen also points to a more creative use and adaptation of western technol-
ogy to local conditions than in other modernizing countries in this period (Allen 2011 ).
0
100
200
300
400
1800
1810
1820
1830
1840
1850
1860
1870
1880
1890
1900
1910
Billions
USA Britain China
Fig. 2.9 GDP dynamics in the USA, Britain and China, 1800–1917, billions of international 1990
dollars, PPP. Data source : Maddison ( 2010 )
2 Great Divergence and the Rise of the West
81
somehow the example of Japan proved that it was not fatally impossible for the
Asian countries to become a modern world power, to master European technology
and implement the necessary institutions. The annual GDP growth in Japan after
1874 and prior to 1940 amounted to 5.5–5.8 % (Бабинцева 1982 : 15), and in the
beginning of the twentieth century they accelerated; the share of manufacturing also
signifi cantly increased (see, e.g., Allen 2011 ).
The development of Turkey and Egypt also demonstrated that the eastern coun-
tries could manage to fi t the world economy and politics providing for right poli-
cies and required reforms. From the 1820s to the 1870s, Egypt managed to develop
agriculture and to make use of the favorable situation with the raw material prices
(especially, with respect to cotton prices). At the same time Egypt demonstrated a
rather good performance, both in economic and military spheres (see Гринин
2006 , 2007 ; Гринин and Коротаев 2009а , б for our analysis of the development
of Egypt).
From 1860 to 1870, 13,000 km of irrigation channels were constructed
(Белоусова 2004 : 143). From 1843 to 1872, there was a fi ve-time increase in the
foreign trade volume (Смилянская and Родионов 2004 : 372). One could observe
an active construction of railways and telegraph lines, modernization of ports, etc.
In 1869, the construction of the globally important Suez Canal was fi nished.
However, the errors of the Khedive Ismail, who went into debt in connection with
the construction of the Suez Canal (in view of persisting high prices for cotton), as
well as the growth of local nationalism led to the crisis, whereas Britain took advan-
tage of it to occupy Egypt (on the occupation of Egypt and the penetration into
China see, e.g., Owen 1969 ; Flower 1972 ; Tignor 1966 ; al-Sayyid Marsot 2004 ;
Зеленев 2003 ; Гринин 2006 , 2007 ; Wright 2001 ). Nevertheless, in many respects,
the British protectorate contributed to the development of Egypt, especially its
agriculture (as Britain needed its cotton and some other raw materials). Turkey
during the nineteenth century undertook more or less successful attempts at mod-
ernization, which ultimately saved it from a complete partition between stronger
players. However, it failed to rise up to the level of the European powers. But even
those attempts at modernization that were not entirely successful still contributed to
it in a rather signifi cant way.
Formation of the Capitalist World System with Europe in Its Center The Great
Divergence meant a powerful development of economic globalization and resulted
in the formation of the capitalist World System with its center in Europe.
Globalization involved eastern countries (as Latin America before that) in the world
market, and by the late nineteenth century, the fi nal partition of colonies among
Western powers took place. Among other things the Great Divergence meant a geo-
graphic expansion of the West, it also meant a certain catch-up of the European
periphery and the West European offshoots (the United States, Canada, Australia,
and New Zealand). The involvement of these regions into the orbit of British econ-
omy (and of the European economy in general), including the discovery of gold in
California and Australia, was extremely important. One can hardly overestimate the
role of the exports of British goods and capitals to the United States, as well as
migration there (as well as to other colonies) of many millions of Europeans.
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
82
Trade and Economic Relations Between the West and the East in the Period of
the Great Divergence. Contradictory Results of the Involvement of Non-
European Countries in Global Processes The clash with Europe, with its indus-
trial and military power, in different countries proceeded in different ways, but
somehow it tended to cause various socio-political and economic crises (endless
revolutions and coups in Latin America, the revolt in India in 1857 and in Indonesia
in the 1840s, Taiping Rebellion in China, the Meiji Restoration in Japan, the revolt
of Arabi Pasha in Egypt in 1881–1882), and in some cases attempts to modernize.
Crises often added momentum to the process of transformation of the Eastern states,
without which modernization would be impossible.
In principle, the Great Divergence could not develop without the process of
globalization, as from the outset of industrialization the new machine industry, on
the one hand, needed an expanding supply of raw materials and later food, which
could not be achieved without active involvement of more and more countries in
the procurement process and, on the other hand, without development of exports
and constant expansion of markets. Both colonial and formally independent coun-
tries became buyers of manufactured goods, suppliers of raw materials and food,
thereby engaging the global division of labor. The inclusion of the periphery as a
source of raw materials and consumer of fi nished goods meant, on the one hand,
the consolidated division of roles in the global system, and hence the consolidation
of the Divergence results or even the movement of Divergence to a higher level.
But on the other hand, this prepared conditions for the onset of Convergence, since
the inclusion of the periphery in the world of technology and world market meant
the increase in its general level of development, the growth of infrastructure and
exports of capitals.
In order to expand their markets, Britain and other European countries did
everything starting from large credits to potential buyers to launching unjust wars.
It is not surprising that such progress was often very diffi cult and tragic. In general,
in 1830–1870, in many non-European peripheral countries vigorous imports of
manufactured goods from Europe, alongside with the absence of sovereignty or in
the presence of non-equivalent trade agreements, resulted in a signifi cant reduction
of local manufacturing, of the number of artisans and even urban population in
general (Мельянцев 1996 : 126 and 127). Many artisans were forced to move to
villages (see Allen 2011 ). These processes (as well as severe socio-economic and
political crises in many countries of the East) brought even certain temporary lower-
ing of the standard of living in some regions. Thus, according to some estimates,
from the late eighteenth century to the last third of the nineteenth century in the
countries which in the twentieth century would constitute the Third World, an
average income reduced by 10–15 % (Мельянцев 1996 : 129; Bairoch 1992 : 446).
However, according to Maddison’s calculations ( 2001 , 2010 ) in most countries of
Asia, Africa and Latin America, this indicator still grew but not as signifi cantly as in
the countries of the World System core. The consequences were particularly hard
for India. Between 1830 and the 1850s, the British cloth exports to India increased
by 60 (!) times (Бобровников 2004 : 423). This resulted in massive bankruptcies of
2 Great Divergence and the Rise of the West
83
artisans. The population of Dhaka, the major industrial center of Bengal, for exam-
ple, fell from 150 to 30 thousand people (Бобровников 2004 : 423).
The Chinese market, as we have said, was partially opened as a result of the First
Opium War and the Treaty of Nanking in 1842 (see, e.g., Pomeranz 2000 ;
Нарочницкий 1973 ; Непомнин 2005 ). At fi rst it seemed immense to the British
entrepreneurs. British manufacturers seriously put their minds to “dress 300 million
people”. As a result, after 1842, one could observe such a vigorous boom in the
establishment and modernization of factories that complaints about diffi culty to
fi nd workers and to survive wage increases became permanent (see, e.g., Туган-
Барановский 2008 [1894]: 122). But sales to China turned much lower than
expected. However, between 1842 and 1845, total exports to India and China
increased by a third (Трахтенберг 1963 : 150).
With formally sovereign countries, Britain and other countries (including Russia)
concluded unequal trade agreements, which resulted in active penetration of
European goods to their markets (as well as an active penetration of European fi nan-
cial structures in their fi nancial systems) (see, e.g., Cuno 1985 ; Issawi 1947 ; Owen
1969 ; Hunter 1999 ; Goldschmidt 2004 with respect to Turkey and Egypt). It tuned
these countries’ economies to the needs of Britain and other European countries, but
that also led to their signifi cant development—including the development of
advanced infrastructure and forms of monetary and trade relations (which can be
particularly well illustrated by the examples of Canada or Australia). The dependent
countries become raw-materials suppliers. In particular, those were India, Egypt,
Indonesia, Brazil, Argentina and other countries of Latin America [but also such
prosperous countries as Canada, Australia, and New Zealand (and even the USA for
a long time)].
49
And moreover, the need for broadening and deepening of globalization began to
be perceived when the need to export capital developed. And such exports from
Britain to some countries (fi rst of all, of course, to India) began in the 1850s. This
was facilitated by the elimination of the East India Company (after the 1857 Sepoy
Mutiny) and the establishment of the direct British control over India. The British
capitals went to India in much larger quantities together with technologies and
experts, local cotton factory industry started to develop, and so on (see on the eco-
nomic development of India, e.g., Nehru 1982 ; on quite serious diffi culties of this
development see Clark 2007 : 346–369).
In the late 1850s and the 1860s, Britain built 5,000 km of railways in India
(Мендельсон 1959 , т. 1: 610). In general, the construction of the Indian Railways
was a crucial part of British investments in Indian infrastructure, and the quality
49 Why did the fl ow of European capitals and technologies to Canada or Australia lead to their suc-
cessful modernization, and why did not it produce the same result in Brazil or India? In the nine-
teenth century, Canada, Australia, India, and Brazil were turned into an agrarian and raw material
appendages of Western Europe and the United States. This, however, did not prevent Canada and
Australia to join the club of developed countries, while Brazil and India as a result of the processes
of the Great Divergence found themselves among the Third World countries. What is the explana-
tion? We will try to answer this question below in Appendix B to this book.
Beginning and Apogee of the Great Divergence and the Emergence of the Capitalist…
84
of construction and equipment was even higher than in the United States (see
Clark 2007 ).
The export of capital became, in our opinion, the most important source of
change in the balance in the development of the World System core and periphery.
However, it took many decades before it produced any tangible results.
One can argue to which extent the rise of the West was fertilized by its exploita-
tion of the colonies and semi-colonies and unequal exchange with them, but clearly
the process of involving semi-periphery and periphery in the world’s economic and
political relations was inseparable from the process of the Great Divergence and rise
of the West. But at the same time it was the process that also launched the reverse
process, which about half a century later became a matter of global dimension, the
results of which became apparent in a 100 years, and now it is visible as the Great
Convergence. For without the involvement of the peripheral countries into the orbit
of economic relations on the basis of the latest techniques and technologies (even
although these countries had been given a purely raw-exports role and were objects
of predatory exploitation) there were no real opportunities for their new rise in the
Modern world.
In Chap. 4 we will analyze in more detail the processes that gradually prepared
the prerequisites for the onset of the Great Convergence.
2 Great Divergence and the Rise of the West
85© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9_3
Chapter 3
Great Convergence and the Rise of the Rest
In the 1980s, 1990s, and even 2000s, many economists failed to detect behind for-
mal indicators the profound changes in the Third World that prepared fundamental
changes and the onset of the Great Convergence. Even at that time the absolute
majority of Western economists seem to have been in unanimous agreement over
the absence of absolute convergence across the world (see, e.g., Sadik 2008 ; Epstein
et al. 2007 ; Seshanna and Decornez 2003 ; Workie 2003 ; Canova and Marcet 1995 ;
Durlauf and Johnson 1995 ; Desdoigts 1994 ; Paap and van Dijk 1994 ). Thus, Sachs
et al. noted in 1995 that in 1970–1995 there had been no overall tendency for the
poorer countries to catch up, or converge, with the richer countries.
In 1996 Sala-i-Martin, having analyzed a large cross-section of 110 countries,
stated that one of the main lessons to learn from the classical approach to conver-
gence analysis is that “the cross-country distribution of world GDP between 1960
and 1990 did not shrink, and poor countries have not grown faster than rich ones.
Using the classical terminology, in our world there is no σ-convergence and there is
no absolute β-convergence” (Sala-i-Martin 1996 : 1034).
Much attention was given to empirical testing of the convergence hypothesis in
Quah’s works (see, e.g., 1996a , b , c ). Using the model of growth and imperfect capi-
tal mobility across multiple economies to characterize the dynamics of (cross-
country) income distributions, Quah tested the convergence hypothesis and came to
conclusion that the evidence showed little unconditional cross-country convergence.
This idea corresponds quite well to the one expressed by Lee et al. ( 1997 ) that
world countries are not converging, but diverging, which they resumed from consid-
ering international per capita output and its growth using a panel of data for 102
countries between 1960 and 1989. Much the same conclusion was almost simulta-
neously made by Bianchi ( 1997 ) who empirically tested the convergence hypothesis
from the perspective of income distributions in a cross-section of 119 countries. By
means of statistical techniques such as non-parametric density estimation and boot-
strap multimodality tests, Bianchi tested for the number of modes and estimated,
86
consistently with the detected number of modes, the income distribution of a cross-
section of 119 countries in 1970, 1980 and 1989, concluding that his fi ndings sup-
port the view of clustering and stratifi cation of growth patterns over time, standing
in sharp contrast with the unconditional convergence prediction.
One of the most recent works refuting the unconditional convergence hypothesis
is the one by Acemoglu ( 2009 ), which contains a cross-country analysis of GDP per
capita values between 1960 and 2000; what is more, he maintains that “there is a
slight but noticeable increase in inequality across nations” (Ibid.: 6).
The conclusion on the continuation of divergence was shared by many research-
ers, for example, Gaulier et al. ( 1999 ), who based their research upon empirical
evidence obtained from the analysis of 86 countries. A more recent work by Howitt
and Mayer-Foulkes ( 2004 ) similarly resumed that among the countries of the world
the divergence, not convergence could be observed starting from the early nine-
teenth century (see also Clark 2007 ; Allen 2011 ).
Numerous students shared the point of view on the absence of absolute conver-
gence throughout the countries of the world (see, e.g., Sadik 2008 ; Epstein et al.
2007 ; Seshanna and Decornez 2003 ; Workie 2003 ; Canova and Marcet 1995 ;
Durlauf and Johnson 1995 ; Desdoigts 1994 ; Paap and van Dijk 1994 ).
In the meantime, as one can see from the fi gures in this chapter, the symptoms of
the movement from the Great Divergence trend toward the Great Convergence one
became rather well visible already in the 1960s and 1970s.
Below we will demonstrate how much the Great Convergence process has
advanced by now notwithstanding all those conclusions and predictions, whereas
the explanation of the Great Convergence factors will be given in Chap. 4 .
Long-Term Divergence–Convergence Trends
as Regards the GDP
According to Maddison’s ( 2001 , 2010 ) data the share of the West in the world GDP
(at PPP) grew quite noticeably in 1000–1800 (which correlates quite well with vari-
ous “small divergence” theories); however, the explosive growth of this share started
after 1800 (which, in its turn, correlates very well with the California School’s Great
Divergence theory). By the end of the nineteenth century, the share of the West in
the world GDP exceeded 50 %, whereas in the 1950s and 1960s it was more than
60 %. However, according to Maddison, since the late 1960s this share started to
decrease with an accelerating speed (see Fig. 3.1 ).
It is diffi cult not to notice that the shape of this curve resembles rather strikingly
the shape of the curve of the world population relative growth rates’ dynamics (see
Fig. 3.2 ).
3 Great Convergence and the Rise of the Rest
87
0%
10%
20%
30%
40%
50%
60%
0 200 400 600 800 100012001400160018002000
Fig. 3.1 Dynamics of the share of the West (In this chapter we denote as “the West” the following
group of countries (roughly corresponding to the high-income OECD countries at the onset of the
explicit Great Convergence in the late 1980s): all the countries of Western Europe, the USA,
Australia, New Zealand, Canada, and Japan.) in the world GDP. Data sources : till 2008—Maddison
( 2010 ); after 2008—World Bank ( 2014 ): NY.GDP.MKTP.PP.KD. To secure the compatibility of
two series, the World Bank GDP data have been re-calculated with Maddison’s coeffi cients of the
conversion of nominal US dollars into international dollars at purchasing power parity (PPP)
0
0.5
1
1.5
2
2.5
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
Fig. 3.2 World population relative growth rates’ dynamics, 1–2003 (%). Source : Коротаев et al.
( 2007 : 12). Before 1800 the curve represents a trend line that does not take into account cyclical
and stochastic fl uctuations
Long-Term Divergence–Convergence Trends as Regards the GDP
88
We believe this is not a mere coincidence. Actually, some time ago we already
made the following observation:
“One could hardly fail to notice that the turnaround of the secular trend toward the growth
of the gap between the World System Center and the World System Periphery
1 to the trend
toward the decrease of this gap coincided with an amazing accuracy (almost about a year)
with the turnaround of a number of other secular (and sometimes even millennial) trends to
the opposite ones. We should note the transition from millennial trends to the increase in
global relative growth rates of population and GDP (as well as GDP per capita) to contrary
trends to the decrease of those rates. One may also note a turnaround of the millennial trend
toward the decrease of the effectiveness of the energy consumption to the opposite one (i.e.,
to the growth of this effectiveness). There are certain grounds to maintain that this syn-
chronicity is not coincidental, as it refl ects the point that we are dealing here with different
aspects of the single process of the World System development, with different aspects of the
single process of the World System’s withdrawal from the blow-up regime and the start of
its movement toward the trajectory of sustainable development. Indeed, all those new trends
that emerged in the 1970s and the 1980s (the ones toward the slowdown of the relative
growth rates of world population and GDP, toward the growth of energy consumption effec-
tiveness and the decrease of the economic gap between the Center and the Periphery) have
a certain ‘common denominator’—all of them lead to a certain stabilization of the World
System development and to a certain discharge of the strains that have accumulated within
it” ( Коротаев etal. 2010: 68–69).
This important point will be considered in more detail in Appendix B to the pres-
ent monograph.
Consider now in more detail the dynamics of the share of the GDP of the West
and the Rest after 1800 (Fig. 3.3 ).
This diagram suggests that, according to Maddison, the West’s share in the world
GDP started to contract since the late 1960s. However, until the late 1990s this con-
traction proceeded at a rather slow rate; the West’s share in the world started to
decrease (and—respectively—the share of the Rest started to increase) at a really
fast pace after 2000.
In Fig. 3.4 one can see in an especially clear way the point that for quite a long
time the West’s GDP has been growing slower than the total GDP of the Rest.
As we see, between 1968 and 2012 the total GDP of the Rest grew by seven
times,
2 whereas the West’s GDP only tripled within the same period of time.
However, this was only after 2000 when the GDP growth rates of the Rest started to
exceed the Western growth rates in a really radical way
3 (see Fig. 3.5 ).
As we see, after 2000 the total GDP of the West has only grown by 20 %, whereas
the GDP of the Rest has doubled, that is, it has grown by 100 %—thus, as regards
1 As we will see below in Appendix B, the long-term curve of the gap between the First and Third
World as regards per capita GDP resembles the curve of the world population growth rate dynam-
ics even more.
2 It appears necessary to stress that we will obtain such results only when we apply Maddison’s
coeffi cients for the GDP conversion at purchasing power parity. As we will see below, when using
other coeffi cients we tend to get signifi cantly different results (especially, as regards the period
between 1968 and 1998).
3 And—as we will see below—we will get a similar result in this case even if use any other GDP
conversion coeffi cients.
3 Great Convergence and the Rise of the Rest
89
20%
30%
40%
50%
60%
70%
80%
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
The West
The Rest
Fig. 3.3 Dynamics of the share of the West in the world GDP after 1800 (according to Maddison).
Data sources : till 2008 (including 2008)—Maddison ( 2010 ); after 2008—World Bank ( 2014 ):
NY.GDP.MKTP.PP.KD. In order to secure the compatibility of data for the period after 2008, the
World Bank GDP data have been recalculated in accordance with Maddison’s coeffi cients of con-
version of nominal US dollars into international dollars at purchasing power parity (PPP)
0
100
200
300
400
500
600
700
1968 1973 1978 1983 1988 1993 1998 2003 2008
GDP of the West
GDP of the Rest
Fig. 3.4 Relative dynamics of the GDP of the West and the rest of the world (according to
Maddison), 1968–2012, 100 = the 1968 level
Long-Term Divergence–Convergence Trends as Regards the GDP
90
average annual economic growth rates, the Rest has been developing fi ve (!) times
as fast as the West.
In the meantime, it appears essential to take into account the point that here much
depends on the unit of measurement we use—that is, on the type of dollars with
which we measure the GDP (and which GDP conversion coeffi cients at PPP we
use). Indeed, as soon as we start using World Bank coeffi cients, the resultant picture
changes in a rather signifi cant way (see Fig. 3.6 ).
As we see, when we use World Bank GDP conversion coeffi cients, we get the
impression that, as regards the variable in question, the convergence of the West and
the Rest only started after 1994; it proceeded very slowly until 1999, but it acceler-
ated immensely between 1999 and 2012, whereas after 2002 it proceeded at a really
fast pace—as a result of which already in 2012 the share of the Rest in the world
GDP exceeded the West’s share (while just 15 years ago the share of West exceeded
the share of the Rest almost twice).
Note that after 2000, the World Bank data on the relative GDP growth rates in the
West and the Rest (calculated in constant 2005 international dollars converted at
PPP using the World Bank conversion coeffi cients) portray a picture (see Fig. 3.7 )
that is very similar to the one that we arrived at above when using Maddison’s
estimates.
On the one hand, the almost complete identity of the curves for 2008–2012 is not
surprising here at all, as above we extended Maddison’s time series to those years
on the basis of the World Bank data; however, on the other hand, it is much more
100
110
120
130
140
150
160
170
180
190
200
2000 2002 2004 2006 2008 2010 2012
GDP of the West
GDP of the Rest
Fig. 3.5 Relative dynamics of the GDP of the West and the rest of the world (according to
Maddison), 2000–2012, 100 = the 2000 level
3 Great Convergence and the Rise of the Rest
91
35%
40%
45%
50%
55%
60%
65%
1980 1985 1990 1995 2000 2005 2010 2015
The West
The Rest
Fig. 3.6 Dynamics of the share of the West and the rest of the world (“the Rest”) in the global
GDP after 1980 (based on the World Bank data on the GDP calculated in 2005 purchasing power
parity international dollars). Data source : World Bank ( 2014 ): NY.GDP.MKTP.PP.KD
100
110
120
130
140
150
160
170
180
190
200
2000 2002 2004 2006 2008 2010 2012
The West
The Rest
Fig. 3.7 Relative dynamics of the GDP of the West and the rest of the world (based on the World
Bank data on the GDP calculated in 2005 purchasing power parity international dollars), 2000–
2012, 100 = the 2000 level
Long-Term Divergence–Convergence Trends as Regards the GDP
92
remarkable that both Maddison’s estimates and World Bank data portray an
extremely similar pattern for the period between 2000 and 2008.
Note that the results of such a comparison will be somehow different if we cal-
culate GDP not in power purchasing parity international dollars, but rather in US
dollars (whereas the GDP of particular countries is calculated by the conversion of
their GDP in local currency into US dollars according to market exchange rates).
Indeed, in this case we get a rather different picture (see Fig. 3.8 ).
As we see, in this case the initial gap between the West and the Rest appears to be
much larger. What is more, the convergence in the 1990s and the early 2000s looks much
less pronounced, whereas a really fast convergence only starts after 2003. However, for
recent years both systems of measurement demonstrate a rather similar pattern of an
extremely fast convergence, with the GDP growth rates of the World System core coun-
tries lagging very far behind the countries of the periphery
4 (see Fig. 3.9 ).
Thus, though different data series portray rather different patterns of conver-
gence between the West and the Rest as regards their shares in the world GDP, they
4 Note that here we quite consciously apply a simplifi ed dual World System structuration scheme
that only singles out the World System core and periphery and ignores the subdivision of the latter
into the periphery per se and semiperiphery.
10%
20%
30%
40%
50%
60%
70%
80%
90%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
The West
The Rest
Fig. 3.8 Dynamics of the share of the West and the rest of the world (“the Rest”) in the global GDP
after 1980 (based on the World Bank data on the GDP converted into current US dollars according
to current market exchange rates). Data source : World Bank ( 2014 ): NY.GDP.MKTP.CD
3 Great Convergence and the Rise of the Rest
93
are very congruent regarding the point that in recent years the convergence has been
going on at extremely fast rates indeed.
Note, that an astonishingly similar picture of the world convergence pattern was
detected by William Thompson when he tried to trace long-term dynamics of the
Western share in the world manufacturing (see Fig. 3.10 ).
As we see, according to Thompson’s calculations a really fast convergence
between the West (≈ the World System core) and the Rest (≈ the World System
periphery) only started (as regards the very important variable in question) after
2000; however, afterwards it proceeded at precipitously high rates—thus, between
2005 and 2010 (just in 5 years!) the gap between the West and the Rest decreased
by one half. With such an extremely high convergence rate the Rest may catch up
the West (as regards its share in the world manufacturing) already by 2015–2020.
5
On the Dynamics of the West’s Share in the World Population
For a more profound understanding of the issue of the Great Divergence and Great
Convergence, it appears necessary to take into account the dynamics of the West’s
share in the overall population of the world (see Figs. 3.11 and 3.12 ).
5 However, this may happen a few years later (for reasons see Statistical addendum to this chapter ).
100
150
200
250
300
350
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The West
The Rest
Fig. 3.9 Relative dynamics of the GDP of the West and the rest of the world (based on the World
Bank data on the GDP converted into current US dollars according to current market exchange
rates), 2003–2012, 100 = the 2003 level
Long-Term Divergence–Convergence Trends as Regards the GDP
94
0
10
20
30
40
50
60
70
80
90
100
1840 1860 1880 1900 1920 1940 1960 1980 2000
%
Developed 3rd World
Fig. 3.10 Long-term dynamics of the Western share in the world manufacturing, %, 1840–2010.
Source : Thompson (2014)
10%
12%
14%
16%
18%
20%
22%
24%
26%
0 200 400 600 800 1000 1200 1400 1600 1800 2000
Fig. 3.11 Share of the West in the total population of the World, 1–2009 with a forecast till 2030
CE. Data source : Maddison ( 2010 )
3 Great Convergence and the Rise of the Rest
95
As we see, the point that an especially fast divergence between the West and the
Rest (as regards their shares in the world GDP) was observed in the nineteenth cen-
tury had a rather strong demographic component. In that century, the explosive
growth of the share of the West was accounted both by a very fast (at least in the
millennial perspective) increase in the productivity of labor (and, thus, the GDP per
capita) caused by the economic modernization,
6 and by a rather fast growth of the
share of the population of the West in the total population of the world caused by
the demographic modernization. Indeed, this was connected with the point that in
the nineteenth century the population of the West grew much faster than the popula-
tion of the Rest. This fact was not coincidental either—actually, in the West, the
acceleration of the growth of the labor productivity and the acceleration of the pop-
ulation growth were two aspects of the single modernization process. In the
nineteenth- century West, one of the main consequences of the start of an intensive
economic modernization was the start of its demographic modernization—that is,
the start of the demographic transition (Вишневский 1976 , 2005 ; Chesnais 1992 ;
Caldwell et al. 2006 ; Dyson 2010 ; Livi-Bacci 2012 ). As is well known, the fi rst phase
of the demographic transition (which the West passed precisely in the nineteenth
century) is characterized by a radical decrease of mortality (Вишневский 1976 ,
2005 ; Chesnais 1992 ; Caldwell et al. 2006 ; Gould 2009 ; Dyson 2010 ; Reher 2011 ;
6 In the same time the Rest lagged far behind the West as regards its economic modernization
(and—hence—as regards the labor productivity growth).
10%
12%
14%
16%
18%
20%
22%
24%
26%
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
Fig. 3.12 Share of the West in the total population of the World, 1800–2009 with a forecast till
2030 CE. Data source : Maddison ( 2010 )
Long-Term Divergence–Convergence Trends as Regards the GDP
96
Livi-Bacci 2012 ). A comparable decrease of fertility is only observed at its second
phase (which the West entered only in the very end of the nineteenth century and the
early twentieth century). Respectively, throughout the whole nineteenth century the
very fast decline of mortality took place in the West against the background of still
very high fertility levels, that led to an explosive increase in the natural population
growth rates (due to the lagging modernization, in most countries of the Rest a
comparable acceleration of the demographic growth only took place in the second
half of the twentieth century). Thus, it is not coincidental at all that in the nine-
teenth-century West, the higher (than in the Rest) GDP per capita growth rates were
accompanied by the higher (than in the Rest) population growth rates, which led to
an especially fast growth of the West’s GDP share in the world GDP.
On the other hand, in the twentieth century, the West entered the second phase of
the demographic transition, the fertility started to decrease there more and more—
hence, the demographic growth rates decelerated in a very signifi cant way (in some
countries even to negative values). In the meantime, in the twentieth century the
majority of the countries of the Rest entered the fi rst phase of the demographic tran-
sition, which meant a very signifi cant decline of mortality against the background
of still very high fertility. As a result, already by the beginning of World War I the
share of the West in the world population had reached its peak, whereas afterwards
it began to decrease, but till the 1950s this decrease proceeded very slowly. However,
in the 1950s, when most countries of the Third World entered the fi rst phase of the
demographic transition, these countries experienced a demographic explosion,
which, additionally, took place against the post-Baby Boom fertility decrease in the
First World—as a result in the 1950s, 1960s, and 1970s the share of the West in the
total population of the Earth was decreasing very fast indeed. The rate of this
decrease only started to slow down after the late 1980s as a result of the entering the
second phase of the demographic transition by the majority of the Third World
countries (see, e.g., Caldwell et al. 2006 ; Gould 2009 ; Dyson 2010 ; Reher 2011 ).
On the Dynamics of the Gap Between the West
and the Rest as Regards the Per Capita GDP
All the above-said should be taken into account when we consider the dynamics of
the gap between the West and the Rest as regards the GDP per capita (see Figs. 3.13 ,
3.14 , and 3.15 ).
Note that Figs. 3.13 , 3.14 , and 3.15 above may suggest that the convergence
between the First and Third World only really started in the 2000s. However, this
impression is not quite correct. The fact is that at this point we should take into
account the fact that the Rest is not equal to the Third World, as in addition to the
Third World it includes the Second World (that is the former “Communist Block”—
the countries of the former USSR as well as the former Communist countries of the
East Europe). Thus, it appears necessary to consider separately the long-term eco-
nomic development of the Second World countries (see Figs.
3.16 , 3.17 , and 3.18 ).
3 Great Convergence and the Rise of the Rest
97
0
1
2
3
4
5
6
7
0 200 400 600 800 1000 1200 1400 1600 1800 2000
Fig. 3.13 The dynamics of the gap in GDP per capita (by how many times) between the West and
the Rest, 1 – 2008
0
1
2
3
4
5
6
7
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Fig. 3.14 The dynamics of the gap in GDP per capita (by how many times) between the West and
the Rest, 1800 – 2008
Long-Term Divergence–Convergence Trends as Regards the GDP
98
4.5
5.0
5.5
6.0
6.5
7.0
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Fig. 3.15 The dynamics of the gap in GDP per capita (by how many times) between the West and
the Rest, 1945 – 2008. Source : Maddison ( 2010 ). Note that Maddison provides GDP estimates in
1990 Geary–Khamis international dollars at purchasing power parity
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
0 500 1000 1500 2000
Fig. 3.16 The Second World per capita GDP Dynamics, 1 – 2008. Data source: Maddison ( 2001 ,
2010 ). Note that Maddison provides GDP estimates in 1990 Geary–Khamis international dollars
at purchasing power parity
As we can notice, in the Second World the economic crisis of the 1990s was
unusually deep and long with an average decline of the per capita GDP by more
than a third (that is it was signifi cantly stronger than the Great Depression in the
USA), whereas on average it took the Second World 16 years to return the per capita
output to the pre-crisis level (for comparison in the 1930s, the same task took the
USA 11 years).
3 Great Convergence and the Rise of the Rest
99
Now let us consider the long-term dynamics of the gap between the First and the
Second World as regards per capita GDP (see. Figs. 3.19 , 3.20 , 3.21 , and 3.22 ).
As we see, in the 1990s in the Second World countries a catastrophic decline of
the output was accompanied by an explosive growth of the gap between the First
and the Second World, which reached by the mid-1990s an unprecedented level.
Note that while by the mid-2000s the Second World managed to return its output to
the pre-crisis level, it failed to return the gap with the First World to this level, and
by 2008 it remained much higher than it had been observed at any point of time
before 1991. The point is that in the 1990s the economic collapse in the Second
World was observed against the background of a generally rather fast economic
growth of the First World countries, that is why by the moment when the Second
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
1800 1850 1900 1950 2000
Fig. 3.17 The Second World per capita GDP Dynamics, 1800 – 2008. Data source : Maddison
( 2001 , 2010 ). Note that Maddison provides GDP estimates in 1990 Geary–Khamis international
dollars at purchasing power parity
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
1950 1960 1970 1980 1990 2000 2010
Fig. 3.18 The Second World per capita GDP Dynamics, 1950 – 2008. Data source : Maddison
( 2001 , 2010 ). Note that Maddison provides GDP estimates in 1990 Geary–Khamis international
dollars at purchasing power parity
Long-Term Divergence–Convergence Trends as Regards the GDP
100
0
1
2
3
4
5
6
0 500 1000 1500 2000
Fig. 3.19 The dynamics of the gap in GDP per capita (by how many times) between the First and
the Second World, 1 – 2008
1.5
2
2.5
3
3.5
4
4.5
5
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Fig. 3.20 The dynamics of the gap in GDP per capita (by how many times) between the First and
the Second World, 1800 – 2008
2
2.5
3
3.5
4
4.5
5
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Fig. 3.21 The dynamics of the gap in GDP per capita (by how many times) between the First and
the Second World, 1950 – 2008
3 Great Convergence and the Rise of the Rest
101
World restored its pre-crisis GDP per capita level, the First World economies had
gone far ahead (see Fig. 3.23 ).
As a result, in the 1990s, the Second World share in the world GDP contracted in
a really signifi cant way. As we remember, when we use the World Bank data on the
GDP calculated in 2005 international dollars at purchasing power parities, we have
an impression that there was almost no convergence as regards the world GDP share
in the 1990s (and that such a convergence only started in the 2000s). However, the
picture changes very signifi cantly as soon as we separate the Third World from the
Second World (see Fig. 3.24 ).
As we see, after the division of “the Rest” into the Second and Third World we
see that a fairly fast convergence between the First and Third World (as regards their
shares in the global GDP) already started in the 1990s (with a certain hitch in the
last years of this decade). However, these were precisely the early 1990s when a
rather signifi cant decline of the Second World’s share in the global GDP occurred.
Thus, in the fi rst half of the 1990s a rather substantial increase in the Third World’s
share of the global GDP was almost entirely compensated by the simultaneous
decline of the Second World’s share (and this is just what creates an illusion of the
convergence absence in this period).
Respectively, after the division of “the Rest” into the Second and the Third
World, we can see that a rather noticeable convergence between the First and the
Third World started in the early 1990s (though with a certain hitch around the end
of this decade), see Fig.
3.25 .
These were already the 1990s when the developing countries managed to achieve
a substantial decrease of the gap with the developed countries as regards the GDP
per capita—from the ninefold value to the eightfold. However, a really sustainable
and fast reduction of this gap started after 1999, and between 1999 and 2012 it
2
2.5
3
3.5
4
4.5
5
1980 1984 1988 1992 1996 2000 2004 2008
Fig. 3.22 The dynamics of the gap in GDP per capita (by how many times) between the First and
the Second World, 1–2008, 1980 – 2008
Long-Term Divergence–Convergence Trends as Regards the GDP
102
0%
10%
20%
30%
40%
50%
60%
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
1st world GDP share 2nd world GDP share
3rd world GDP share
Fig. 3.24 Dynamics of
shares of the First, the
Second, and the Third World
in the global GDP, 1984–
2008 (based on the World
Bank data on the GDP
calculated in 2005 purchasing
power parity international
dollars). Data source : World
Bank ( 2014 ): NY.GDP.PCAP.
PP.KD. The fact that the First
World curve in this graph is
not entirely identical with the
one in Fig.
3.1 is accounted
for by the point that in two
cases two different
aggregation schemes were
used
60
70
80
90
100
110
120
130
140
1989 1992 1995 1998 2001 2004 2007
1st world GDP pc 2nd world GDP pc
Fig. 3.23 Relative Dynamics of the GDP per capita in the First and Second World, 1989–2008,
100 = 1989 level. Data source : Maddison 2010 . Note that Maddison provides GDP estimates in
1990 Geary–Khamis international dollars at purchasing power parity
3 Great Convergence and the Rise of the Rest
103
shrank from the eightfold to the almost fi vefold. If the lessening of this gap contin-
ues at the same rate (regarding which one may still express certain doubts in view
of both the perspective of the “reindustrialization of the West” and the threat of
middle income trap
7 with respect to some Third World leaders) the gap between the
developed and developing countries may almost disappear already in 20 years.
The analysis of the dynamics of the gap between the First and Third World with
respect to the per capita GDP on the basis of Maddison’s database produces results
rather similar to the ones obtained above on the basis of the World Bank database.
However, this is only Maddison’s database that allows considering this dynamics in
a deep historical perspective. In a two-millennia perspective it looks as follows (see
Fig. 3.26 ).
Consider now the dynamics of the gap between the First and Third World at the
scale of centuries and decades (see Figs. 3.27 and 3.28 ).
As we see, the gap between the developed and developing countries continued to
grow up to the 1960s; in the 1970s it somewhat contracted, but in the 1980s it grew
again. Curiously, these were just the 1990s when the Western economist undertook
a massive examination of the convergence issue (see, e.g., Barro 1991 ; Bianchi
1997 ; Canova and Marcet 1995 ; Desdoigts 1994 ; Durlauf and Johnson 1995 ; Lee
7 For more details on this trap see Statistical addendum below, or, e.g., The World Bank and the
Development Research Center of the State Council of the People’s Republic of China ( 2012 : 12)
and Гринин et al. ( 2014 ).
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
1984 1989 1994 1999 2004 2009
Fig. 3.25 The dynamics of the gap in GDP per capita (by how many times) between the First and
the Third World, 1984–2012 (based on the World Bank data on the GDP calculated in 2005 pur-
chasing power parity international dollars). Data source : World Bank ( 2014 ): NY.GDP.PCAP.
PP.KD
Long-Term Divergence–Convergence Trends as Regards the GDP
104
et al. 1997 ; Mankiw et al. 1992 ; Paap and van Dijk 1994 ; Quah 1996a , b , c , 1997 ;
Sachs et al. 1995 ; Sala-i-Martin 1996 —see the next chapter for a detailed review of
those publications). The most widespread method of this examination was to com-
pare the gap in the 1950s and 1960s (on the one hand) with, on the other hand, the
most recent data points (which, naturally—as the examination took place in the
0
1
2
3
4
5
6
7
8
9
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Fig. 3.27 Dynamics of the gap in GDP per capita (by how many times) between the West (the
First World) and the Third World, 1800 – 2008
0
1
2
3
4
5
6
7
8
9
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Fig. 3.26 Dynamics of the gap in GDP per capita (by how many times) between the West (the
First World) and the Third World, 1 – 2008
3 Great Convergence and the Rise of the Rest
105
1990s—corresponded to the late 1980s and early 1990s).
8 As one can easily guess
on the basis of Fig. 3.28 , such a scrutiny led Western economist in a rather system-
atic way to an apparently well-grounded conclusion that there was no convergence
between the developed and developing countries at all—one would rather speak
about a continuing divergence (albeit a rather weak one). Note that a rather sound
theoretical basis for such a conclusion had been established by that time by Paul
M. Romer’s ( 1986 ) theory of “increasing returns”, which implied in a rather clear
manner that the gap between poor and rich countries should in future increase rather
than decrease. Indeed, Romer wrote that the model of increasing returns offered “an
alternative view of long-run prospects for growth” that was contrary to the assump-
tions of convergence theory: “per capita output can grow without bound, possibly at
a rate that is monotonically increasing over time. The rate of investment and the rate
of return on capital may increase rather than decrease with increases in the capital
stock. The level of per capita output in different countries need not converge; growth
may be persistently slower in less developed countries and may even fail to take
place at all” (Romer 1986 : 1003).
Yet, as is suggested by the very Fig. 3.28 , rather paradoxically, just in that very
time when the Western economists arrived almost unanimously at the conclusion
8 The most wide-spread way to operationalize such a comparison looked as follows—the idea was
to identify the correlation between the per capita GDP levels in various countries of the world in
1950/1960, on the one hand, and the GDP per capita growth rates between 1950/1960 and 1990,
on the other. Quite logically, within such an operationalization scheme, a signifi cant negative cor-
relation was rather soundly interpreted as evidence for the presence of global convergence, a sig-
nifi cant positive correlation was as soundly interpreted as evidence for the presence of global
divergence, whereas an insignifi cant correlation was interpreted as evidence for the absence of
both global convergence and global divergence.
5
5.5
6
6.5
7
7.5
8
8.5
1950 1960 1970 1980 1990 2000 2010
Fig. 3.28 Dynamics of the gap in GDP per capita (by how many times) between the West (the
First World) and the Third World, 1950 – 2008
Long-Term Divergence–Convergence Trends as Regards the GDP
106
that there was no convergence between the developed and developing countries, that
very convergence was already gaining momentum!
9
Statistical Addendum to This Chapter: On the Structure
of the Present-day Convergence
10
First, let us view the dynamics of the gap in GDP per capita between the high-
income OECD countries and the low-income countries for the past three decades
(see Fig. 3.29 ).
One can see that the gap between the high-income OECD countries and the low-
income countries kept growing until 2000. All in all, between 1981 and 2000 this
gap increased very signifi cantly, from 25 times in 1981 to almost 40 times (however,
one should note here that, though the gap was still widening in the late 1990s, this
enlargement proceeded at a much slower pace as compared to the previous years).
In the 2000s, the gap started to contract rather fast, decreasing from 40 to 30 times
during only 12 years. Abstractly speaking, if this trend and pace persist, the gap will
essentially disappear in about three decades; though, of course, there are strong
doubts whether the low-income countries [“the bottom billion” as coined by Paul
Collier ( 2007 )] will manage to keep up the current fast pace of catch up the high-
income countries in terms of GDP per capita.
Let us now turn to the dynamics of the gap in GDP per capita between the high-
income OECD countries and the middle-income countries in the past three decades
(see Fig. 3.30 ).
Thus, the gap between the high-income and middle-income countries kept grow-
ing until 1990, approaching the value of 10 (which means that the GDP per capita
in the high-income countries exceeded that in the middle-income countries by an
order of magnitude). After 1990 one can observe a rather pronounced trend for this
gap to decrease. However, during the 1990s the gap was decreasing rather slowly,
going down from the value of 9.25–8.7 within a decade. In the 2000s the gap con-
tinued decreasing at a more accelerated pace, going down from 8.7 to 5.4 during 12
years (2000–2012).
Finally, let us view the dynamics of the gap in GDP per capita between the
middle-income countries and the low-income countries in the past three decades
(see Fig. 3.31 ).
Some important observations can be made at this point. Indeed, both the middle-
income (after about 1990) and the low-income (after about 2000) countries seem to
have been converging to the high-income countries in the latest years (as compared
9 We think, that this fi asco of the Western economic science was connected with the fact that
Western economists tried to apply basically linear models to the analysis of a highly nonlinear
process.
10 This Addendum has been prepared on the basis of our article “On the structure of the present-day
convergence” (Korotayev and Zinkina 2014 ).
3 Great Convergence and the Rise of the Rest
107
to the divergence trend observed in the previous decades).
11 However, at the same
time the low-income countries have been diverging from the middle-income coun-
tries for the whole period of the latest three decades. Thus, the gap between these
two groups of countries has been steadily growing for the latest 30 years; the GDP
per capita in the middle-income countries exceeded that in the low-income coun-
tries by three times in 1981; now this gap is more than fi vefold.
11 Notably, the change from divergence to convergence trend fi rst occurred in the middle-income
countries, and then (10 years later) in the low-income ones.
0
5
10
15
20
25
30
35
40
45
1980 1985 1990 1995 2000 2005 2010
High Income/Low Income
Fig. 3.29 Dynamics of the gap in GDP per capita (from here on we use 2005 constant interna-
tional dollars, PPP) (by how many times) between the high-income OECD countries (According
to the World Bank classifi cation, this group of countries includes Australia, Austria, Belgium,
Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland,
Ireland, Israel, Italy, Japan, Korea, Rep.; Luxembourg, the Netherlands, New Zealand, Norway,
Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United
States.) and the low-income countries (According to the World Bank classifi cation, this group of
countries includes Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central
African Republic, Chad, Comoros, the Democratic Republic of Congo, Dem. Rep.; Eritrea,
Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kenya, North Korea, Kyrgyzstan, Liberia,
Madagascar, Malawi, Mali, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sierra Leone,
Somalia, South Sudan, Tajikistan, Tanzania, Togo, Uganda, Zimbabwe.), 1981–2012. Note : The
fi gures on the Y-axis scale denote by how many times the average GDP per capita in the high-
income OECD countries exceeded the one in the low-income countries for a given year. Thus, the
value of 25 for 1981 means that in 1981 the GDP per capita was 25 times higher in the high-income
OECD countries than in the low-income countries. Calculations made on the basis of the data
presented by: World Bank ( 2014 ): NY.GDP.PCAP.PP.KD
Long-Term Divergence–Convergence Trends as Regards the GDP
108
Thus, the general pattern of convergence and divergence between the high-
income, middle-income, and low-income countries during the last 30 years looks as
follows (see Fig. 3.32 ).
Our fi nding is quite concordant with some of the results presented in previous
publications. Thus, Ho ( 2006 ) studies the threshold effects of per capita income on
the convergence behavior of growth rates among 121 economies during the sample
period from 1960 to 2000. Convergence appears to be insignifi cant in the lowest-
income regimes, but is signifi cantly found beyond such regimes. Ho fi nds the income
threshold (which the country needs to overcome in order to start converging) to be
0
1
2
3
4
5
6
7
8
9
10
1980 1985 1990 1995 2000 2005 2010
High Income/Middle Income
Fig. 3.30 The dynamics of the gap in GDP per capita (by how many times) between the high-
income OECD countries and the middle-income countries (according to the World Bank classifi ca-
tion, this group of countries includes Albania, Algeria, American Samoa, Angola, Antigua and
Barbuda, Argentina, Armenia, Azerbaijan, Belarus, Belize, Bhutan, Bolivia, Bosnia and
Herzegovina, Botswana, Brazil, Bulgaria, Cameroon, Cape Verde, Chile, China, Colombia, Congo,
Rep.; Costa Rica, Cote d'Ivoire, Cuba, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt,
El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Guyana, Honduras, India,
Indonesia, Iran, Islamic Rep.; Iraq, Jamaica, Jordan, Kazakhstan, Kiribati, Kosovo, Lao PDR,
Latvia, Lebanon, Lesotho, Libya, Lithuania, Macedonia, Malaysia, Maldives, Marshall Islands,
Mauritius, Mexico, Micronesia, Moldova, Mongolia, Montenegro, Morocco, Namibia, Nicaragua,
Nigeria, Pakistan, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Romania,
Russian Federation, Samoa, Sao Tome and Principe, Senegal, Serbia, Seychelles, Solomon Islands,
South Africa, South Sudan, Sri Lanka, St. Lucia, St. Vincent and the Grenadines, Sudan, Suriname,
Swaziland, Syrian Arab Republic, Thailand, Timor-Leste, Tonga, Tunisia, Turkey, Turkmenistan,
Tuvalu, Ukraine, Uruguay, Uzbekistan, Vanuatu, Venezuela, Vietnam, West Bank and Gaza,
Yemen, Zambia.), 1981–2012. Note : The fi gures on the Y-axis scale denote by how many times the
GDP per capita in the high-income OECD countries exceeded that in the middle-income countries
for a given year. Thus, the value of 9 for 1993 means that in 1993 the GDP per capita was nine
times higher in the high-income OECD countries than in the middle-income countries. Calculations
made on the basis of the data presented by: World Bank ( 2014 ): NY.GDP.PCAP.PP.KD
3 Great Convergence and the Rise of the Rest
109
0
1
2
3
4
5
6
1980 1985 1990 1995 2000 2005 2010
Middle Income/Low Income
Fig. 3.31 The dynamics of the gap in GDP per capita (by how many times) between the middle-
income countries and the low-income countries, 1981–2012. Note : The fi gures on the Y-axis denote
by how many times the GDP per capita in the middle-income countries exceeded that in the low-
income countries for a given year. Thus, the value of 4 for 1994 means that in 1994 the GDP per
capita was four times higher in the middle-income countries than in the low-income countries.
Calculations made on the basis of the data presented by: World Bank ( 2014 ): NY.GDP.PCAP.PP.KD
1
10
1980 1985 1990 1995 2000 2005 2010
High Income/Low Income
High Income/Middle Income
Middle Income/Low Income
Fig. 3.32 The dynamics of the gap in GDP per capita (by how many times) between the high-
income, the middle-income, and the low-income countries, logarithmic scale, 1980–2012
Long-Term Divergence–Convergence Trends as Regards the GDP
110
about $1,150. Malamud and Assane ( 2013 ) investigate the growth difference
between sub-Saharan Africa/SSA (which make up the majority of the lowest-
income group viewed by Ho and the low-income group investigated in this paper)
and the rest of the world and fi nd that SSA countries converge more slowly, if at all,
than the rest of world countries over the period from 1965 to 2000. Our results seem
to be well consistent with the fi ndings stated in both papers.
Possible Explanations of the Trends
Now let us turn to analyzing the forces and factors behind the above-revealed
specifi c pattern of the dynamics of per capita income gaps between the high-
income, middle-income, and low-income countries. Naturally, in a single paper
one can hardly present a comprehensive explanation (or even an attempt at mak-
ing the one) for the complex structure of convergence trends. So below, we will
try to outline only some main economic forces that are likely to have contributed
to the specifi c convergence-divergence pattern of recent years. Let us start with
the two fundamental convergence-driving forces proposed by Gerschenkron and
Solow (as quoted above), namely, the technological diffusion from the more
advanced countries to the developing ones, and weaker diminishing returns in the
developing countries.
As regards the technological diffusion, it is likely to proceed particularly fast in
the middle-income countries that have a suffi cient amount of well-qualifi ed work-
force (including labor force with professional technical education) which is essen-
tial for a successful practical implementation of the adopted technologies. Indeed, a
number of studies demonstrate that in order to benefi t from international technology
transfers, the learning capacity as well as the investment required to apply technolo-
gies in local production processes, play an important role (see, e.g., Nabin et al.
2013 ; Hoekman et al. 2005 ).
Now let us briefl y view the possible infl uence of another major convergence-
driving factor, namely, the larger marginal product of capital and investment profi t
in the developing countries as compared to the more affl uent societies. Abel and
Bernanke took this principle implied in the Solow model as a basis to expect a more
rapid increase in capital stock in poor countries (Abel and Bernanke 2005 : 234).
Indeed, already in 1998, the proportion of investment in GDP was much higher
in the middle-income countries than in the high-income ones (notably, this propor-
tion was the lowest in the low-income countries)—see Fig. 3.33 . By 2008, the pro-
portion of investment in GDP remarkably dropped in the high-income countries and
simultaneously grew in the low-income ones; so the low-income countries actually
outpaced their high-income counterparts with respect to this indicator. However, the
middle-income countries experienced the greatest increase in the proportion of
investment in GDP during the same period and by 2008 they far outpaced both the
high-income and the low-income countries (see Fig. 3.34 ).
3 Great Convergence and the Rise of the Rest
111
Foreign investment infl ow into the developing countries contributes to conver-
gence in various ways. Generally, it has a signifi cantly positive direct effect on the
growth of income per capita (e.g., Alfaro et al. 2004 ; Blonigen and Wang 2005 ;
Borensztein et al. 1998 ). Moreover, FDI has a signifi cantly positive direct effect on
TFP growth, which is extremely important, as more than half of the cross-country
variation in both income per capita and its growth rates results from the differences
in TFP and its growth, respectively (for a detailed review see Woo 2009 ).
This taken into account, the particularly high economic growth rates in the
middle- income countries are clearly not coincidental.
21.22
23.62
17.92
0
5
10
15
20
25
High Income Middle Income Low Income
Fig. 3.33 Proportion of investments in GDP, %, 1998. Note : calculated on the data from World
Bank ( 2014 ): NE.GDI.FTOT.ZS
20.28
27.16
21.54
15
17
19
21
23
25
27
29
High Income Middle Income Low Income
Fig. 3.34 Proportion of investments in GDP, %, 2008. Note : calculated on the data from World
Bank ( 2014 ): NE.GDI.FTOT.ZS
Long-Term Divergence–Convergence Trends as Regards the GDP
112
Possible Global Implications of the Convergence–Divergence Pattern
Thus, in recent years the structure of convergence-divergence pattern has become
rather peculiar. The gap between the high-income and middle-income countries has
been rapidly decreasing. This fact is particularly noteworthy when taking into
account that the middle-income countries currently accommodate about 70 % of the
world population (about fi ve billion people). If the current pace persists in the near-
est decades, the prospects for these 70 % look really bright, as the gap between the
high-income OECD countries and the middle-income countries will essentially dis-
appear in just 15–20 years. However, such a bright prospect of the middle-income
countries fully converging to the high-income ones is very doubtful with a view to
the prospect of the “Reindustrialization of the West”, on the one hand, and the
“middle-income trap” 12 awaiting the middle-income countries, on the other. Indeed,
a number of Latin American countries were the fi rst to experience stagnation after
reaching middle-income levels and failure to move further into the ranks of high-
income countries. A number of works reveal the same threat to be currently looming
large for many developing countries in other regions, notably in Asia (including
China) (see, e.g., Grinin and Korotayev 2010a ; Kohli and Mukherjee 2011 ; Cai
2012 ; Kharas and Kohli 2011 ; Aiyar et al. 2013 ). Note also that the mathematical
model presented above in Appendix B also predicts a certain slow-down of the pro-
cesses of Great Convergence in the forthcoming decades. One should not exclude
the possibility of temporary reversals (similar to the one that was already observed
in 1997–1999).
The gap between the high-income and the low-income countries has also been
decreasing lately, but at a much slower pace. Meanwhile, the gap between the
middle- income and the low-income countries has been growing steadily. In the
early 1980s, this latter threefold gap was clearly outshadowed by the colossal gap
(almost a tenfold one) between the high-income and the middle-income countries.
The current situation is remarkably different: the low-income countries lag behind
the middle-income by more than fi ve times, which is almost equal to the gap
between the middle-income and the high-income countries.
As regards the low-income countries, we would like to emphasize that their total
population does not exceed a billion people (World Bank 2014 : SP.POP.TOTL),
which is less than the total population of the high-income countries. In other words,
“the bottom billion” is currently less than “the golden billion”. This means that
when looking at the convergence and divergence processes in terms of the popula-
tion numbers in the converging/diverging countries, we are bound to state that cur-
rently the processes of convergence clearly prevail over the processes of divergence
(much more people live in the converging countries than in the diverging ones).
However, this disposition is likely to dramatically change in the coming decades, as
12 As defi ned by Aiyar et al., the “middle-income trap” is “the phenomenon of hitherto rapidly
growing economies stagnating at middle-income levels and failing to graduate into the ranks of
high-income countries” (Aiyar et al. 2013 : 3). For a detailed description of the factors and mecha-
nisms of the middle-income trap see, e.g., Kharas and Kohli 2011 .
3 Great Convergence and the Rise of the Rest
113
the population growth rates in the “bottom billion” are much higher than in the rest
of the world. Indeed, the African populations have recently been growing more
rapidly than the non-African developing world grew at its peak , and that by 1970,
the ratio of young dependents to the working-age population had exceeded histori-
cal developing-country norms and even now remains that high (Ndulu et al. 2007 :
106; Zinkina and Korotayev 2014 ). A decade of economic successes has been
hardly enough to bring many countries just to the WHO recommended level of per
capita food consumption; however, if the fertility decline fails to accelerate and
population continues rocketing up, to sustain this level (let alone to surpass and start
to catch it up, which is utterly essential for improving the living standards of the
majority of population) is likely to become “mission impossible” (Zinkina and
Korotayev 2014 ; Зинькина and Коротаев 2013 ).
Thus, our analysis reveals a rather signifi cant re-confi guration of the World
System in the recent three decades. It is namely the middle-income countries that
have demonstrated the highest economic growth rates after 1990 (and even more so
after 2000). This is quite explicable, as in the modern world namely the middle-
income countries generally have the best opportunities for achieving high economic
growth rates. Indeed, the workforce in such countries is still rather cheap (as com-
pared to the high-income ones), but already benefi ts from rather high levels of edu-
cation and health system, which greatly increases the quality of the workforce (as
compared to the low-income countries). The low-income countries, on the other
hand, are lagging behind in terms of education (especially secondary and tertiary
education) and still demonstrate extremely high population growth rates which
increase the age-dependency ratio and decreases the economic growth rates. While
the middle-income countries have been converging to the high-income ones, the
low-income countries have actually been diverging from the middle-income ones.
This is a rather threatening trend which requires specifi c international attention to
removing the growth obstacles in the low-income countries (among other things, by
increasing the education level and the quality of the workforce, as well as by bring-
ing down the extreme population growth rates).
Long-Term Divergence–Convergence Trends as Regards the GDP
115© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9_4
Chapter 4
The Great Convergence and Globalization:
How Former Colonies Became the World
Economic Locomotives
After the Great Divergence reached its peak level between the 1850s and the 1870s,
more than a century had passed before a new trend became apparent in the world
economy development; that was a tendency towards convergence. Still, retrospec-
tively one can already trace the beginning of this process in the nineteenth century
when Europe’s and the West’s domination seemed to have become overwhelming.
Strange as it may seem, the main reason for such a change was the necessity to sup-
port Western economic development as well as the trend in divergence, that is to
increase the export of capital and technologies to the countries which would later
become developing ones and this, in its turn, encouraged both the growth of national
movements for political and economic independence and also the rise of the stratum
of entrepreneurs with new business ethics.
1 In the late nineteenth and early twenti-
eth centuries, the increasing export of British and European capital also marked the
initial formation of the contemporary World System. From the late nineteenth
century, the World System core began to move from Great Britain to the USA (see
Гринин and Коротаев 2009в; Grinin and Korotayev 2012c , 2013a for details); but
before this transfer was fi nally completed, there were hard crises of the fi rst half of
the twentieth century which also made it easier for the colonies to gain political
independence.
1 This became evident rather soon (see, e.g., Marx 1853 ).
116
Western Technologies and the Emergence of Prerequisites
for a Shift Toward Convergence in the Late Nineteenth
and Early Twentieth Centuries
Increasing Export of Capital as a Starting Point of the Turn The emergence of
steam transport and development of electric communications brought opportunities
of the fast transfer of capital and goods. Combined with free trade policy, this led to
a rapid growth of external trade and export of capital in the world. The latter also
affected less developed countries, yet one could hardly speak about any equal trade.
In the period from the 1850s to the 1870s, the average growth rate in world trade
was about 5 % (Held et al. 1999 ); moreover, in the nineteenth century its general
growth surpassed the industrial production growth (see, e.g., Широков 1981 : 39).
An intensive railway construction in the USA and in a number of other countries
(including Argentina, India, Australia, and Russia) was the driving force of global
development for at least last two or three decades of the nineteenth century and was
impossible without foreign capital involvement. On the whole, the role of Great
Britain as the main exporter of capital (followed by France) was exceptionally
important. It was exactly the export of capital that “cooled down” the British eco-
nomic upswings starting from the last quarter of the nineteenth century. During the
20 years (from 1862 to 1882), according to some evidence (Hobson 1902 ), the out-
fl ow of British capital grew six times. To a great extent the export of capital took
place in the form of foreign loans. According to some estimates, by 1881, British
capital had invested into the foreign government obligations a huge sum of money
for those days, namely, 700 million pounds (Hobson 1902 ; see also O’Rourke and
Williamson 1999 : 209 etc.). On the whole, between 1870 and 1914, British net
export of capital totaled £2,400 million, which in large part fl owed to the underde-
veloped countries (Sweezy 1969 : 194). But in the 1870s, for each 100 million of
British capital sent abroad, there were already 60–70 millions of French capital also
being sent abroad (Мендельсон 1959 , т. 2: 14). In that period (as well as in the
subsequent one), in addition to Great Britain and France, Germany also became a
capital exporter and its role tended to increase (Гинцберг 1970 : 433–434), while
the USA, Italy, Russia, and Japan absorbed foreign investments (see Мельянцев
1996 : 114–115; see also Amsden 2004 ; Allen 2011 ).
In the subsequent period, large-scale foreign investments of different kinds
became the most important locomotive of global development, and in the periphery
countries as well. Thus, during the period from the 1880s to the 1890s, Great Britain,
France, and Germany doubled their foreign investments. During the economic cycle
of 1881–1893, the foreign investments almost equaled the investments for the entire
previous history of these countries (see Мендельсон 1959 , т. 2: 305; см. также
Rippy 1959 ). “This continuous and increasing emigration of capital from the coun-
tries with the old capitalist culture presented a factor of utmost importance in the
matter of distribution of the capitalist economy throughout the world. It was just due
to the fl ow to emerging economies that capital conquers one country after another
4 The Great Convergence and Globalization: How Former Colonies…
117
in our days: emigrating capital remains a capital and brings everywhere the new
economic mode” (Туган-Барановский 2008 [1913]: 273; see also Tugan-
Baranovsky 1954 ). This process, already evident in the late nineteenth and early
twentieth century, intensifi ed even more in the fi rst half of the twentieth century. For
example, before the Second World War the volume of European, American, and
Japanese investments in South- East Asia amounted to no less than 3.2 billion dol-
lars (Васильев 1977: 175; Hall 1955 ; see also Amsden 2004 : 108).
Railroad track mileage in Asia and Africa doubled in the 1890s (Мендельсон
1959 , т. 2: 385). By the beginning of the First World War, some 35,000 km of
railways were built to the South of the Sahara (Allen 2009 ). The beginning of the
twentieth century was marked by a twofold increase of the railway construction in
non-Western countries (i.e., in Latin America, Africa, Asia, Canada, and Australia
etc.). Aside from the USA and Europe, during the 7 years between 1900 and 1907,
there were built 72,000 km of railways (calculated by Мендельсон 1959 , т. 3: 33;
see also Amsden 2004 ). On the whole, by the beginning of World War I, the length
of the railway network in a number of countries, which later would form the Third
World, was rather considerable. Thus, India’s rail net was about 56,000 km; this is
larger than in Great Britain and France and almost equal to the length of railroads in
Germany. In Brazil, Mexico, and Argentina the length of the railroad network was
24.9, 25.5, and 33.2 thousand kilometers respectively (Мельянцев 1996 : 130). 2
According to the estimates by such scholars as Issawi and Maddison, between 1870
and 1914, the volume of foreign capital (in constant prices) invested in the Third
World countries grew by 5.3–5.5 times and the investments were made mostly in
infrastructure and the mining industries (Issawi 1981 ; Maddison 1989 ; see also
Rippy 1959 ; Amsden 2004 ). Communication lines (like river and ocean shipping,
telegraph etc.) also developed rather actively together with, say, about 6,000 miles
of highways built in British Burma by 1938 (Hall 1955 ). The fi nancial system was
created [as well as banks and other institutions (about Indochina, Java see Ibid. )].
The investments in the infrastructure of periphery countries increased their
exports, although the periphery still remained mostly a supplier of raw materials
and some agricultural products (see, e.g., Гуревич 1986 ), and to a lesser degree it
was also a supplier of industrial natural resources and fuel [like copper, lead, tin,
iron and other metals, sulfur, saltpeter, oil etc. (Hall 1955 ; Rippy 1959 ; Yergin
1991 )]. In 1870–1928, in India, China, and Brazil the export in physical expression
annually grew by 2–3 %, while in Indonesia and Argentina it grew even more—by
4.5–5 %.
3 And in Korea, although it was exploited by Japan, even higher rates of
industrial growth were registered: in 1900–1929 the growth was 10.5–11.5 % (van
der Wee and Blomme 1992 ; Amin 1970 ; Maddison 1989 ; Morris and Adelman
1988 ; Perkins 1969 ; Amsden 2004 ). 4 However, during the Great Depression many
2 Due to this, already in the last decades of the nineteenth century wheat and meat (the latter due to
the invention of refrigerators) from Uruguay and Argentina managed to gain the European mar-
kets; and Chile started an active export of copper and guano.
3 In value terms the export from Indonesia in 1850–1914 grew by 13 times (Гуревич 1986 : 66).
4 During World War II, the Korean industry gave as much as one-third of all materials and products
needed by Japan (Пак 1986 : 472).
Western Technologies and the Emergence of Prerequisites for a Shift Toward…
118
developing countries suffered from a sharp decrease of trade volumes. However, in
the 1870s–1920s and especially in the years of World War I, the terms of trade index
of the periphery countries supplying raw materials and agriculture products also
grew (Asselain 1985 : 272; Bairoch 1992 : 410; Perkins 1975 : 34; Goldsmith 1986 :
54–55; Hansen and Lukas 1978 : 431; Heston 1983 : 903–904; Issawi 1982 : 39; Leff
1982 : 82). The demand for raw materials (especially for some of the products such
as rubber or jute) in the Western countries was rather large.
As noted, the appearance of new technologies, assets and goods as well as the
attempts to modernize Eastern societies led to the emergence of local industries,
bourgeoisie and proletariat, in other words, brought about rather important social
and economic changes. But, in our opinion, of utmost importance is the emergence
of local intelligentsia aware of western values and knowledge systems; this led to
the emergence of a number of large-scale social movements of the early twentieth
century in Turkey, Iran, China, India, the Philippines, Egypt etc. Although the
remaining countries were still rather backward, the East, nevertheless, started mov-
ing within the general global trend and becoming more closely involved in the
World System. It is also worth noting that in the second half of the twentieth century
the progress proceeded more rapidly in exactly those countries of the future Third
World where various changes in modernization did occur (however weak and often
contradicting the countries’ interests they may have seemed).
The Political Crisis in the Western Countries and Political Rise of the Peripheral
Societies By the beginning of the twentieth century, the opportunities for territorial
expansion of the West were almost exhausted. Meantime, a vigorous development
of the Western economies was combined with increasing contradictions between
them. This escalated into a confrontation that launched two murderous world wars
which signifi cantly reduced the importance of Europe in both the global economy
and global politics. As has been mentioned earlier, powerful social revolutions and
movements took place, and they changed the Western countries’ social policy. While
the role of Europe was decreasing, the might of the USA as the major country of the
Western world increased and fi nally, after World War II, one could observe a politi-
cal consolidation of countries headed by the USA in the struggle against Communism.
Of course, at the beginning of the twentieth century it was really impossible to
imagine that 50 years later there would hardly remain any remnants of the huge
colonial empires. Similarly, at the beginning of the nineteenth century, one could
hardly imagine that half a century later the world would be a network of railways
and telegraph lines. In the world of industrial economy and constant innovations 50
years is rather a long period.
The export of most up-to-date technologies, an active development of agricul-
tural production of essential basic stuff, the acquaintance of the colonial countries’
elites with Western education, the growth of local entrepreneurship (e.g., Amsden
2004 ), and weakening of Western countries as a result of wars and crises—all these
led to the strengthening of the political liberation movement (e.g., Grenville 1994 ).
As has been mentioned above, this created a new situation. On the one hand, in the
interwar period, the Western governments increased their efforts (at the same time
4 The Great Convergence and Globalization: How Former Colonies…
119
enhancing the humanitarian trend) to preserve their political domination; on the
other hand, their activity was also enhanced by the rising national consciousness
(see von Albertini 1971 , 1982 for the different infl uence of European countries,
changes in respect of the rule of colonies, nationalist elites etc.). Besides, some
other countries’ infl uence increased and their example (in the fi rst place that of the
USSR and Japan) infl amed minds. It is enough to read Jawaharlal Nehru (Nehru
1949 ) to see that the idea of active industrialization with state intervention to elimi-
nate backwardness in the shortest period of time had penetrated the political lead-
ers’ minds. Later, practice showed that using only domestic and state resources
could hardly help to achieve this end (However, without considerable efforts on the
part of the state, this could hardly occur either.). Thus, the idea of self-enhancement
that originated in the most developed eastern countries fi rst as means to create a
strong modern army, later started to actively penetrate the political elites’ minds,
though already on a wider basis, as a concept of societies’ deep modernization.
Nevertheless, one can hardly ignore the fact that this idea often had to oppose the
ideology of the unique path of certain countries and civilizations combined with the
preservation of old institutions. For example, Mahatma Gandhi (and far from him
alone), basing his thinking on his ideal of small-scale industries, was against
“machine civilization” thinking that machines would bring evil. Thus, in his famous
book “ Hind Swaraj ”, he maintained that “today machinery merely helps a few to
ride on the back of millions” (Gandhi 1998 ). Of these same views was the Iranian
thinker, Ahmad Kasravi (for details see Дробышев 1986 : 246–247). But even such
leaders had to admit the necessity of industrialization.
Many peripheral countries participated in the two world wars as allies of the
respective imperial centers. This brought certain changes in colonial and semi-
colonial countries especially during the Second World War. While the First World
War had hardly touched many of them, the Second World War, in particular, the
Japanese expansion, affected many more countries. For example, the British
dominions and protectorates were actively involved in this struggle. That led to a
vigorous rise of national consciousness (see, e.g., Юрьев 1994 : 3–12). Besides, it is
known that the weakening of the West launched a wave of anti-colonial struggle
which led to the emergence of several dozens of independent states within two
decades. The intellectuals in these societies were full of bright hopes that their soci-
eties would fl ourish shortly after, but economic welfare appeared a long way from
political independence. Nevertheless, the world had signifi cantly changed. Its con-
fi guration became completely different. It began to comprise three worlds, consist-
ing of the developed Capitalist (the First), Socialist/Communist (the Second) and
developing (the Third) World segments. But we should note that such a division was
only defi ned in these terms in the 1950s.
5
5 Let us note that the term “Third World” itself was initially introduced as a political (military-
political) term denoting the countries that did not join any military-political blocks (mind that far
from all developing countries were non-aligned countries) and only later the term “the Third
World” started to denote developing countries. Thus, originally, the Third World could only resolve
political issues, and the convergence itself meant just choosing the path of convergence (Capitalist
or Socialist/Communist).
Western Technologies and the Emergence of Prerequisites for a Shift Toward…
120
West and East After the Second World War:
Technologies and Politics
The Scientifi c-Information Revolution. A New Rise of the West. Pessimism
Towards the East Contrary to the hopes of the Socialist Prophets after the Second
World War, the Western countries not only managed to escape a permanent crisis,
but having recovered, they demonstrated unprecedented growth rates. This hap-
pened, on the one hand, due to profound transformations in the Western societies
connected with an increasing role of the state in social and economic regulation and
with the elimination of discrimination of different layers of the population (Grinin
2012a ). On the other hand, Western societies managed to extract advantages for the
starting scientifi c-information revolution.
6 No wonder that just in that period, an
especially concentrated cluster of innovations emerged. The share of new products
was rather large in the World System core economies. Thus, according to the esti-
mates by McGraw-Hill , in 1970 the share of new products, which appeared in the
market after 1952, in the US industrial output in the machinery manufacturing sec-
tor this amounted to 85 %, in electrical engineering—97 %, in car industry—77 %
(Клинов 2006 : 87). On the whole, by the end of the 1960s, the share of engineering
and chemical industries in the US manufacturing output exceeded 56 % (Клинов
1992 : 177, 179–180).
Between 1950 and 1970, this revolution revealed itself in a vigorous develop-
ment of synthetic materials’ production, in the introduction of automation into man-
ufacturing, in the development of biotechnologies which allowed the production of
new drugs, nutritional and livestock supplements, and in numerous other changes in
most industries. The non-computer electronics and communication means were also
actively developed (for more details see Grinin 2012a ; Grinin and Grinin 2013 ).
Finally, the invention of the fi rst computers in the 1940s and 1950s contributed to
the information revolution in subsequent decades a revolution that changed practi-
cally everything. The Western economy became a service economy (Bell 1973 ;
Hartwell 1976 ; Toffl er 1980 ; see also Gibson 1993 ; Krahn et al. 2008 ). Meanwhile,
the Western societies achieved an unprecedented level of living standards. The
affl uent society had come true.
In the meantime, the Third World countries also underwent huge changes. In
addition to the development of enhanced independent statehood in these countries,
the major changes consisted in the demographic transition that started in most of
those countries and was connected with the introduction of modern medical service.
As is known, this led to outstanding population growth rates in those countries and
in the world in general. The rates of natural population increase in the developing
countries grew from 1.3 % in the 1940s to 2.54 % in 1971 (calculations are based
on Maddison 2010 ; similar estimations see, e.g., Широков 1981 : 83; UN Population
6 For a long time it has been denoted as a “new industrial revolution” or a “scientifi c-technical revo-
lution” etc. (see, e.g., Bernal 1965 ; Philipson 1962 ; Benson and Lloyd 1983 ; Sylvester and Klotz
1983 ).
4 The Great Convergence and Globalization: How Former Colonies…
121
Division 2014 ; for details see Appendix B). One can state that it will be defi nitely
impossible to achieve the population growth rates which were observed in the 1960s
and 1970s again. Thus, the leading evolutionary trend of the previous millennia,
which we defi ned earlier (in Chap. 2 ) as the major indicator of development, reached
its maximum point in the 1970s and started gradually decreasing. One can consider
just that period as a critical point after which the global trend of the Great Divergence
started transforming into the Great Convergence. Why? First, the non-Western
world had fi nally maintained its advantage on labor resources (which some time
later became more evident), while the Western world had almost achieved its maxi-
mum rate of labor resources. Second, a gradual decrease of the birth rate in the
developing countries in the 1990s meant that in the non-Western countries the level
of development of human capital had signifi cantly increased and started the transi-
tion to the modern economic model (for details on this point see Appendix B).
However, not all such transformations were evident and some were presented as
having apocalyptical outcomes. It seemed impossible to catch up with the Western
states because of their huge development rates. It is not surprising, that in the period
after 1950, the dependent development theory became rather popular in Latin
America and among leftist economists in the West—Hans Singer, Raúl Prebisch,
Fernando Henrique Cardoso, Enzo Faletto, Celso Furtado etc. (see e.g., Prebisch
1950 , 1959 ; Cardoso and Faletto 1979 ; Furtado 2003 , 1999 ; see also Toye and Toye
2003 ). 7 This theory was applied, in particular, to Latin American countries which
passed through several waves of modernization but still lagged behind the devel-
oped countries.
8 The general idea within this approach is that the world economic
system is organized in a way that gives substantial advantages to the developed
countries in trade and other transactions with respect to the developing ones (in
particular, in the form of non-equivalent export) which generate inequality and per-
manent backwardness of the latter.
9
Yet, contrary to all the predictions of many of the above mentioned (as well as
other) experts (e.g., Prebisch 1959 ; Bairoch 1964 ; Sunkel 1966 ; Wallerstein 1974 ,
1987 ; Amin 1976 , 1994 , 1997 ; Bornschier 1976 , 1981 , 1982 , 1983 ; Bornschier and
Chase-Dunn 1985 ; Frank 1979 ; MacPherson and Midgley 1987 ; Love 1980 ; etc.)
who in the 1950s, 1960s, 1970s, and 1980s wrote about practically unbreakable
vicious circles of backwardness of the developing countries, two or three decades
later the real situation in many of them appeared rather optimistic.
7 Of course, we do not mention different socialist and communist ideas that were rather popular in
the 1950s and 1960s among some Western economists according to which the monopolistic
Capitalism and real progress of underdeveloped countries are completely incompatible (e.g. Dobb
1963a , 1969 ; Feinstein 1969 ).
8 In contemporary economic literature this phenomenon was also called the end of the standard
model of modernization (e.g., Аллен 2013 ; Allen 2011 ).
9 These ideas got their further development within the world-system theory (Frank 1979 ; Wallerstein
1987 ; Arrighi 1994 ). The dependency theory as a concept has generally lost its value, but some of
its important ideas are used this way or another by contemporary scholars (James 1997 ; Köhler and
Tausch 2002 ; see also Бобровников 2004 ; Хорос and Красильщиков 2001 ; Красильщиков
2011 ).
West and East After the Second World War: Technologies and Politics
122
Nevertheless, as we will see below in Appendix B, already in the 1950 and 1960s
the Third World generally caught up with the First World in terms of GDP growth
rates, and then the progress of the Third World accelerated. Thus, there was an
increase in the rate of investment from 6–8 % of GDP in 1900–1938 to 21–23 % of
GDP in 1950–1993 (Мельянцев 1996 : 220; об этих, а также и последующих
периодах см. также Мельянцев 2000 , 2009 , 2013 ). The developing countries also
began to surpass the developed countries in terms of changes in development indi-
ces ( Ibid. ). In short, these countries achieved modern growth rates and other indica-
tors of growth, but in order to reduce the gap they had to make a more vigorous
breakthrough. The Third World’s lagging behind the First in terms of the per capita
GDP growth rate in the 1960s and the 1970s was connected fi rst of all with the fact
that at that period most developing countries had not yet entered the second phase
of the demographic transition. Meanwhile, the enormous backwardness of the
developing countries in comparison with the developed ones concealed the most
important positive change: namely, that the developing countries started to advance
much faster than they used to, and this was especially manifested in the develop-
ment of human capital (however poor the actual situation was, but medicine, educa-
tion and culture had progressed very much in these countries). Actually, the
developing countries’ lag was evident only in comparison with the progress of the
developed ones; but in fact, in many of them profound changes had occurred, and
besides, the economic growth rates (in particular, the growth rate of export volume),
as well as the HDI growth rates had already surpassed the preindustrial value and
reached contemporary ones.
On the whole, in the Third World, the share of people living below the poverty
line reduced from 45–50 % in 1960 to 24–28 % in 1990 (Мельянцев 1996 : 199).
The literacy rate of the adult population which in 1900 was about 14–15 % increased
from 28 % in 1950 to 69 % in 1993, and the average number of years of study
increased from 1.6 to 5.8 (see, e.g., Bairoch 1983 ; Мельянцев 1996 ). Besides, child
mortality in the developing countries also declined at a fast rate (from 200 to 70 ‰
in 1950–1993). On the whole, then the general improvement of economic and
sanitary situations in the Third World contributed to the increase in average life
expectancy, which in 1950–1993 increased almost two times from 35 to 64–66
years (Мельянцев 1996 : 199; World Bank 2014 ).
But of course, the development of the Third World was rather contradictory,
since a rather pronounced backwardness was still evident and in some regions griev-
ous poverty and misery even increased; besides, the development was also non-
uniform, as alongside with some countries’ progress, the others could even fall
farther behind. This non-uniformity was present both among countries and within
certain countries where some regions resembled developed areas while the others
remained very backward.
The developing countries have also demonstrated a diversity of pathways and
patterns of economic development (Грановский 1988 : 314). Not all of them proved
to be a success, but that was the way to gain the necessary experience of development
as well as to give a boost to some of their economic sectors. Thus, the Soviet schol-
ars distinguished the following modes of economic growth in India’s development
4 The Great Convergence and Globalization: How Former Colonies…
123
before the 1980s: (1) economic stabilization (by the mid-1950s); (2) imbalanced
industrialization (from the mid-1950s to the mid-1960s); (3) the promotion of
agriculture (from the mid-1960s to the mid-1970s); (4) development limited by
internal market dynamics (from the mid-1970s) (Грановский 1986 : 140). 10 Let us
also note that in the 1960s one could observe a very fast growth of heavy industry
in the developing countries. The average annual growth rate in heavy industry was
8.4 %, while in light industry it was 4.8 % (UN Department of Economic and Social
Affairs 1973 : 17; Бабинцева 1982 : 24). This tendency, but already with a smaller
gap, endured even in the 1970s. This was in itself quite important for the emergence
of national economies despite the later developed ideas that it was actually of no
importance which sector of economy developed if it worked rather effi ciently (for
the criticism of this idea see Reinert 2007 ). But since many of those enterprises
were state-owned, they often turned unprofi table. Thus, the TNCs became another
important and more effective way to develop technologies.
Finally, in the 1970s and 1980s the most effective export-oriented models of
development were elaborated (see Amsden 2004 ). However, we should note once
again that in the 1970s and even 1980s, those retrospectively visible changes were
undetected, while on the surface one was used to observing increasing poverty,
unemployment and economic lag (real and apparent, primarily with respect to the
GDP per capita) behind the Western countries. It was worse that many economists
were convinced that such backwardness was impossible to overcome, because of
the fallaciousness of the world economic system itself. But as is typical of
evolutionary processes, when a trend achieves its most visible outlines, it means that
it has already exhausted itself; but this fact was not yet evident to a superfi cial
observer. Both the problems of the South and the wealth of the West showed evi-
dence for a turn toward convergence. First, this turn toward convergence evidently
appeared in the small Asian Tigers’ success (Berger 1986 ), and later—in the larger
countries’ advance.
11
10 This period is recognized to bring a serious crisis which became possible to overcome after the
reforms of 1991, after which the growth rates in India accelerated. Granovsky (Грановский 1986 :
134) distinguished three components of the economic policy in the developing countries in the
1960–1980s, namely, declarative, compensatory and structurally reforming components. The
declarative component comprised planned objectives not supported with resources and opportuni-
ties. It was just the tasks of that kind that would frequently exhaust the weak economy and lead to
crises. The compensatory impact was most clearly manifested in credits (often ineffective) of the
small-scale manufacturing. But on the whole, the reformative and purposeful activity of the young
states led to development.
11 The Asian Tigers and sometimes such Latin American countries as Argentina, Mexico, and
Brazil are regarded as fi rst newly industrialized country (NIC). The next generations of NIC
include Malaysia, Thailand, India, Chile, Cyprus, Tunisia, Turkey, Indonesia, the Philippines, and
China. The term “newly industrialized country” came into use around 1970. There are some crite-
ria for NIC (in particular, the combination of an open political process, comparatively high GNI
per capita, and a thriving, export-oriented economic policy, substantially high Human Development
Index). However, different economists disagree both on the list of such countries and on the criteria
(e.g., Bożyk 2006 : 164; Guillén 2003 : 126; Waugh 2000 : 563, 576–579, 633, 640).
West and East After the Second World War: Technologies and Politics
124
Together with the process of current globalization and general technological
advance, the periphery became actively involved in the global technological process.
The attempts to attract capital and technologies became more and more intensive,
and active work started in order to create conditions for this. The Great Convergence
was coming.
The Beginning of the Turn to Convergence:
Causes and Manifestations
The “rise of the rest” was one of the phenomenal changes in the last half of the
twentieth century (Amsden 2004 : 2). However, one can hardly speak about any
single reason which appeared as a determinant in the change of the vector of devel-
opment from the Great Divergence to Great Convergence. If the task was to defi ne
the most important reason, then, in our opinion, it would consist of the fact that the
process of the growing connectedness of different countries which was aimed at
supporting further innovative development sooner or later would demand the equal-
ization (at least to a certain degree) of developmental levels of different regions of
the world. One can call this a “law of communicative vessels” in global economy.
Up to a certain moment this law did not work to its full extent as there were some
social and cultural, technological, and political impediments for its implementation.
As is demonstrated in Appendix B, the most important among them was the low
level of the human capital development in the World System periphery which did
not allow any really effective diffusion of capital and technologies from the World
System core.
12 But those impediments would almost inevitably weaken, and then
the backward regions would start to develop faster simply due to the infl uence of
more developed countries. Below we will dwell on this point in detail.
Nevertheless, similar to the case with catching up divergence, it is more appro-
priate to speak about a range of reasons. Below, we will enumerate a number of
additional factors and causes which led to the situation where the growth and devel-
opment rates of the Third World countries ultimately surpassed those of the First
World. Unfortunately, we have no opportunity to dwell on each cause in detail. That
is why we limit ourselves to a brief enumeration which will be accompanied with
additional comments to some of the aspects. Since any hierarchy of causes would be
rather ambiguous, we will place them in chronological order to as much an extent
as possible.
12 On the other hand, the level of the human capital development was as high as in Western Europe
in such its agricultural and raw material suppliers as Canada, Australia, and New Zealand—and
West European capitals and technologies diffused there without any problems, bringing them quite
easily to the club of the most developed countries of the world. Throughout most other peripheral
countries it was much lower, and the enormous problems that the Western industrial capital
encountered when trying to diffuse to the peripheral countries with low levels of the human capital
development are very vividly described by Clark ( 2007 : 303–370).
4 The Great Convergence and Globalization: How Former Colonies…
125
Fundamental Reasons
Political and Ideological Reasons and Factors
The Role of the USA From the very beginning, the USA (having quite a few colo-
nies of its own) was much more determined than France and Great Britain as regards
that peoples deprived of independence should gain it and that even having colony
status, the peoples of the latter have the right to claim a fairer distribution of wealth.
This position supported the struggle for independence of many colonies. For exam-
ple, Franklin D. Roosevelt sharply criticized Britain for the eighteenth-century
methods of trade with colonies. He believed that they should use the twentieth-
century methods which involved bringing industry to the colonies, increasing peo-
ple’s welfare by increasing their living standards, by educating them, by bringing
them sanitation, by making sure that they would get a return for the raw wealth of
their community (Рузвельт 1947 : 230–233). Of course, later the United States did
not hesitate to use the methods of the past centuries, if it turned out to be profi table,
but some factors (listed below) would prevent this. To sustain their own image as the
most democratic country and to manipulate voting in various international organiza-
tions the USA also supported the developing countries in different ways.
The Growth of the Military and Political Signifi cance of Developing
Countries This signifi cance increased during the Second World War, and this
increase resulted from the confl ict between Capitalism and Communism, the forma-
tion of military blocks, the deployment of military bases, etc. In some way, this
growth demanded from the West (and from the Communist Bloc as well) technical,
military, fi nancial and other support be given to the periphery countries, conse-
quently bringing up the Third World countries to a higher level of development. The
ideological and political confl ict between Capitalism and Communism contributed
to the fact that the Western countries had to increase their various forms of support,
especially to the countries in strong confrontation with the Communist Block. And
exactly those countries succeeded to make early breakthroughs (Taiwan, Hong
Kong, South Korea). This support was also provided to other countries which for
some reason turned out to be important for the West, for example to maintain bal-
ance in the Middle East, Latin America, in the former colonies, etc. The signifi cance
of the ideological factor (the responsibility of the West, its guilt), and of the general
humanitarian component (which had prepared the background for the mobilization
of the society to help developing countries) also increased.
The Role of the USSR and the Communist Countries was quite signifi cant with
respect to industrial modernization and the transfer of technology which led to the
formation of heavy industry in some Third World countries. The USSR and other
Communist states supported different countries, many of which (India, Egypt, etc.,)
accepted state industrialism but refused to accept Communism. The result was the
enhancement of important steps in the industrial development of those countries.
The Beginning of the Turn to Convergence: Causes and Manifestations
126
Aspects of International and Regional Organizations
The Role of Developing Countries due to Their Number Was Especially
Tangible in Various International Organizations Thus, the assistance to devel-
oping countries had been intensifi ed through international organizations and was
performed on a scientifi c basis with the involvement of the leading experts. In short,
the West had to realize the necessity of bringing up the developing countries to
reduce the gap. The Western countries were not interested in the developing coun-
tries catching up with them, but they were interested simply in reducing the gap.
That is why the most grievous forms of backwardness such as hunger, tribal war-
fare, long civil wars, and complete disregard of modernization (education, medical
aid, etc.) were considered highly undesirable or simply intolerable and were mostly
eliminated.
The Role of Regional Organizations Within framework of the regional organiza-
tions it was easier to assimilate new experience, to get certain aid, to adopt a new
ideology and certain standards, and to negotiate with the Western countries. Despite
the fact that regional international organizations in developing countries as well as
the association of developing countries with the Western countries (within the
Commonwealth framework, contacts with EU etc.) were not entirely effi cient, they
still contributed to problem solving.
The Growing Variety (and Rivalry) of Development Programs Many different
models of modernization appeared after many countries gained independence dur-
ing the confl ict between Capitalism and Communism and regional struggle (e.g. in
the Middle East). Due to this great variety, there were many opportunities for the
implementation of some alternatives and their successes. And the successful pattern
could be reproduced.
Economic Reasons and Factors
The Growing Signifi cance of Developing Countries as Suppliers of Industrial
Mineral Resources and Agricultural Raw Materials (timber, agricultural com-
modities, minerals, fuels, etc.).
In the nineteenth century cotton was the most important raw material for
European industry, later its place was taken by natural rubber and then by oil. While
coal deposits were abundant in European countries, the oil reserves were limited.
Furthermore, the dependence on oil supplies grew more and more. The struggle for
oil within the framework of economic expansion started in the 1920–1930s with the
most illustrative case of Mexico which nationalized the oil companies.
Nationalization remained the most important event after the war and often alter-
nated with the overthrows of the governments that aimed at nationalization (the
most illustrative case is Iran in the 1950s). At the same time, the signifi cance of the
oil countries (or countries possessing some other strategic raw materials) was growing.
4 The Great Convergence and Globalization: How Former Colonies…
127
The Second World War demonstrated the importance of having oil. That is why
during and immediately after the Second World War the Middle East became a stra-
tegically important region. Saudi Arabia started to be the USA’s signifi cant focus
and was considered as a valuable foreign investment. It is not surprising that in 1950
President Harry S. Truman wrote a letter to the King of Saudi Arabia which reads as
follows: “No threat to your kingdom could occur which would not be a matter of
immediate concern to the United States” (Yergin 1991 ). Thus, the USA began to
establish a strategic partnership with Saudi Arabia (and later with the states of the
Gulf) rather long ago. The year, 1960, became an important landmark in the devel-
opment of oil-producing countries as that year the Organization of the Petroleum
Exporting Countries (OPEC) was established in Baghdad. The founders of the orga-
nization were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. OPEC became the
most powerful supranational organization of developing countries after the oil price
shocks in 1973–1974 and 1979–1980, and these oil price shocks marked the turning
point in the relations between the developing and developed countries. As a result,
for the fi rst time in history the developing countries surpassed the developed ones
with respect to oil production and therefore, the Third World countries’ economic
activity for the fi rst time led to a global economic crisis.
For many countries increasing oil production eventually paved the way to grow-
ing welfare, to infl ows of capital, and even to convergence. In the 1970s, oil gener-
ally became a symbol of the third-world countries’ growing opportunities in relation
to the West. Of course, the allocation of oil revenues remained ineffi cient for a long
time (and the situation still persists), but nevertheless, in many developing countries
oil revenues are the major source of accumulation of capital and this allowed imple-
mentation of important reforms in agriculture, education, healthcare, etc. This par-
ticular situation is observed in many countries, and their number constantly grows
[among relatively new oil-exporting states are Angola, Chad, Cameroon, Equatorial
Guinea, there are large prospects for Kenya and Mozambique (with respect to gas)
as well as for some other countries].
Progress in Agriculture due to the Green Revolution and the Aid from
Developed Countries The inability to provide enough food for their rapidly
increasing population was one of the main problems in the developing countries.
Different measures were taken to solve this problem (e.g. , application of new scien-
tifi c and technological achievements in agronomy), and some of them (like levelling
land allocation or the formation of cooperatives of the Soviet type) failed to contrib-
ute to the agriculture effi ciency in a number of countries. But on the whole, the
developing countries made a great step forward in solving this issue. Among the
most effi cient measures was the Green Revolution, which involved a number of
changes in the agriculture of developing countries in the 1940s, 1950s, 1960s, and
1970s and led (and still leads) to a signifi cant growth of agricultural production
(Thirtle et al. 2003 ; Pingali 2012 ).
13 The Green Revolution involved the use of the
13 Norman Borlaug has contributed signifi cantly to producing new varieties of plants. The term
“Green Revolution” was introduced by William Gaud, the former Director of the United States
Agency for International Development (USAID).
The Beginning of the Turn to Convergence: Causes and Manifestations
128
achievements in genetics, selection, and the physiology of plants for the active
development of high-yielding varieties, using fertilizers, pesticides, and modern
techniques. Another component of the Green Revolution was irrigation already
familiar to the Asian countries, which with the beginning of the Green Revolution
received special attention in a number of countries. The point is that many new
varieties of grain crops could produce high yields only in the conditions of good
water supply.
The impact of the Green Revolution expanded beyond developing countries, but
for such countries as Mexico, Korea, India, Pakistan, Indonesia, Sri Lanka and some
others it appeared to be of particular importance. These are mostly countries with
dense populations where wheat and rice constitute the basic ration. The rapid growth
of their populations led to a further increasing pressure on agricultural land which
was already overcropped. In the situation of free land scarcity and prevalence of the
small and even the smallest farms using old farming practices, in the 1960s and
1970s more than 300 million families in these countries were hard pressed, being on
the edge of starvation and some were even hit by constant famine (Стопа 2010 ).
That is why Green Revolution was considered in these countries to be a realistic
endeavor to overcome this critical situation. New varieties of rice and other cereals
were developed—with characteristics best suited to specifi c conditions of certain
countries (Philippines, India, etc.) which greatly outyielded the old varieties. In
China during the Song dynasty (the tenth to thirteenth centuries) high-yielding and
early- maturing rice varieties were introduced which (in combination with a few
other factors) fi nally (by the nineteenth century) led to an extraordinary (even for
today) population growth from c. 40 million up to 400 million people (see, e.g., Ho
1956; Perkins 1969 : 38; Shiba 1970 : 50; Bray 1984 : 491–494, 598; Korotayev et al.
2006b : 54–64). During the Green Revolution, a rapid technological progress in agri-
culture was observed in most of the Third World; meanwhile, at that time the fi rst
Green Revolution passed China by (whereas actually this country was suffering
from famine resulting from the Communist experiments) and it was only three
decades later that the achievements in agriculture and plant breeding were success-
fully applied in China. Over all, the progress was outstanding and impressive. Thus,
during 5 years from 1966 to 1971, the rice production in Ceylon, India, and
Philippines grew by 60 %, the wheat production in India increased by almost 2.5
times, the corn production in Morocco more than doubled (Стопа 2010 ). On the
whole, during the last 50 years the developing world witnessed an extraordinary
period of food crop productivity growth, despite increasing land scarcity and rising
land values. Although populations had more than doubled, the production of cereal
crops tripled during this period, with only a 30 % increase in land area cultivated
(Wik et al. 2008 ; Pingali 2012 ). Between 1960 and 2000, yields for all developing
countries grew by 208 % for wheat, by 109 % for rice, by 157 % for maize, by 78 %
for potatoes, and by 36 % for cassava (FAO 2004 ; Pingali 2012 ). At the fi rst stages
of the Green Revolution its third component (namely, the industrialization of agri-
culture which implies the use of farm mechanization, chemical fertilizers, insecti-
cides and pesticides) was realized to a lesser extent, as it required much more time
for implementation. But the advance in this fi eld became more noticeable in the
4 The Great Convergence and Globalization: How Former Colonies…
129
1980s and 1990s and is still ongoing. On the whole, in the second half of the
twentieth century, the agricultural production in Asia grew by 4.8 times, and popu-
lation—by 2.6 times (Потапов и др. 2008 : 41; see also Wik et al. 2008 ). The most
signifi cant progress in the development of the agricultural sphere has been made in
Republic of Korea, Thailand, Taiwan, and the People’s Republic of China (as
already noted—since the 1980s). Thus, for example, in Thailand from 1950 to 2000,
the volume of agricultural production increased by almost seven times (Королев
2003 : 590–592; see also Swaminathan 1993 ; Evenson and Gollin 2003 ; Thirtle
et al. 2003 ; Renkow and Byerlee 2010 ; Ecker et al. 2011 ; Bideleux 2014 ).
Let us note that the Green Revolution is generally dated from the establishment
of the Mexican Agricultural Program by the Rockefeller Foundation in 1943.
Norman Borlaug is known to succeed in developing numerous highly-productive
wheat varieties including layering-resistant ones. By 1951–1956, Mexico became
fully self-suffi cient at cereal production and began exporting it to other countries,
because during a period of 15 years the crop capacity tripled there. Borlaug’s main
achievements were used in plant breeding in Columbia, India, and Pakistan; he was
awarded the Nobel Peace Prize in 1970.
In 1963, the International Maize and Wheat Improvement Center (CIMMYT)
was established on the basis of Mexican research institutions, and this institution
made a primary contribution to the spread of the Green Revolution. It is no coinci-
dence that the Green Revolution originated in Mexico as the USA was really inter-
ested in improving the food security of this neighboring country (One should recall
that the Philippines was a colony of United States up to 1946; that is partly why the
Philippines have also become a country where Green Revolution was a success.).
Thus, the collaborative efforts of the developed and developing countries as well as
that of the international agricultural research centers and national research programs
are evident in the Green Revolution (Evenson and Gollin 2003 ). This emphasizes
the fact that the Western countries are not simply involved in the Convergence, but
it is to a very considerable extent due to their efforts (and to a larger extent to their
corporations’ activities).
The General Role of Developing Countries in the Context of Intensifying
Contacts and Increasing Interdependence Between Countries The increasing
immigration to the Western countries from the Third World required control over
epidemics in developing countries, as well as fi ghting against drug traffi cking, and
coping with other negative factors. It became of vital importance to realize that the
explosive increase of populations in developing countries should be taken under
control. For this purpose different programs and reforms in education, welfare,
health service, agriculture, and many other spheres were developed.
The Workforce Decline in Western Countries and actually expanding job oppor-
tunities for immigrants from developing countries (the source of accumulation,
information and currency fl ow) also played some role.
The Role of Transnational Corporations (TNCs)
The TNCs play the leading
role among numerous factors and agencies that contribute to globalization, global
The Beginning of the Turn to Convergence: Causes and Manifestations
130
integration, technological transfer, and the development of infrastructure, as well as
contributing to the development of modern economic patterns in the Third World
countries, which allowed those countries to be involved in international labor
division. Transnational corporations became the networks that connect countries,
institutions and different fi rms, and were also responsible for the new technologies,
commodities, services, views, etc.
14 For the fi rst time in history, the backward coun-
tries industrialized without proprietary innovations (Amsden 2004 ; in this book see
also about the role of multinational fi rms in technology transfers in different coun-
tries). An especially rapid growth of transnational corporations was observed in the
1950s and 1960s and coincided with the period of formation of newly independent
states which provoked numerous confl icts. In 1971, the volume of foreign produc-
tion of TNCs already exceeded the export volume of the developed countries (note
that in the specifi ed period the activity of most TNCs was conducted in developed
countries, yet the share of developing states grew specifi cally in the fi eld of oil and
minerals extraction). As a result, the studies of TNCs as well as of international
business and foreign investment generally became rather popular in the literature of
the 1970s (e.g. Barnet and Muller 1974 ; Weinshall 1975 ; Gilpin 1975 ; Buckley and
Casson 1976 ; Wallace 1976 ; Hood and Yong 1979 ). Though most of the economists
considered the results of TNCs’ activity as positive, nevertheless, opinions of their
activity in the mass media and in different countries were quite contradictory. This
should come as no surprise. Similar to old-time organizations which through achiev-
ing their own peculiar aims (of a variety of kind from egoistic to noble ones) had
become the instrument of progress, the TNCs, pursuing their own interests, had
become one of the most important forces capable of changing the ideas about
sovereignty and the role of national borders (see e.g. Vernon 1971 ; Strange 2003 ;
see also Grinin 2008b , 2011b , 2012c ). The TNCs (similarly to the past-time forces)
have both positive and negative sides; but that is the essence of development, which
is a side effect of the powerful forces actively achieving their objectives. Egoistic
interests of TNCs (together with the egoism of the ruling groups and elites) used to
cause numerous confl icts, crises, revolutions, coup d'états, and defaults in many
periphery countries. In a number of cases, the confl ict between national govern-
ments and TNCs was rather acute (on the one hand, acts of nationalization and
expropriation, on the other hand, bribery, and neglect of national problems resulting
in military takeovers). Both sides justifi ed the confrontation ideologically: by the
right of the state or the people’s will, by the primacy of technological progress, and
by the sanctity of private property. Barnett and Muller believed reasonably that
transnational corporations themselves were generated by “the planetary transforma-
tion”, but at the same time they contributed to its development. However, in justifying
the actions of TNCs, they would require too much for them, in particular, to grant
them the right to disregard and transform national states (Barnet and Muller 1974 :
18–19). Then the relationships between TNCs and national states improved, as
14 Their role as well as a contradictory nature of the results of their activity can be compared with
the activity of East Indian companies of the seventeenth and eighteenth centuries in terms of estab-
lishing contacts between Europe and Asia.
4 The Great Convergence and Globalization: How Former Colonies…
131
unlike many other historical agents, TNCs appeared to be rather fl exible, and they
scaled back their ambitions and thus addressed the concerns over state sovereignty.
At the same time, the struggle for promotion of corporate social responsibility
intensifi ed which also contributed to the adjustment of the interests of societies and
corporations in various countries.
15 In their turn, the states learned to more or less
control TNCs. Thus, if in the 1950–1970s TNCs primarily established their branches
in developed countries, but in the 1980s they started to actively establish them in
developing countries. As a result, one can hardly overestimate the signifi cance of
the corporations for the rapid development of Third World countries.
The Scientifi c and Technological Progress Together with Changing
Technological Modes Can Be Considered as an Important Reason of the Shift
to Convergence Especially starting from the 1980s when an active phase of the
so-called deindustrialization of the West began. Deindustrialization can be defi ned
as a decline in the share of industry in the GDP of the countries of the West, as well
as in employment in manufacturing. The process of deindustrialization actually
started in the mid-1960s, fi rst in the USA; however, in Japan and Europe this pro-
cess lagged behind. The share of manufacturing employment in the USA declined
from 28 % in 1965 to 16 % in 1994. In general, in developed countries the share of
manufacturing employment declined from 28 % in 1970 to 18 % in 1994 ( Rowthorn
and Ramaswany 1997 ). At the same time, the share of services employment rapidly
grew. However, this phase of deindustrialization was mainly connected not only
with a transfer of industrial technologies to developing countries or the preferential
establishment of new factories there, even though the process was under way (see
Amsden 2004 ) but also with the rapid growth of other economic sectors including
information production and services. For this reason, many economists mistakenly
believed that North–South trade had very little to do with deindustrialization and
with the growing share of low-skilled workers in the developing countries (Lawrence
and Slaughter 1993 ; Krugman and Lawrence 1994 ; Krugman 1996 ; Bhagwati
1995 ). Later the researchers had to admit that in this respect the role of external
trade with low-wage economies showed some signs of strengthening in the 1990s
and early 2000s (Debande 2006 ).
16 On the whole, the rapid growth of the service
sector, including complex and qualifi ed services (e.g. informational, medical, fi nan-
cial, etc.) together with the extension of free trade, free capital transfer (see below),
strict environmental laws, demographic deterioration in the countries of the First
World, and the growth of the human capital development level in the Third World
made the transfer of production to peripheral countries more profi table.
So, the initiation of the active phase of deindustrialization turned out to be an
active phase of industrialization in many developing countries. Let us point out once
again that TNCs played the most important, actually a defi ning, role in this process,
15 For contemporary views on different aspects of activity and effi ciency of TNCs, see e.g. Baily
and Solow ( 2001 ), Ghoshal and Westney ( 2005 ), Mtigwe ( 2006 ), Wild et al. ( 2008 ), Lewis ( 2004 )
and Zerk ( 2011 ).
16 For the analysis of the waves of scholarship in the studies in deindustrialization, change of
vectors of researchers’ interests and estimations during the last 40 years see High 2013 .
The Beginning of the Turn to Convergence: Causes and Manifestations
132
as under free-trade conditions it was more profi table and even simply necessary for
them (in order to produce competitive products) to substitute high-paid workers of
their own countries with the low-paid workers from the developing countries. As a
side note, this slowed down the development of robotics which was actively devel-
oped in the 1960s, 1970s, and 1980s. Since the productivity in services grew less
rapidly than manufacturing productivity (Rowthorn and Ramaswany 1997 ); this
process contributed greatly to Convergence. First, the industrial share in the devel-
oping countries’ GDP grew very quickly; second, the working effi ciency grew faster
than in developed countries.
Thus, due to the shortage of demographic resources, scientifi c and technological
progress supported the move of production from the First World countries to the
Third World countries, at the same time making it profi table. The economy of every
country is known to comprise different sectors, starting from agriculture. Yet, their
hierarchy changes together with the development of innovative spheres within the
economy. The less innovative sectors lose their share in economy, while the new
ones expand. But within the global economy, due to the international division of
labor, the situation is different, and the share of less innovative sectors might even
increase. The reason is that the former technologically leading sectors, when leav-
ing the World System core, move to other parts of the World System, not as leaders
with the prefi x “ex-” but as actual leaders there.
17 First, this occurs in underdevel-
oped countries via the development of their own production in the ex-leading sec-
tors by means of adopted (imported) technologies. Second, this happens due to the
actual transfer of old sectors to the less-developed countries (as has already been
mentioned, this process has been going on during the last two or three decades
within the process of deindustrialization of the West).
Thus, the structure of the international division of labor, which is generally the
World System’s most important axis, to a certain extent refl ects the historical
succession of leading sectors and makes it possible for a new mode of production to
emerge in the World System core. But the new wave of technologies requires not
only the presence of an innovation cluster but also a “free space” in the leading
countries in order to re-orient the workforce. While capital and labor are being
reoriented, the old basic commodities should be produced elsewhere in suffi cient
quantity so that the economy with an emerging new leading sector could have more
opportunities, which means, it should get rid of the less-innovative commodities.
Otherwise, in the situation of basic commodities shortage, it would be more diffi cult
to concentrate on innovative ones which, despite their importance, becomes
less connected with people’s basic needs (compare food, clothes, and even metals,
on the one hand, with Internet and specific services, on the other). Such a
release becomes possible due to the import of goods whose production becomes
17 The problem of the leading sector has been considered in different aspects in Kuznets ( 1926 ,
1930 ), Rostow ( 1975 ), Duijn ( 1983 ), Modelski ( 1987 ), Modelski and Thompson ( 1996 ), Thompson
( 1990 , 2000 ) and Rasler and Thompson ( 1994 ), see also: Rennstich ( 2002 ).
4 The Great Convergence and Globalization: How Former Colonies…
133
unprofi table. Far from everything is logical here; the process of transformation pro-
ceeds with diffi culty, but the logic of the process contributes to the World System’s
economic growth and provides opportunities for innovative breakthroughs in differ-
ent regions of the World System. In fact, this is a way to involve new economies into
the operating arena of the new production principle. Even if a number of societies
do not fi t the principle yet (as at present many countries of the world do not really
achieve the appropriate level of the scientifi c and information production principle),
anyway to a certain extent they are getting involved in it (at least in large cities
where there already exist some advanced technology centers). Moreover, they
become a part of the international division of labor which is formed under the infl u-
ence of a new principle of production. Therefore, the adaptation of new waves of
innovations should be supported by technology and capital transfer to the less devel-
oped parts of the World System in order to compensate for the volume and range of
commodities not produced anymore in the core.
One of the mechanisms of such shifts within technological modes can be inter-
preted within the fl ying geese paradigm which was developed in the late 1930s by
the Japanese scientist Kaname Akamatsu [in the early 1960s his works appeared in
English (Akamatsu 1961 , 1962 )]. According to Akamatsu, at fi rst the import substi-
tution of certain goods (e.g. textile goods) proceeds through the establishment of
local enterprises, and then the development of the industry contributes to interna-
tional market entry. However, the role of foreign capital received little attention in
Akamatsu’s theory, as he worked out his theory proceeding from the observations of
the textile industry development in Japan (then still a developing rather than devel-
oped country) during the period of 40–50 years starting from the late nineteenth
century. The development of Japan between the 1950s and the 1980s, then NICs
(Korea, Taiwan, etc.) and later China, Thailand, and Malaysia, in which the role of
foreign capital and export sector had already become fundamentally different,
allowed many Japanese and foreign scientists to expand and modernize Akamatsu’s
paradigm. They included the factors of FDI and TNC in their analyses and
demonstrated in what way the technological and fi nancial transfers promote eco-
nomic progress in developing countries (Shinohara 1982 ; Kojima 2000 ; Ozawa
1992 , 2001 , 2005 , 2009 ; see also Ginzburg and Simonazzi 2005 ; Ito 2001 ; Korhonen
1998 ; Kwan 1994 ; Yamazawa 1990 ).
As Ozawa writes: “The countries across the world are at different stages of development,
growing at different speeds of structural transformation. This constitutes a basis for dynamic
comparative advantages, and the countries within a hierarchy of countries can interact with
each other in a complementary and mutually augmenting way so that they can benefi t from
the ‘economies of hierarchical concatenation’” (Ozawa 2001 ). Such economies are analo-
gous to the effect that a gaggle of 25 fl ying geese can achieve a “70 per cent-range energy
saving over a bird fl ying solo” thanks to the “wingtip vortex” and “upwash/upcurrent”
mutually created by fl ying together (Gedney 1982 ). It is also observed in econometric stud-
ies on national economic growth that “‘regional dummies add substantially to a growth
regression’s explanatory power (Temple 1999 )’” (Ozawa 2010 : 5).
The Beginning of the Turn to Convergence: Causes and Manifestations
134
The Emergence Within States of a Self-Sustaining System of Motivation
for Modernization
The General Idea of Modernization, Development of Forms and the Methods
of Its Implementation contributed to the fact that in many developing countries
the appeals for reformation and modernization have become extremely important
and politically signifi cant. Thus, the governments made certain attempts to some-
how promote it. The emergence of Western-educated intellectuals (in particular, via
student training in the West and in the USSR) was very important and could be the
proponent of the ideas of modernization. As a result, modernization becomes the
most powerful political means in a countries’ domestic political struggle.
Some Consequences of Changes
Summarizing the abovementioned points, we can say, that the following factors
have prepared the ground for the turn toward Convergence: the dramatically
increased necessity for the West and the USSR (each for various reasons) to seek
alliances with developing countries; the need to put negative processes in the devel-
oping countries under control and elaborate proper strategies, scientifi c ideas,
programs etc. ; changes in the Western economies’ structure, that required moving
industrial production to developing countries; the awakening of the intellectuals
and striving for modernization; the role of developing countries as suppliers of raw
materials (especially oil) and of cheap—but gradually a more and more qualifi ed—
labor force.
Finally, again we would like to bring our attention to an extremely important
point—by the early 1990s, to a large extend due to globalization, most developing
countries succeeded in minimizing (if not bridging) the gap with advanced states in
terms of human capital development,
18 so that it became possible to move a large
number of factories from the core to the periphery of the World System. That, in
turn, increased the fl ow of capital and technologies and thus, launched the process
of the Great Convergence. In this respect one can suppose, that the Great Convergence
originated from the new wave of globalization, which began in the late 1980s—
early 1990s.
Thus, as a result of the above mentioned processes, in the early 1970s the per
capita GDP growth of developing countries caught up with the ones in the core of
the World System, and since the late 1980s more and more the average GDP growth
18 In particular, this concerns the education level growth as a factor that increases the necessity for
modernization. In the few decades after 1950s most countries of the periphery managed to achieve
a sharp increase in literacy (and some other important indicators of the human capital develop-
ment, see Figs.
4.3 and 4.4 ), which, on the one hand, stimulated the GDP growth, and, on the other
hand, contributed to a very signifi cant decrease of fertility and population growth rates.
4 The Great Convergence and Globalization: How Former Colonies…
135
of the periphery began to exceed the one of the core. As a result the relative gap
between the per capita GDP of the core and periphery began to decrease. The slow-
down of economic growth rates in the First World and the acceleration of growth
rates in the Third World periphery were accompanied (and to a considerable extent
were caused) by the following processes-trends (apart from the above mentioned):
(1a) the decrease of the share of investments in the GDP of the core (after the early
1970s); (1b) the increase in the share of investments in the GDP of the periphery
(after the early 1990s); (2a) the decrease of the macroeconomic effectiveness of the
investments
19 for the First World (after the late 1960s); (2b) the increase in the
macroeconomic effectiveness of investment in the Third World (after the early
1990s) (see Figs. 4.1 and 4.2 ).
As has already been mentioned above, we believe that of special importance is
the fact that between 1950 and 1960 and the 1990s we observe a radical decrease of
the gap between the “First” and “Third” world with respect to the level of develop-
ment of the human capital (see Figs. 4.3 and 4.4 ).
Thus, the Great Convergence is an objective consequence of the world economy
development and the result of economic and political development of both
19 Calculated in dollars of GDP growth per a dollar of investments.
19
20
21
22
23
24
25
26
1965 1970 1975 1980 1985 1990 1995 2000 2005
Core Periphery
Fig. 4.1 Dynamics of the share of investments in the GDP of the core and periphery, %, 1965–2005.
Source : Малков et al. (2010: 240, Fig. 6). Notes : The World System core was identifi ed for the
calculations presented in this diagram with the high-income OECD countries, whereas the World
System periphery was identifi ed with the rest of the world. Data source for the calculations: World
Bank ( 2014 ). Seven-year moving averages (with consecutive decrease of the smoothing window at
the edges)
Some Consequences of Changes
136
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
1965 1970 1975 1980 1985 1990 1995 2000 2005
Core Periphery
Fig. 4.2 Dynamics of the effectiveness of investments in the GDP of the core and periphery,
1965–2005. Source : Malkov et al. (2010: 242, Fig. 8). Notes : The World System core was identi-
fi ed for the calculations presented in this diagram with the high-income OECD countries, whereas
the World System periphery was identifi ed with the rest of the world. Data source for the calcula-
tions: World Bank ( 2014 ). Seven-year moving averages (with consecutive decrease of the smooth-
ing window at the edges)
39
70
26
67
14
36
11
0
10
20
30
40
50
60
70
80
1950 2000 1950 2000 1950 2000 1950 2000
Africa Asia (without Japan,
Korea, and Taiwan)
China Latin America
Gap in literacy rates with Western Europe
and off-shoots, per cent points
Fig. 4.3 Decrease of the gap between the Western Europe (and off-shoots) and the main Third
World macroregions/countries with respect to the literacy rates, per cent points, 1950–2000. Data
source : Morrison and Murtin ( 2006 )
4 The Great Convergence and Globalization: How Former Colonies…
137
developed and developing countries (meanwhile, the purposeful or unintentional
contribution of the former seems to be even larger than that of the developing states
themselves); it is the way to maintain the Western countries’ welfare during the
demographic crises, and it provides an ability to create a better basis for further
innovative development of the world.
In developed countries the increasing welfare of wide populations and the estab-
lishment of the middle class as the major layer were the product of a long social and
political struggle and of the businessmen’s reaction (in terms of technology and
organization) to rising wages, demands, and qualifi cation level of personnel. The
Great Convergence is also an objective result of world economic dynamics and the
interaction result of counteracting development vectors. In the recent decades the
middle class has been dissolving in the developed countries (NIC 2012 ; Grinin
2013 ). However, this process stimulates the growth of population and the role of the
middle class in developing countries, the majority of which is directly involved in
production in the Western countries, replacing their domestic specialists.
32
26
30
8
27
16
24
7
23
6
14
5
0
5
10
15
20
25
30
35
1960 2000 1960 2000 1960 2000 1960 2000 1960 2000 1960 2000
Ethiopia Middle East &
North Africa
South Asia East Asia &
Pacific
China Latin America
& Carribean
Gap in life expectancy with the USA, years
Fig. 4.4 Decrease of the gap between the USA and some Third world regions/countries with
respect to the life expectancy, 1960–2000. Data source : World Bank ( 2014 )
Some Consequences of Changes
138
On Discussions About the Possibility of Convergence:
Why Did Economists Overlook It?
The problem of convergence has been one of the critical issues for the economic
growth discourse for several decades. This seems most obvious and natural, as one
can hardly imagine a more attention-catching question than the following, “Is the
gap between the poor and the rich increasing or decreasing?” As has been men-
tioned above, despite the fundamental changes in Third World economies and
societies, for a long time some circumstances (an evident general backwardness of
the Third World countries, aggravated by explosive population growth and changes
in the leading economies) concealed from the Western economists the fact that the
periphery’s rate of development had actually surpassed that of the developed ones.
To a large extent the beginning of the change was not realized because of conven-
tional ideological stereotypes both in the developed and developing countries.
That is why both the conventionalists and advocates of the Western hegemony,
as well as radicals considering the latter as the main specifi c of the established
system generating inequality between the core and the periphery and a source of
exploitation of the former by the latter, agreed on the presumption that the gap
between the developed and developing countries would increase (Prebisch 1959 ;
Sunkel 1966 ; Wallerstein 1974 , 1987 ; Amin 1976 , 1994 , 1997 ; Frank 1979 ;
Bornschier 1976 , 1980 , 1981 , 1982 , 1983 ; Love 1980 ; Bornschier and Chase-Dunn
1985 etc.).
As a result, the absolute majority of Western economists missed the beginning of
the Great Convergence. Most were convinced that the Third World’s backwardness
was fatal and could only be overcome, if at all (Romer 1986 ), in the long term after
a world socialist revolution (Frank 1979 ; Wallerstein 1987 ). Besides, these econo-
mists did not comprehend the essence of economic globalization, which presup-
poses that capital and technologies do not only search for the most profi table areas,
but besides, they also contribute to the evening of different regions, developmental
levels. However, as we will see below, this process is non-linear, and the law of
uneven development acts here in its entirety. In fact, the law of communicating ves-
sels and the law of unevenness combine to make a unifi ed system. In view of the
aforesaid, it is worth considering the main subjects of the discussion on divergence
and convergence in economic literature.
Accordingly, up to date, the theory of convergence has evolved into quite a num-
ber of branches (Islam 2003 : 312). Of greatest interest for the present chapter is the
essence of the unconditional vs. conditional convergence problem.
The Advantage of the Backwardness According to Gerschenkron and Greater
Profi ts by Investing in Poor Countries After Solow As early as in the early
1950s, the fi rst theoretical works on convergence appeared that revealed possibili-
ties to narrow the gap between the developed and less developed countries through
4 The Great Convergence and Globalization: How Former Colonies…
139
borrowing off-the-shelf technologies.
20 The cornerstone for the theory of conver-
gence was laid in an essay Economic Backwardness in Historical Perspective by
Alexander Gerschenkron ( 1952 ), who developed the “theory of relative backward-
ness” relying on data obtained from the history of European countries. The main
tenet of his theory is as follows: “the opportunities inherent in industrialization may
be said to vary directly with backwardness of the country” (Gerschenkron 1952 : 6).
Remarkably, Gerschenkron emphasized that the conditions inevitably required for a
country to take advantage of its backwardness included “adequate endowments of
usable resources’ and the absence of ‘great blocks to industrialization” ( Ibid. : 6).
Thus, backward countries (provided that the outlined conditions are observed) were
bound to grow faster than the developed economies, the former thus gradually con-
verging with the latter.
As Samuelson and Nordhaus put it,
poorer countries have important advantages that the fi rst pioneers along the path of indus-
trialization did not. Developing nations can now draw upon the capital, skills, and technol-
ogy of more advanced countries. A hypothesis advanced by Alexander Gerschenkron of
Harvard suggests that relative backwardness itself may aid development. Countries can buy
modern textile machinery, effi cient pumps, miracle seeds, chemical fertilizers, and medical
supplies. Because they can lean on the technologies of advanced countries, today’s develop-
ing countries can grow more rapidly… As low-income countries draw upon the more pro-
ductive technologies of the leaders, we would expect to see convergence of countries toward
the technological frontier. Convergence occurs when those countries or regions that have
initially low incomes tend to grow more rapidly than ones with high incomes (Samuelson
and Nordhaus 2005 : 584).
The roots of the issue of unconditional convergence are also frequently traced to
A Contribution to the Theory of Economic Growth by Robert M. Solow ( 1956 ). This
work is sometimes regarded as the pioneering one in establishing the tenets for the
hypothesis of unconditional convergence in economic growth among the world
countries (see, e.g., Abel and Bernanke 2005 : 235).
As Mankiw notes
The diminishing returns to capital [implied by the Solow model] have another important
implication: Other things equal, it is easier for a country to grow fast if it starts out relatively
poor. This effect of initial conditions on subsequent growth is sometimes called the catch-
up effect. In poor countries, workers lack even the most rudimentary tools and, as a result,
have low productivity. Small amounts of capital investment would substantially raise these
workers’ productivity. By contrast, workers in rich countries have large amounts of capital
with which to work, and this partly explains their high productivity. Yet with the amount of
capital per worker already so high, additional capital investment has a relatively small effect
20 We should note, that the authors considered, fi rst of all, the semi-periphery of the World System
core, that is less developed European countries. However, these ideas met the expectation of the
newly formed countries for their successful overcoming of backwardness. The situation resembled
the one in the formerly (relatively) backward European countries. Due to barrowings of off-the-
shelf technologies and techniques and as a result of lower than those in the donor country costs of
some production factors (fi rst of all, labor force and minerals) they succeeded to rapidly develop
by absorbing investments.
On Discussions About the Possibility of Convergence…
140
on productivity. Studies of international data on economic growth confi rm this catch-up
effect: Controlling for other variables such as the percentage of GDP devoted to invest-
ments, poor countries tend to grow at faster rates than rich countries (Mankiw 2008 : 258).
Abel and Bernanke also note that according to the Solow model, if the economy
is open, the absolute convergence receives the support of some additional economic
forces. Since poorer countries have less capital per worker and therefore a higher
marginal product of capital than the more affl uent countries, investors from richer
countries will be able to get greater profi ts by investing in poor countries. Therefore,
foreign investment should provide a more rapid increase in the capital stock in poor
countries, even if the level of domestic savings in these countries is low (Abel and
Bernanke 2005 : 234).
It is easy to see that both the “Gershenkron” factor and the “Solow” factor of the
faster growth of the peripheral (and especially semi-peripheral) economies are
mutually complementary, as capital diffusion tends to be accompanied by techno-
logical diffusion (what is more, capital diffusion is one of the main creators of chan-
nels for technological diffusion).
On the other hand, Solow’s model implies that the output levels per capita should
be higher the higher the savings rate in the country, or the lower the population
growth rate. That is why according to this theory, it is the advanced countries’ recent
leadership in economic development rate over the developing ones that needs expla-
nation. One of the most important explanatory factors of this situation (in addition
to the above mentioned low education and qualifi cation level, as well as poor infra-
structure of many Third World countries) was insuffi cient transparency of economic
borders, connected to a large extent with various leftist economic experiments start-
ing from the attempts (sometimes successful) of full state regulation of the economy
(which minimizes economic transparency) to a seemingly harmless ban on the repa-
triation of profi ts (which in fact, in most cases, effectively blocked foreign invest-
ments). In this context, the obvious trend of the recent years to level the economic
development of the First and Third World countries is a rather logical consequence
of expanding real globalization, which would be impossible without increasing eco-
nomic transparency, and also of the fact that by the 1990s most countries had risen
sharply in the level of human capital [especially in terms of education and health
(see above for more details)]. The latter, on the one hand, stimulated economic
growth and, on the other hand, favored the decline in birth rate and a signifi cant
slowdown of population growth rate (that is, this led to the fi nish of the demographic
transition). As a result of all these processes, in recent years we have observed sig-
nifi cantly higher growth rates of GDP per capita in most of the countries of the
Periphery than in the majority of developed countries, which leads to a logical and
rather quick narrowing of the gap between the living standards of developing and
developed countries. As the graphs above in Chap.
3 demonstrate, this convergence
proceeds much faster than the divergence proceeded in the earlier period.
The Turn to Conditional Convergence Note, that in the 1960s and 1970s no
systematic studies of the presence (or absence) of the convergence between the
developed and developing countries were undertaken. However, the fl ood of such
studies emerged after 1985.
4 The Great Convergence and Globalization: How Former Colonies…
141
A counterstrike to Solow’s theory of diminishing returns was struck by Paul
M. Romer in the mid-1980s, when he published his article “Increasing Returns and
Long-Run Growth” ( 1986 ), stating that the model of increasing returns offered “an
alternative view of long-run prospects for growth” that was contrary to the assump-
tions of convergence theory: “per capita output can grow without bound, possibly at
a rate that is monotonically increasing over time. The rate of investment and the rate
of return on capital may increase rather than decrease with increases in the capital
stock. The level of per capita output in different countries need not converge; growth
may be persistently slower in less developed countries and may even fail to take
place at all” (Romer 1986 : 1003). Thus, Romer disproved the very essence of the
idea of absolute convergence.
This being a starting-point, the second half of the 1980s witnessed the emergence
of a wave of works contradicting the idea of absolute convergence and stating the
idea of conditional convergence instead (for a detailed literary survey see, e.g.,
Rassekh 1998 ). Baumol ( 1986 ), for instance, suggested that convergence could be
observed within separate groups of countries. Thus, according to Baumol’s data,
remarkable convergence could be observed among the productivities of industrial-
ized market economies. Convergence was, in Baumol’s opinion, shared by planned
economies. Less developed countries did not reveal any signifi cant marks of conver-
gence. And, according to Baumol, no absolute convergence could be observed
across the world as a whole.
Another substantial work refuting the hypothesis of absolute convergence was the
one by Barro ( 1991 ). After examining 98 countries in the period 1960–1985, Barro
stated that “The hypothesis that poor countries tend to grow faster than rich countries
seems to be inconsistent with the cross-country evidence” (Barro 1991 : 407).
Another cornerstone of counter-unconditional-convergence discourse was a
watershed work by Mankiw et al. ( 1992 ). Examining empirically a sample of 98
countries (excluding those where oil production is the dominant industry), they
proved the failure of countries to converge in per capita income during the period
1960–1985. However, of greater importance was the introduction of the notion of
conditional convergence carried out in their work. After a comprehensive analysis
of Solow’s theory, the researchers state that the Solow model does not predict
unconditional convergence; it predicts only that income per capita in a given coun-
try converges to that country’s steady-state value, these values being different for
various countries. From this assumption Mankiw, Romer, and Weil conclude that
“Solow’s model predicts convergence only after controlling for the determinants of
the steady state”, nominating this phenomenon “conditional convergence”. The
fi nding of conditional convergence is now considerably well established in the
empirical literature, having been regarded in numerous studies on the data of the
second half of the twentieth century with different conditioning variables (see, e.g.,
Caggiano and Leonida 2009 ; Petrakos and Artelaris 2009 ; Romero-Avila 2009 ;
Owen et al. 2009 ; Sadik 2008 ; Frantzen 2004 ; de la Fuente 2003 ; Jones 1997 ;
Caselli et al. 1996 ; Sala-i-Martin 1996 ; King and Levine 1993 ; Levine and Renelt
1992 ; Barro 1991 ; De Long and Summers 1991 ).
On Discussions About the Possibility of Convergence…
142
At the same time, most researchers agree that there is an obvious convergence
among OECD countries.
21 Abramovitz ( 1986 ) made a substantial attempt to prove
the convergence of productivity levels among the economies of the developed coun-
tries. However, Abramovitz made a remarkable comment that the rate of conver-
gence varied from period to period and showed a marked strength only during the
fi rst quarter-century following World War II. He also noted that the general process
of convergence was also accompanied by dramatic shifts in countries’ productivity
rankings. His main contribution included extending the simple catch-up hypothesis
in order to rationalize the fl uctuating strength of the convergence process. The main
conclusion made by Abramovitz stated that “differences among countries in produc-
tivity levels create a strong potentiality for subsequent convergence of levels, provided
that countries have a ‘social capability’ adequate to absorb more advanced technolo-
gies” (Abramovitz 1986 : 405). However, the most important remark made by
Abramovitz on the basis of his empirical analysis was that “the long-term convergence
… is only a tendency that emerges in the average experience of a group of coun-
tries”, that is, he would not regard convergence as a global-scale phenomenon.
A considerable number of works have been devoted by various scholars to differ-
ent aspects of convergence in OECD. Initially, there appeared some works that sub-
stantially proved the existence of convergence itself across OECD through a
systematic catching up in levels of total factor productivity (see, e.g., Dowrick and
Nguyen 1989 ). Later on, the focus shifted to other aspects, such as convergence in
aggregate productivity (Bernard and Jones 1996a , b ), convergence in international
output (Bernard and Durlauf 1995 ; Caggiano and Leonida 2009 ), the impact of
globalization upon convergence in OECD (Williamson 1996 ), various sources of
convergence (i.e. government size and labor market performance) (de la Fuente
2003 ), technological diffusion and productivity convergence (Frantzen 2004 ),
stochastic convergence of per capita real output (Romero-Avila 2009 ), and country
size impact upon convergence (Petrakos and Artelaris 2009 ), etc.
In addition to the above said, one should note that the main conditions of the
convergence with the high-income economies were identifi ed, fi rst of all, as (1) a
suffi ciently high level of development of human capital (comparable with the one of
the high-income economies) (e.g., Barro 1991 ; Mankiw et al. 1992 ; Cohen 1996 );
(2) a suffi cient degree of economic openness (e.g., Ben-David 1993 : 653; Sachs
et al. 1995 : 199 etc.); (3) a suffi cient degree of law and order (e.g., Milanovic 2005 ;
Owen et al. 2009 ). By the 1990s, all the major developing economies of the world
satisfi ed those conditions much better than they did during the era of divergence.
Currently, there exist a remarkable number of sources revealing the particulari-
ties of the convergence process in some regions of the world or in some more groups
of countries, such as Latin America (e.g. , Dobson and Ramlogan 2002 ; Galvao Jr.
21 In our opinion, such convergence evidenced for a signifi cant extension of the World System core
that, according to the world-system theory, was to indicate the transition of the role of the semi-
periphery the countries of the former periphery, that is to the developing countries. In other words,
the Third World countries were to approximate to those of the First World. Thus, convergence in
the Western countries implied inevitable convergence within the whole World System.
4 The Great Convergence and Globalization: How Former Colonies…
143
and Reis Gomes 2007 etc. ; see also Красильщиков 2011 ), ASEAN (e.g. , Lim and
McAleer 2004 ), some particular Asian regions and countries (Li and Xu 2007 ;
Zhang 2003 ; see also the fl ying geese paradigm above), and transition countries
(e.g., Rapacki and Prochniak 2009 ).
Factors of Conditional Convergence Various researchers tried to specify the factors
underlying the process of convergence (or its failure). Thus, Abramovitz empha-
sized the importance of education and organization for the process of convergence.
With respect to the convergence factors, Abramovitz ( 1986 : 405) stated that “the
pace of realization of a potential for catch-up depends on a number of other condi-
tions that govern the diffusion of knowledge, the mobility of resources and the rate
of investment”.
The suggested failure of unconditional convergence was attributed to different
factors by various students. Thus, Bradford De Long ( 1988 : 1148) assumed that one
of the factors driving some countries towards convergence was technology becoming
a public good.
Barro ( 1991 : 437) concluded that “the relatively weak growth performances of
countries in sub-Saharan Africa and Latin America” and their failure to catch up
with the developed countries (i.e. the absence of absolute convergence) could be
attributed to the lack of human capital development, discovering the fact that in his
data set of 98 countries in the period 1960–1985 the growth rate of real per capita
GDP was positively related to initial human capital.
Cohen ( 1996 : 351) stated that “the poor countries have failed to catch up with
rich ones because the progress that they have achieved in educating their workers
(which is evidenced in the convergence of domestic inputs) is not suffi cient to
compensate for their poor endowment in the knowledge on which the education of
workers stands”. Sadik ( 2008 ) explained that simultaneous convergence among
industrialized countries could be caused by the fact that technological progress
diminishes the differences within the group of countries that adopt technologies but
increases the gap between those countries and the rest of the world.
Milanovic ( 2005 ) devoted his study purely to specifying the reasons for catch-up
failure, listing the following causes: war and civil strife, and a delay in reforms
among the least developed countries (LDC). Direct foreign investment and democ-
racy, according to Milanovic, did not have any signifi cant infl uence upon the failure
of catch-up process among LDC. Yifu Lin ( 2003 ), on the other hand, supports the
idea that the failure of most LDCs to converge with developed countries in terms of
economic performance can be explained largely by their governments’ inappropri-
ate development strategies.
Owen, Videras, and Davis, observing countries growth experiences over the
1970–2000 period, found evidence that “the quality of institutions and specifi -
cally, the degree of law and order, helps to sort countries into different regimes”
(regimes being here quite synonymic to the notion of convergence clubs) (Owen
et al. 2009 : 265).
Sachs et al. revealed the connection between convergence and economic openness
and international trade, stating that “the absence of overall convergence in the world
On Discussions About the Possibility of Convergence…
144
economy during the past few decades might well result from the closed trading
regimes of most of the poorer countries” (Sachs et al. 1995 : 37). They present an
evidence suggesting that the lack of convergence observed across the world can be
“explained by the trade regime: open economies tend to converge, but closed econo-
mies do not. The lack of convergence in recent decades results from the fact that the
poorer countries have been closed to the world” ( Ibid. : 3). 22
Some Results of Convergence Research In general, the main results of the two
decades of the unconditional convergence research seem to be summed by such
statements as follows:
Empirical studies have shown consistent evidence of a cross-country income distribution
displaying bimodality with a marked thinning in the middle. This result is interpreted as
showing that poor countries are not catching up with the rich, but rather that there is evi-
dence of club convergence, that is, polarization at the extremes of the income distribution
(Cetorelli 2002 : 30).
Unfortunately (from the perspective of the world’s poor countries), there is little empirical
support for unconditional convergence. Most studies have uncovered little tendency for
poor countries to catch up with rich ones (Abel and Bernanke 2005 : 235).
There is no evidence of (unconditional) convergence in the world income distribution over
the postwar era (Acemoglu 2009 : 17).
Besides, Acemoglu adds at this point:
Combining the postwar patterns with the origins of income differences over the past several
centuries suggests that we should look for models that can simultaneously account for long
periods of signifi cant growth differences and for a distribution of world income that ulti-
mately becomes stationary, though with large differences across countries. The latter is
particularly challenging in view of the nature of the global economy today, which allows for
the free fl ow of technologies and large fl ows of money and commodities across borders. We
therefore need to understand how the poor economies fell behind and what prevents them
today from adopting and imitating the technologies and the organizations (and importing
the capital) of richer nations (Acemoglu 2009 : 22).
However, does the paradox outlined by Acemoglu actually exist? Does not really
“the global economy today, which allows for the free fl ow of technologies and large
fl ows of money and commodities across borders” lead to its logical outcome—the
general convergence? Are poor economies of the world still generally failing to
“adopt and imitate the technologies and the organizations (and import the capital) of
richer nations”? We suppose that unfortunately, economists did miss the turn to the
Great Convergence. Having pointed that convergence in the World System core
expanded, they did not realize that was the indicator of the general convergence
22 Sachs and Warner might not be entirely satisfi ed yet with the degree of economic openness of,
say, Russia, China, or Ethiopia. But they would hardly argue against the point that Chinese and
Russian economies are radically more open now than they used to be in the 1960s, whereas the
Ethiopian economy is radically more open now than it used to be in the late 1970s. On the other
hand, the evidence that we present suggests that Sachs et al. ( 1995 ) appear to have exaggerated the
degree of economic openness that is necessary for the convergence phenomenon to develop.
4 The Great Convergence and Globalization: How Former Colonies…
145
process. Having emphasized unevenness of convergence, they left aside that conver-
gence proceeds in a wavelike manner, that upsurge of some developing countries
inevitably contributes to a rapid progress of their new group. In any case, we sup-
pose that the switch from the conditional to unconditional convergence pattern
seems to be accounted for by the point that by the 1990s all the major countries and
economies of the world began to satisfy (more or less) the major criteria for the
conditional convergence.
Globalization Becomes the Major Cause of Convergence
Today globalization is one of the most popular trends of scientifi c research that
seems to be rather reasonable and perspective.
Globalization is a result of a very complicated alloy of political, social, eco-
nomic, civilizational and many other processes of the modern world (see, e.g. ,
Modelski et al. 2008 ; Eisenstadt 2010 ; Etzioni 2011 ). However, among these
numerous factors one should especially mark out the huge changes in modern pro-
ductive forces, technologies, media, world trade and specialization (Медведев
2004 : 3; Гринин 1999, 2005, 2007 ). Thus, the directions, forms and results of the
processes will constantly depend on the changing balance of the world forces, on
the strategy that will be chosen by these or those countries and associations, on dif-
ferent geopolitical factors and so on. In our opinion, it means that those who are
longing to play a more important role in integrating and changing the world must
forecast and foresee the tendencies that can be used for benefi t (about the available
possibilities for different countries and particularities of national paths in globaliza-
tion see Harris 2003 : 65; Srinivas 2002 ; Talavera 2002 ; Yan 2002 ; Berger 1986 ,
2002 ; Grinin 2012a ).
But what is globalization after all? There does not exist a generally accepted defi -
nition and presumably it will not appear in the immediate future, as far as it has most
diverse meanings (for some interpretations of globalization see, e.g., Albrow and
King 1990 ; Scott 1997 ; Holton 1998 ; Bayliss and Smith 2001 ; Eisenstadt 2010 ;
Kiss 2010 ; Gay 2010 ; concerning the formal measuring of globalization see Dreher
et al. 2010 ). Without any claim to an unequivocal defi nition, we would determine it
in the following way. Globalization is a process by which the parts, countries, peo-
ples etc. of the world become more connected and more dependent on each other.
Both the increase in the quantity of problems common for states and the expansion
of the number and types of globalization’s subjects take place. 23
In other words, there emerges a peculiar system where the problems of separate
countries, nations, regions and other subjects (corporations, different associations,
global media holding companies etc.) interlace into one tangle. Separate local
23 In the present chapter we do not purport to give a detailed review of the works on globalization
and different views on this process (on diverse defi nitions of globalization see, e.g., Al-Rodhan
2006 ; for our ideas in detail see Grinin and Korotayev 2010a , 2012c , 2014 ; Sheffi eld et al. 2013 ;
Гринин and Коротаев 2009в; Grinin 2012c ).
Globalization Becomes the Major Cause of Convergence
146
events and confl icts affect a great number of countries. At the same time decisions
in the most signifi cant centers of the world have an effect on all the fates. In general
the processes of globalization in the broadest sense are characterized by the abrupt
intensifi cation and complication of mutual contacts in the basic spheres of eco-
nomic, political and social life, gaining planetary scales (Иванов 2004 : 19).
Globalization is an exclusively versatile process. Practically all spheres of life expe-
rience its impact (see, e.g. , Гидденс 2004). Lots of positive as well as negative
phenomena also gain a global character, e.g., the struggle for the preservation of
environment, human rights (Sapkota 2011 ; Taran 2011 ; Collins 2010 ), the antiglo-
balist movement itself (see, e.g. , Gay 2010 ; Yanling 2010 ; see also Tomlinson 1991 ;
Kinnvall 2004 ), terrorism and crime (see, e.g., Мирский 2004б: 80; Лунеев 2005 :
114–115; Glenny 2008 ), drug mafi a (Glenny 2008 ) etc. In this respect the idea of
globalizing Islam and other religions is of great interest (Roy 2004 ; Мирский
2004a : 35; see also: Schaebler and Stenberg 2004 ; Abushouk 2006 ; Eisenstadt
2010 ; Robertson 2011 ).
Great Convergence, Globalization, and the Decline of the Leadership of the
USA and the West The discussions of an inevitable eclipse of the American might
have begun already in the 1970s when this country confronted simultaneously polit-
ical, economic, and currency crises. In the 1970s and the 1980s a number of fore-
casts predicted that the USA would be replaced by Japan in the role of the world
economic leader (see, e.g., Vogel 1979 ; Kennedy 1987 ; Attali 1991 ). There were a
lot of works analyzing new challenges to the USA connected with the defeat in
Vietnam, monetary and oil crises, fall of the USA share in the world economy etc.
(see, e.g., Stohl and Targ 1982 ; Rosenau and Holsti 1983 ). However, a new vigorous
technological wave in the USA (that took place against the background of the eco-
nomic stagnation in Japan) demonstrated the fallacy of such views. The US hege-
mony did not only turn out to be rather solid; what is more, it rose to a new level as
a result of disintegration of the Communist block and the USSR.
However, these were just the 1990s when the number of forecasts predicting the
inevitable decline of the American hegemony and the ascent of Asia to the leader-
ship positions started growing rather rapidly (see, e.g., Thompson 1988 ; Attali
1991 ; Colson and Eckerd 1991 ; Frank 1998 ; Todd 2003 ; Wallerstein 1987 , 2003 ;
Kupchan 2002 ). First such forecasts were taken rather skeptically, or were received
as a sort of expression of leftist views and anti-American moods. However, with the
growth of negative tendencies in the USA and successes of Asian countries the idea
of the American decline started looking more and more grounded, which provoked
(depending on one’s orientation) feelings of triumph or apprehension. Nowadays,
taking into account the consequences of the global crises, the forecasts of the decline
of the US role in the world appear to be shared by the overwhelming majority of
analysts. The USA and American people seems to have started putting up with the
idea of the decline of the American hegemony—though many still seem to pin their
4 The Great Convergence and Globalization: How Former Colonies…
147
hopes on some sort of technological or other miracle that will revive the American
might (this is often expressed rather vividly in President Obama’s speeches).
Thus, there is no much doubt that the USA hegemony (which has continued for
more than 60 years) is coming to its end. Sooner or later the USA will not be able
to remain the World System leader in the sense that has become usual for us, as a
result of which the global geopolitical landscape will change rather seriously (see,
e.g., Grinin and Korotayev 2010b , 2011 ; Grinin 2010 , 2011b , 2012b , c ; Grinin et al.
2015 ; Гринин 2012 ). On the other hand, hopes of some political scientists and
economists that a sort of total collapse of the USA will take place very soon (e.g.,
Айвазов 2012 ) appear rather ungrounded; the relative decline of the USA will pro-
ceed gradually (and not without certain interruptions), while certain objective cir-
cumstances (including the rise of peripheral countries) will contribute to this.
However, in the forthcoming two or three decades the USA will remain a sort of
primus inter pares because of their superiority with respect to a few aspects of lead-
ership and a certain “legality” of its leadership role (NIC 2012 : XI). In addition, one
should take into account that, on the one hand, the USA is not going to surrender the
leading position to anyone using all possible legal and illegal means to hold it and
to weaken rivals, and on the other hand, the world as a whole is still interested in
America’s enduring leadership.
Some Causes of the Weakening of the USA (and the West in General) Since the
end of the Second World War one could see in the world a rather unique situation
when one country—the USA—became the world hegemon in so many respects:
political, military, monetary, economic, ideological, technological, cultural, educa-
tional, artistic, innovations, and so on. For a rather long period of time this leader-
ship was strengthened by the competition with the world Communism, which
unifi ed the West and stimulated a vigorous energy in the United States (Devezas
et al. 2007 ). After the collapse of the USSR the USA became the absolute hegemon
of the world. And this may appear paradoxical, but it was the obtaining of the status
of the absolute hegemon that contributed to the start of the eclipse of the US might.
On the one hand, this weakened the country’s readiness to sacrifi ce anything (as it
was done within the context of the Cold War); on the other hand, against the back-
ground of the apparent omnipotence, the American leaders chose a generally wrong
strategy trying to transform internal American tasks into goals of the US foreign
policy (Kissinger 2001 ). As a result, within two decades the US administrations
made and keeps making many mistakes. Through their various actions they dissi-
pated a certain safety factor that the US had, shook their own might, accumulated
exorbitant debts, and created a detonator for the global crisis whose consequences
are not clear yet. In the meantime, within less than two decades, between 1991 and
2008, against the background of the weakening of Europe and continuing stagna-
tion of Japan one could see the explosive growth of the Asian giants (China and
India) as well as the formation of large group of fast developing countries (from
Mexico to Malaysia) that will take leading positions in the world in foreseeable
Globalization Becomes the Major Cause of Convergence
148
future (this is, of course, very tightly connected with the process of the Great
Convergence that has been discussed above).
How did this take place? And (what is the most important) why? Quite a number
of explanations have been suggested by now. For example, “Decline of the West”
may be interpreted in spirit of Oswald Spengler ( 1918 ) or Pat Buchanan ( 2002 ), that
is from the point of view of the theory of civilizations and the renunciation of moral
imperatives.
24 However, this, of course, fails to account scientifi cally for the actual
causes of the “moral degradation”. The weakening of the USA may be also regarded
as the confi rmation of various theories of cycles of political hegemony (e.g.,
Modelski 1987 ; Thompson 1988 ; Modelski and Thompson 1996 ; Arrighi 1994 ),
according to which the hegemony period lasts about 100–200 years, whereas after-
wards an old hegemon tends to be replaced by a new one. Indeed, no country can
remain a global hegemon infi nitely. However, the point is that the forthcoming
change of the global hegemony pattern will not mean just a “usual” replacement of
the USA by a similar absolute world leader.
25 And if there is no single absolute
leader, the world will be structured in a signifi cantly different way (see, e.g., Grinin
2010 , 2012a ; Grinin and Korotayev 2010b , 2011 ). Thus, with the eclipse of the
USA the cycles of political hegemony are likely to come to their end. We will return
to this point in the concluding chapter.
It is rather natural to consider the change of geopolitical landscape as a result of
mistakes and arrogance that become typical for great powers at a certain phase.
Jawaharlal Nehru notes in this respect that history of great powers goes through
three stages: success, the consequence of success—arrogance and injustice, and as
a result of this—fall (Nehru 1949 ). Indeed, a very considerable number of mistakes
(including rather evident ones) have been made. One may even have an impression
that Western democracies tend to lose their very important quality—to make correct
conclusions from their own mistakes. Some evidence in support of this statement
appears to be suggested by a sort of maniac attempts to topple regimes in the Middle
East and East Europe without a suffi cient care for consequences, without taking into
account experience of their involvement in Lebanon, Palestine, Somalia,
Afghanistan, Iraq, Libya, Syria…
However, those very mistakes (as well as changes in behavioral patterns of elites
and commoners) may be regarded as results of deeper processes. Hence, it is very
important to see those processes that change the world (often contrary to the will of
those who seem to be in the center of the events).
24 “The de-Christinization of America is a great gamble, a roll of the dice, with our civilization as
the stakes. America has thrown overboard the moral compass by which the republic steered for 200
years, and now it sails by dead reckoning” (Buchanan 2002 : 198).
25 Note that William R. Thompson was one of the fi rst to arrive at this conclusion—while analyzing
possible challengers to the USA leading position in the 1980s he demonstrated that at that time the
USSR was the only state that could compete with the USA militarily, whereas Japan was the only
state that could compete with the USA economically—while there was no state that could take all
the World System hegemony functions of the USA (Thompson 1988 : 261–282).
4 The Great Convergence and Globalization: How Former Colonies…
149
Is the Globalization the Main Cause? As we could see above, if we consider the
situation in retrospective, the decline of the might of the USA and the West was
inevitable. The crisis of 2008–2014 just revealed in a rather distinct way the trend
that had become rather pronounced well before the crisis, the trend toward the
weakening of the main Western economic centers and the inevitability of the loss of
the absolute hegemony by the West. We are dealing here with a certain historical
logic that, however, has not been completely comprehended yet: the development of
globalization after it had reached its certain phase became incompatible with the
well-established model of the American and Western hegemony. Thus, the very glo-
balization (that was actively imposed by the USA; that is stigmatized by the antiglo-
balists of all the countries; that is often regarded as the main source of problems for
the developing countries) made the trend toward the relative weakening of the rich
countries and the relative strengthening of the poor countries inevitable. Consider
this point in more detail.
How the Globalization Have Weakened the Core
and Strengthened the Periphery
We have already mentioned the law of communicating vessels above. Now let us
dwell on it.
Law of Communicating Vessels of the World Economy As we could see above,
up to the early 1970s the development of globalization was accompanied by the
increasing gap between the rich and poor countries with respect to a number of
important characteristics, especially, if we compare their GDP per capita levels. At
the same time much was done to prepare the start of convergence. Then, in the
recent decades, some world economic processes, particularly globalization, began
to contribute more and more to the closing of this gap. “The developing world’s
share of global employment and global exports rose steeply, initially on the basis of
manufacturing experience plus low wages and economies of scale. Employment
and export shares both increased from the 1970s to the 1990s by at least 10 %
points” (Amsden 2004 : 256).
Thus, it appears possible to speak about the “ divergent globalization ” (approxi-
mately up to the 1970s) and the “ convergent globalization ” (since the 1980s).
However, it appears important to note that a rather pronounced convergence
between the First and the Third World was already observed in the 1990s; however,
this convergence can be hardly seen when “the West” is compared with “the Rest”,
as in this case the convergence between the First and the Third World was obscured
by a catastrophic economic decline observed in the early 1990s in the Second
World (see Chap. 3 ).
How the Globalization Have Weakened the Core and Strengthened the Periphery
150
Hence, the very essence of the last globalization wave implies that the develop-
ing countries must grow faster than the developed.
26 This is because the globaliza-
tion increases the transparency of economic borders and this brings into action what
may be called the “law of communicating vessels”. As a result the development of
periphery (and, especially, semiperiphery) accelerated, whereas the growth of the
countries of the World System core slowed down. There is no doubt that this is one
of the main results of the global development in the last two decades.
According to the World Bank, just 20 years ago the share of the most developed
countries (=the First World = “the West”
27 ) in the world GDP (calculated in the con-
stant 2005 international purchasing power parity) was almost twice as high as the
one of the rest of the world. It started declining in the 1990s, but these were the
2000s when this decline became precipitous, and by now the share of the Rest
already exceeds the one of the West (see Chap. 3 ).
Law of Communicating Vessels of the World Economy and Awakening of
Masses Many economists of the 1960s and the 1970s did not have much hope that
in the forthcoming future there would be much chance to bring the countries of the
global South from the obscurity of backwardness. They were right to consider as the
main obstacle the absence of the aspirations to improve their lives among the popu-
lation of those countries. Poverty did not bother people, they did not perceive it as
an unbearable state that should be escaped as soon as possible [on this see, e.g., the
book by Noble Prize Winner Gunnar Myrdal ( 1968 ; see also his earlier work Myrdal
1956); the same opinion may be also found in the famous book of Braudel ( 1973 )].
Such a psychology, which was described by economists in the 1950s, 1960s, and
26 This especially relevant for those developing countries that passed a certain threshold level of per
capita GDP, which has been identifi ed by Ho ( 2006 ) to be around $1,150 [note that this is rather
congruent with the “take-off” theory of W. W. Rostow ( 1960 )]. The growth of the convergence rate
in the recent decades is directly connected with the fact that during those decades one could
observe a very signifi cant growth of the number of those developing countries that passed that
passed this threshold level. Indeed, as we have argued on a number of occasions these are medium
developed countries that tend to grow faster than either the least developed countries or the most
developed ones (see, e.g., Коротаев and Халтурина 2009 ; Korotayev and Zinkina 2014 ; see also
Statistical addendum to Chap.
3 ). It is also very important to stress that at present the majority of
the developing countries (with a total population of about fi ve billion) belong to the category of the
medium developed (“middle income”) countries (World Bank 2014 ), whereas only the minority of
the Third World population [the so-called “bottom billion” (Collier 2007 )] live now in the least
developed countries. Note also that in the recent years the least developed countries tend to grow
faster than the most developed ones, but still slower than the medium developed states (see
Korotayev and Zinkina 2014 and Statistical addendum to Chap.
3 ).
27 Here this notion is operationalized as “High Income OECD Countries” according to the World
Bank classifi cation.
4 The Great Convergence and Globalization: How Former Colonies…
151
1970s (see above), may still be found among some inhabitants of the most underde-
veloped areas [especially, in Tropical Africa (see, Allen 2011 )].
28
However, in many developing (mostly middle-income) countries the situation
has changed, that is why the Third World is transforming from sleeping and apa-
thetic into rather dynamic indeed (see, e.g. Korotayev et al. 2011a , b , 2012 ;
Korotayev and Zinkina 2014 ; Grinin 2013 ). And one of the main changes may be
seen just in the change of life priorities of hundreds million, who make more and
more active attempts in order to escape from poverty and illiteracy into a new life.
Thus, the most diffi cult precondition for the breakthrough turns out to awaken
this activity in the population of the poor countries (this requires very considerable
efforts aimed at the initial modernization of education and health care, that is the
initial accumulation of the human capital). However, when the need to enhance the
conditions of life emerges at the mass scale, this puts into work a powerful motor.
This may produce a qualitative result (though such a “Brownian motion” is almost
always connected with various sorts of lawlessness, injustice and so on). When it
starts, the movement toward the change of people’s own life to the better tends to
generate social energy for many decades. And when we observe a synergy of efforts
produced by the population and by the state, the success may be overwhelming.
This is what happened in China, India and many other developing countries (Grinin
2011b , 2013 ; Grinin et al. 2015 ).
In rich countries (notwithstanding all their achievements in culture and educa-
tion) this source of development has already dried up. Motivation toward hard work
does not decrease only among some groups of immigrants struggling for their (and
their children’s) economic status (and, by the way, in the USA this supports the
economic dynamism up to a considerable extent).
And taking into consideration the population aging, possibilities for fast devel-
opment are further shrinking more and more. It appears important to emphasize that
among the causes of the weakening of the relative might of the West an important
place belongs to the dramatic slow-down of the population growth rates in the West
(whereas in some developed countries those growth rates have even become nega-
tive) which is accompanied by its very signifi cant aging (see, e.g., Goldstone 2010 ;
Powell and Khan 2013 ). This leads to the decline of the working age populations
and explosive growth of the number of pensioners.
29 In the meantime it was the
28 Note that even in the 1990s some very important economists (like Jacque Attali who was the
President of the European Bank of Reconstruction and Development at that time) still believed that
the overwhelming supremacy of the global North over the global South would only increase in the
forthcoming decades and would continue in the foreseeable future. Attali, for example, was sure
that in the forthcoming decades many markets of the North would become closed for imports from
the impoverished South. He expected the desperate popular masses of the World System periphery
to continue observing in painful despair the effl orescence and richness of the World System core
(Attali 1991 ).
29 Note that the USA has certain advantages here as regards higher fertility and immigration rates,
which are among the main factors making the US economy more dynamic than the European
economies.
How the Globalization Have Weakened the Core and Strengthened the Periphery
152
globalization that increased dramatically the demand for the main resource of poor
countries—their workforce. What is more, the value of this resource is likely to
continue growing further in the forthcoming decades (see, e.g., Grinin 2011b , 2013 ;
Zinkina and Korotayev 2014 ; Grinin and Korotayev 2010b , 2014 ) though for many
developing countries in South Asia and, especially, Sub-Saharan Africa this will
still be an extremely diffi cult task to fi nd a productive employment for hundreds
million young working hands (Zinkina and Korotayev 2014 ).
As has already been mentioned above, the openness of economic borders creates
a situation when a sort of law of communicating vessels of the world economy
begins to act; whereas the above described arrangement of labor incentives and
labor resources determine to a considerable extent the work of this system of com-
municating vessels. In order to make the production cheaper, capitals and produc-
tion capacities of the developed countries are transferred to the developing countries
where one can fi nd hundreds million young women and men looking for a job.
Together with this, the motor of the world economic growth is also transferred from
the core to the periphery (which implies a signifi cant reconfi guration of the World
System). As a result, the role of the developing countries in the world economy
(especially, as regards the generation of its growth) is increasing, whereas the gap
between them and the developed countries is decreasing (though is still remains
very signifi cant).
Thus, by now the globalization of recent decades has worked mostly in favor of
developing countries notwithstanding claims that it only increases the gap between
the developed and developing countries (see, e.g., Stiglitz 2002 ). In spite of many
just observations made by the critics of globalization, we should maintain that it is
Jagdish Bhagwati ( 2007 ) who turned out to be right with his vigorous defense of
globalization (see also Amsden 2004 ). And we do not see suffi ciently strong factors
that can stop entirely the Great Convergence rather than just to slow it down.
30
And could it be the other way? It is not rare when a logic of a certain process
remains unclear and contradictory for a long period of time; the attention is attracted
by those very features that disappear later, whereas the most important characteris-
tics remain some time blurred. It becomes clear only later that the process was
bound to acquire those characteristics. This was what happened with globalization.
Let us consider if the development of globalization had substantial chances to bring
signifi cantly different results.
For a rather long period of time (as we have seen above) the expansion and inten-
sifi cation of the economic links in the world proceeded (up to a considerable extent)
through the transformation of peripheral economies into agrarian and raw material
30 A certain slowdown is not entirely unlikely against the background of possible successes in the
“reindustrialization of the West” and industrial application of robotics.
4 The Great Convergence and Globalization: How Former Colonies…
153
sources for the developed states.
31 As has been mentioned above, that is the reason
why many development students (e.g., Frank 1979 ; Wallerstein 1974 , 1980, 1988,
1987 , 2003 ; Amin 1976 , 1994 , 1997 ) believed that the world-system core (≈the
West) could only exist through the exploitation of the periphery, through its imposi-
tion on the developing countries of such an economic specialization that would
preserve the leadership of the developed countries. It was also rather comfortable
ideologically to equate the new globalization wave with a sort of modernized neo-
colonialism, maintaining that it either conserves the global inequality, or will even
increase the gap between the developed and developing countries. There seem to
have been certain grounds for such believes. However, fi nally the logic of the glo-
balization process has turned out to be rather different. Why? The point is that that
the globalization does not only increase the number of economic ties, it also extends
enormously the world economic space. And this means a constant transformation of
the international division of labor, which in the developing countries, as we have
seen above, was transformed from colonial to more advanced Actually this could
have only happened in the following way—while advanced countries concentrated
on the development of new sectors, the technologies of older generations must have
been transferred to less developed countries (Гринин 2013 ; Grinin and Korotayev
2014 ; see also Amsden 2004 ). One should also take into account the exhaustion of
labor resources in the developed countries, and the abundance of such resources in
the Third World. Thus, globalization objectively forced those countries that devel-
oped postindustrial economy and that could hardly support all the economic sectors
to move industrial production to weakly industrialized regions.
32 As a result of such
a diffusion (greatly facilitated by the opening of international borders for the move-
ment of capitals and the growth of the human capital development level in the Third
World) one can observe a transfer of a substantial part of the World System core
31 However, even such a development was rather important for the modernization of the peripheral
countries. Note also that in the nineteenth century ones of the most salient examples of transforma-
tion of whole colonies into agrarian and raw material sources for the developed states were repre-
sented by Australia, Canada and New Zealand. However, by 1913 the average level of life in
Canada [estimated through the per capita GDP level, which, in 1913 in Canada, according to
Maddison ( 2010 ), was equal to 4,447 international dollars (to be exact—1990 Geary—Khamis
international purchasing power parity {PPP} dollars)] was considerably higher than the Western
European average ($3,687), whereas in Australia and New Zealand ($5,157 and $5,152 respec-
tively) it was higher than in the most prosperous Western European countries of that time. Note that
now Australia is still a major agrarian and raw material source, though in the present-day for China
rather than Western Europe. In the meantime the average level of life/per capita GDP in Australia
[$34,396 (2005 PPP dollars)] is till now a few times higher than in the workshop of the present-day
world, China.
32 Such processes contributed to the economic development in the nineteenth century too, though
the transfer of industrial production was not so wide-spread. However, in the nineteenth century
one may note similar processes with respect to the agricultural production. In this century, as a
result of explosive urbanization, the share of agriculture in the Western European GDP declined,
whereas the demand for food increased dramatically. This led to the fast development of market-
oriented agriculture (and economy in general) in many peripheral areas (Australia, Russia, parts of
India, Argentina, the American West). Of course, the results in India dramatically differed from the
ones in, say, Australia. Why? We have tried to answer this question in Appendix B.
How the Globalization Have Weakened the Core and Strengthened the Periphery
154
industries to the World System periphery. On the other hand, many developing
countries have applied a lot of efforts of their own to achieve their
industrialization.
Causes of the Change of Economic Balance of Forces in the World Now sum-
marize the points indicating that the convergence was a virtually inevitable result of
the globalization process.
1 . Development of new technologies led to the situation when the technologies of
older generations became cheaper and cheaper. The transition of the Western
economies to new technologies connected with the production of highly skilled
services [in conditions of scarcity and high costs of their labor (as well as high
ecological standards)] demanded the transfer of the old industries to the periph-
ery. The transfer of those industries led to the rise of the peripheral countries
(see, e.g., Grinin 2013 ).
The so-called fi nancial revolution and the encouragement of the migration of
capital between countries had a signifi cant infl uence on the developing states’
advance.
33 Capital (whose volume steadily grew) searched for more profi table
investments and often found them in young economies. Thus, the countries that
actively attracted capital and created favorable conditions for it would benefi t. At
the same time, we could also observe some important negative consequences of
this situation which led to a number of crises (in 1997 etc.) and improved the
control (although partial) of foreign capital activity. One can agree with Amsden
( 2004 : 253) that “the debt crisis in Latin America in 1982 and in East Asia in
1997 were both preceded by a surge in investment ”. Anyway, the direct invest-
ments in developing economies in the 1990s and 2000s appeared the major chan-
nel to attract long-term private capital, new technologies and managerial
experience which often appear to have been more effective than local enterprises
(Руденко 2006 : 7). The following fi gures evidence for the private investment
growth rate: in 1990, the net infl ows of investment to developing countries was
35 billion dollars and in 1994–1996 they already constituted 200 billion dollars
a year (Ibid.: 6). Of course, the foreign investments spread unevenly in different
Third World regions and countries (to a large extent that depended on effective-
ness of the states’ economic policy and other factors).
34
2 . For the functioning of the transferred industries it was necessary to raise the level
of the recipient countries in many respects. Developing countries became produc-
tion grounds (assemblage workshops, preliminary procession industries, etc.).
33 Hernando De Soto argued that “the major stumbling block that keeps the rest of the world from
benefi ting from capitalism is its inability to produce capital” (de Soto 2000 : 5). So with the fi nan-
cial revolution and deindustrialization the strength of such a “stumbling block” declines
signifi cantly.
34 In this respect, the Arab states in the 1990s serve an example of low-active and ineffective policy.
For example, while the investment infl ow to developing countries in 1990 and 1996 generally
increased six times, in the Arab countries it was far from increasing, on the contrary it only halved
(Руденко 2006 : 6), yet in the 2000s the effectiveness of those policies increased in the Arab coun-
tries very signifi cantly (see, e.g. , Korotayev and Zinkina 2011 ).
4 The Great Convergence and Globalization: How Former Colonies…
155
However, such production grounds could only function in the presence of mini-
mal required infrastructure, fi nancial sector, a certain qualifi cation of workers
(implying the elimination of illiteracy and some development of secondary and
higher education) and so on. The West blamed ‘Third World peoples for their lack
of entrepreneurial spirit or market orientation’ (De Soto 2000 : 4) and insisted that
the developing countries should develop all these.
3 . The transfer of industries launched a vigorous source of growth. In a number of
poor countries it set in motion two of their very important advantages: vast labor
resources and their cheapness. As a result they did not only start producing cheap
goods in great quantities—industrialization and modernization greatly acceler-
ated in those countries. And those processes for decades (due to the rural–urban
migrations) generate a rather fast economic growth.
4 . These were the unshakable globalization principles that led the West to its dein-
dustrialization [including, in particular, the so called Washington Consensus
(see, e.g., Korotayev 2010 ); see also de Soto 1989 ]. The very globalization prin-
ciples (free trade as well as free movement of capitals) have made the process of
the production transfer to those regions inevitable (see, e.g., Grinin 2013 ).
5 . The West and Japan themselves gave modernization technologies to developing
countries . In order to preserve their leading positions, the Western countries
actively taught the developing countries what they should do, insisted on the
acceleration of their modernization; what is more, they developed strategies of
such a modernization; and, through the system of international development cen-
ters, they provided them with signifi cant help in this regard. In many countries
this coincided with desires and efforts of local elites; and in many cases this
resulted in impressive successes of respective countries. Success of Japan (and
later “Asian Tigers”) created an effective model of catch-up development based
on the fast development of the exporting sectors, and this model started diffusing
(see, e.g., Grinin 2011b ; see also above about the “fl ying-geese” paradigm).
6 . Cheap industrial products defeated the industry of the West. The expansion of
the importation of cheap manufactured products to the Western countries made
the process of the transfer of industries to the poor countries irrepressible.
Western producers failed to compete with low prices and were not ready to pay
more to support their industry.
Who Have Found Themselves in the “Globalization Trap”? So the transfer of
industries to the developing countries created such conditions when they started
growing faster than developed states. This is hardly surprising taking into consider-
ation the point that for a few decades industrial capacities and capitals were leaving
developed countries while entering the developing ones. In addition, this was sup-
ported by active policies of the developing countries’ elites who tended to actively
attract investments and technologies to their countries, to eliminate barriers in their
ways.
Compare, for example, economic growth of Mexico and the USA. The transfer
of industries from the latter to the former [that especially accelerated after the estab-
lishment of the North American Free Trade Area (NAFTA) in 1994] has led to the
How the Globalization Have Weakened the Core and Strengthened the Periphery
156
following results: between 1986 and 2012 the Mexican GDP grew nine times (from
$129.4 billion to $1153.3 billion); the GDP of Brazil (that also actively imported
capitals and technologies) grew comparably—eight times and a half, whereas the
USA GDP only grew 3.4 times (respectively from $4,425 billion to 14,991
billion).
In the meantime the Mexican and Brazilian economies are far from being the
fastest growing (and in the 1980s and the 1990s their economic and fi nancial sys-
tems experienced serious turbulences). In the same years Malaysia and Indonesia
increased their GDP about 11 times. Since 1991 (that is, since the country’s econ-
omy had become open to the importation of foreign capitals) India increased its
GDP 7 times just within 20 years (whereas between 1980 and 2012 it grew about 10
times). And, fi nally, China between 1986 and 2012 increased its GDP more than
27(!) times (from $298 billion to $8,227 billion).
35 All those fi gures are very impres-
sive indeed. For comparison, between 1986 and 2012 the GDP of the United
Kingdom grew 4.3 times; whereas GDP of France and Germany only grew 3.4
times [calculated on the basis of data provided in World Bank 2014 (NY.GDP.
MKTP.CD), see Fig. 4.5 ].
The developed countries could only preserve the gap through the prohibiting of
the transfer of capitals, technologies and industries, through policies of high tariff
barriers, that is by closing their markets from foreign goods. However, after decades
when they tried to convince the developing world that the free trade is sacred, after
the establishment of the WTO, it appears impossible for the developed countries to
protect their markets with custom tariffs. What is more—customers in the developed
35 All the calculations have been performed on the basis of the World Development Indicators data-
base (World Bank 2014 ).
239% 244% 254% 333%
627%
Germany
France
USA
UK
India
Brazil
Mexico
Malaysia
Indonesia
China
740% 810% 980% 997%
2662%
0%
200%
400%
600%
800%
1000%
1200%
1400%
Fig. 4.5 GDP growth in some developed and developing countries between 1986 and 2012. Data
source : World Bank ( 2014 ): NY.GDP.MKTP.CD
4 The Great Convergence and Globalization: How Former Colonies…
157
countries prefer to buy foreign but cheaper goods (fi rst these were Japanese goods;
then these were Taiwanese, Chinese and Mexican ones; now these are more and
more goods from Bangladesh, Vietnam etc.).
Thus, we are dealing with a certain paradox of development. For a very long
time the USA was a very active proponent of the ideology of the free trade and hon-
est competition [for example, it constantly pressed upon such its partners as Japan
that tried not to let to their markets certain goods (Bhagwati and Patrick 1991 ;
Amsden 2004 )]; it initiated the creation of respective international organizations.
That time it was benefi cial for the USA. However, those fi rm rules prohibiting the
creation of artifi cial barriers blocking cheap imports became the basis for the ratio-
nalization of technological process and the transfer of production from Europe and
North America to Mexico, China and other countries. Note that the behavior of the
respective Western corporations was rather rational and logical; yet, as a result the
West transferred to the periphery together with the industries a substantial part of
its might.
As a result of the deindustrialization of the West, the developing countries have
generally profi ted, whereas the developed countries found themselves in the trap of
low growth rates. The process of deindustrialization (and its consequences) is
described rather well by Martin and Schumann ( 1997 ) who see in it a global “trap”
for Europe and the USA. However, those authors pay most attention to the issue of
job cuts and wealth distribution; whereas they do not notice the global change of the
balance of power, because they are sure that globalization brings negative results to
all the countries of the world.
These were just Western and Japanese corporations that “impregnated” Mexican,
Chinese, Indian and other developing economies. Western countries’ policies
together with global demographic changes (exhausting of the demographic bonus
combined with the population aging of the West and the demographic bonus of the
East) amplifi ed those processes. Of course, if the Western leaders of the late 1980s
and 1990s could realize entirely all the consequences of the deindustrialization, they
might have done something to slow down this process
36 ; however, they could hardly
prevent it completely, taking into account the powerful infl uence of both consumers
(≈electorate) and the fi nancial-industrial elites. On the other hand, policies of a
number of developing countries turned out to be rather successful as regards the
support of industrialization and accelerating development of those countries.
37 Yet,
without an adequate infl ow of capitals and technologies from the developed
36 Today the US administration tries to take certain steps in this direction, and Obama openly
expresses his joy as regards the return of some industries to the USA.
37 Note that a certain possible slowdown in the growth of developing countries turns out to be rather
compatible with our idea that a new technological breakthrough (see Grinin and Grinin 2013 for
more details) within the World System (that we expect to take place in the 2030s and 2040s) will
request not only a certain decrease in the gap between the developing and developed countries (the
economic convergence), but also a certain decrease of this gap in the sociopolitical and administra-
tive dimensions (sociopolitical convergence), which may hinder the economic growth of respective
developing countries, especially against the background of the World System reconfi guration that
is likely to be generated by those processes (see Grinin and Korotayev 2012b for more details).
How the Globalization Have Weakened the Core and Strengthened the Periphery
158
economies their success would have been rather limited. Such reforms only turn out
to be successful only providing for favorable conditions.
Hence, precisely globalization played a decisive role in the weakening of the
economic positions of the West in general, and the USA in particular (and, simulta-
neously, in the strengthening and rise of the countries of Asia and Latin America).
We would forecast that the process of convergence will go very unevenly, in a wave-
like manner, sometimes slowing down (up to temporary reversals), sometimes
accelerating (see Appendix B for details). According to many forecasts, in the forth-
coming decades one will observe a very signifi cant reduction of poverty in the
developing countries [according to some calculations it will decrease twice by 2030
(NIC 2012 : 8)], the most notorious forms of exploitation will be eliminated, the
illiteracy will be reduced very substantially, there will be serious progress with
respect to gender equality, and so on.
38 This will result in a substantial reduction of
the gap between richer and poorer countries. We can also forecast in a rather confi -
dential way the growth of the group of middle income countries (see, e.g., Korotayev
et al. 2011a , b , 2012 ; Korotayev and de Munck 2013 ; Grinin 2013 ). In some respects
such an equalization of incomes appears to resemble the process of convergence as
regards the standards of life of different strata in various modern western countries
in the fi rst two thirds of the twenty-fi rst century (especially in conjunction with
rather active processes of the middle class formation).
38 However, in absolute fi gures the number of poor and illiterate people remains rather high. On the
other hand, the fertility decline in the Third World is bound to contribute to the reduction of those
fi gures.
4 The Great Convergence and Globalization: How Former Colonies…
159© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9_5
Chapter 5
Afterword: The Great Convergence
and Possible Increase in Global Instability,
or the World Without an Absolute Leader
Why Has the Great Convergence Led to the Growth of Global Instability?
Thus, the overall conclusion of our research is that in the foreseeable future we are
likely to observe the processes of economic and socio-cultural convergence between
developing and developed countries. However, this will simply be a general ten-
dency. In reality, this kind of long-term process never goes (and basically cannot go)
in a strictly linear and progressive way. Especially when you consider that such a
convergence implies a very serious and dramatic transformation of the World
System, its zones, as well as individual countries. In general, such changes can sig-
nify a reconfi guration of the World System and a diffi cult search for new principles
of world order. On the one hand, it is obvious that the Western world, by the United
States will not put up with the decrease (and—all the more—the loss) of its global
leadership, and it can use a variety of soft and hard means to preserve this leader-
ship, including fi nancial measures, renunciation of already unfavorable agreements
and even military actions. On the other hand, the achievement by these or other
developing countries of suffi ciently high levels of development can lead to serious
internal crises within them in connection with the contradiction between the increas-
ing level of cultural development (and especially the expectations) of the population
and the archaic and undemocratic forms of government together with high levels of
social/economic inequality. Under certain conditions this kind of stress can lead
under certain conditions to unrest and revolutions, which, however, are not neces-
sarily benefi cial for the future development (see, e.g., Goldstone 2001 , 2014 ) and
can, on the contrary, drag society back (Grinin and Korotayev 2015 ). Especially if
we take into account that the USA appears to be ready to actively use such situations
in order to maintain its position as the world hegemon, encouraging such move-
ments or even provoking them.
Aside from the above, the instability in the forthcoming decades may be further
amplifi ed by uneven development of different countries or groups (see below), the
changes in the ethnic proportions of some societies, especially Western societies
(and in particular the USA), the more active participation in the processes of
160
globalization of the regions that are weakly involved in them in present, as well as
by the state formation and nation building in the regions with weak traditions of
statehood (Grinin 2012b ), the struggle for regional leadership, as well as by the
struggle evoked by the general trend toward the weakening of state sovereignty and
natural attempts to save it (Grinin 2008b , 2011a , 2012a , b ). Of course, the world
will face in its full magnitude the problem of risks associated with global fi nance
which, on the one hand, can cause new devastating global fi nancial crises, but, on
the other hand, is likely to lead to the search for new solutions in the fi eld of
global fi nancial regulation. But these solutions are also directly linked with the
processes of convergence, and their infl uence on the might of the Western powers.
We could not address these problems in this book, yet we have examined some of
them in other studies of ours ( Grinin and Korotayev 2010a , b , 2011 , 2012b , 2015 ;
Grinin 2012a ).
Serious Transformations Are Likely to Be Observed Within the Developing
Countries Themselves The Great Convergence with its development becomes a
more and more complex process. As a result, even the concept of developing coun-
tries under the infl uence of rapid and radical change is being transformed. In fact,
we should talk now not about a single group of developing countries, but rather
about a number of groups which are very different in terms of levels and potentials
of their own development. The law of uneven development is represented here in its
full power. In the recent decades we observe a clear divergence between middle
income and low income countries (see Appendix B below and Korotayev and
Zinkina 2014 ). And this divergence may continue for some time, as not all the least
developed countries are ready for the take-off. This may be further aggravated by
the point that these are the least developed countries where we observe the highest
population growth rates (see Korotayev and Khaltourina 2006 ; Korotayev and
Zinkina 2014 ; Zinkina and Korotayev 2014 for more details). However, there are
some grounds to maintain that some time we will observe a certain equalization
within the developing countries themselves. This equalization will manifest itself in
the following: in the forthcoming decades an increasing number of the least devel-
oped countries (including the ones in Tropical Africa) will join the club of the fast-
est growing economies. Thus, the number of the countries belonging to the “bottom
billion” is very likely to decrease in the forthcoming decades (and this will be only
partly compensated by the extremely high population growth rates that are so typi-
cal of the least developed countries).
Thus the gap between low- and middle-income countries is likely to continue
growing; but the number of middle-income countries will increase, whereas the
number of the low-income countries is likely to decrease in the forthcoming decades.
We will almost certainly observe the growth of the group of developing countries
with per capita average annual income in the range not only over $1,150, but also in
the range between 3 and 15 thousand dollars.
Therefore, there are grounds to expect a few more waves of the rise of peripheral
countries (whereas the growth rates of the current leaders — China and India — will
slow down) . One may note rather bright perspectives for the growth of a large
group of developing countries, including Vietnam, Bangladesh, Turkey, Indonesia,
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
161
Nigeria,
1 Malaysia and so on (note that those countries are already actively diverg-
ing investments and export shares from China).
The Great Convergence and New Technologies There is no doubt that new tech-
nologies can also signifi cantly infl uence the situation in the world, although we do
not expect a new technological breakthrough before the 2030s (see Grinin 2012a , b ;
Grinin and Grinin 2013 , 2014 for more detail). Some researchers who study the per-
spectives of global technological development in the forthcoming decades have noted
that the potential of the information- computer technological paradigm has already
been exhausted to a considerable extent, whereas the new technological break-
throughs (that will presumably be based on the development of bio- and nanotech-
nologies) appear to be delayed (e.g., Maddison 2007, p. 72; Мельянцев 2009 ). Some
researchers interpret this as an onset of the so-called “technological pause” period
(Полтерович 2009 ). From our point of view such a delay is not coincidental.
Convergence of Development Levels Is Necessary for a New Technological
Breakthrough The point is that the largest technological shifts emerge initially as
economic sectors, and then they diffuse throughout economies for rather long peri-
ods of time (see, e.g., Modelski and Thompson 1996 ; Grinin 2012a ; Grinin and
Grinin 2013 , 2014; Perez 2002, 2010, 2011, 2012 ). Currently, we observe the fi nal
phases of such a wave of diffusion as regards information-computer technologies.
As regards fi nancial technologies, such a diffusion may continue for some time. The
analysis of emergence and diffusion of earlier waves of innovation suggests that a
new wave of innovation does not start before certain equalizing of the technological
level in a zone that is wider than the new innovation zone. For example, the cellular
telephone could not emerge before the diffusion of previous modes of communica-
tion (including the traditional telephone). In addition, with every new major innova-
tion wave the zone that is necessary for technological leveling expands (see Grinin
2007 , 2012a , b ; Grinin and Grinin 2013 , 2014 for more detail). At present, due to
the process of globalization, that particular zone has expanded to the maximum pos-
sible size. Finally, the level of technological reception in the largest part of the world
is not yet suffi cient, and this is why the main economic actors prefer to diffuse exist-
ing technologies rather than to create new ones. Thus, we suppose that it will take a
rather long time before the next new technological breakthrough starts; and during
this time we will observe both the processes of technological leveling and the
incubation processes preparing for the emergence of new technologies (see ibidem
for more detail).
Thus, a new advance of the Great Convergence is a necessary condition for the
future technological breakthrough. After the beginning of a new wave of major
technological innovations, the Great Convergence will enter a new phase, as
the new generation of newly industrialized countries will be very likely to play an
extremely important role in the development and spread of this new wave of
innovation.
1 However the Nigerian state and civil society need to achieve a radical reduction of dangerously
high fertility rates in this country (see Zinkina and Korotayev 2014 for more details).
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
162
Economic Globalization Versus Political Integration of the World In general,
we can say that in the present-day world political globalization lags far behind the
economic globalization that has developed enormously in the recent decades (see
Grinin and Korotayev 2012a , b , c , 2015 ; Grinin 2012a , b ). The catching up of the
political component with the economic component of globalization will imply the
reconfi guration of the World System, which may turn out to be a rather painful pro-
cess ( Ibid .). The crises may occur in very unexpected parts of the World System. In
particular, we tend to consider the Arab Spring, the crisis in Ukraine (which caused
serious tensions between Russia and the West), as well as tensions along the Chinese
borders as manifestations of such a reconfi guration of the World System. Of course,
it is impossible to predict the specifi c forms (and more so results) of each individual
crisis, interstate confl ict and social upheaval, but we have substantial grounds to
expect a very uneven multivector process, which is likely to mean in the end a
movement toward a new world political order.
Thus, we expect that the process of convergence will lead not only to the victory
over poverty, low levels of consumer culture and literacy in developing countries,
but, unfortunately, also to a period of greater instability in the world. In this con-
cluding chapter we will mention one aspect of the movement to the new political
order, the contours of which are unclear. We will discuss the point that in the near
foreseeable future, on the one hand, there will be a weakening of the leadership
functions of the United States and the West (with active attempts on the part of both
the United States and the West to keep them), and, on the other hand, no absolute
leader will appear to replace the United States. Thus, the world will develop against
the background of absent absolute leadership, which may further increase
instability.
Will Any Country Be Able to Replace the USA? The development of the above-
mentioned trends the gradual convergence of the World System core and periphery
connected with the weakening of the USA and the West (as we have seen it in Chap. 4 ),
and the growing of the signifi cance of many developing countries means that on a
planetary scale we are dealing not just with major changes, but rather with a radical
transformation of all the structure of the global economic and political order, and an
overall rather complicated reconfi guration of the world.
Yet, how will this reconfi guration proceed? First of all note that though positions
of the USA will be weakening, no state in the new world will be able to become the
absolute leader. The idea that the position of the USA will be occupied by some
other state (the most frequently proposed candidate is, of course, China) is utterly
wrong. China will outrun the USA as regards GDP at PPP very soon and will outrun
the it with respect to GDP in current US dollars perhaps within 5 or 10 years.
However, this is utterly inadequate to become the absolute world leader. The matter
is that today the USA concentrates simultaneously almost all the aspects of
leadership (political, military, fi nancial, monetary, economic, technological, ideo-
logical, and cultural) , whereas there is no country in the world (and there is no
group of countries in the world) that in foreseeable future will be able to monopo-
lize so many aspects of the world leadership (incidentally, this was suggested by
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
163
William R. Thompson already in 1988). In addition, neither China, nor India (nor
any other country) will be able to afford such a heavy burden due to the lack of
appropriate economic possibilities as well as political risks [at least because of the
problems with poverty of substantial parts of respective populations and discontent
with social problems, but also due to the lack of experience and necessary alliances,
as well as ideological weakness (see Grinin and Korotayev 2010b , 2011 ; Grinin
2011b , 2013 for more details)].
How Would the Future World Look Like? One may expect that the forthcoming
global system will have the following three characteristics: (1) changing rules and
fl exibility of structures of the World System, (2) activation of the struggle for allies,
and (3) the reduction of a country’s sovereignty. The absence of the strong absolute
leader will lead to the growth of the World System fl exibility as regards the search
for new political foundations. As we have already noticed earlier ( Grinin and
Korotayev 2010a , b ; Grinin 2010 ; Гринин, Л. Е 2013 ), the struggle for an “honor-
ary” place within the globalization and coalitions, organization and functioning of
the new world order will lead to the beginning of what we have called the epoch of
пew coalitions. In the process of the search for the most stable, advantageous and
adequate forms of supranational organization one may expect to observe the emer-
gence of various and even fast changing intermediate forms when actors in global
and regional political arenas will look for the most profi table and convenient blocks
and agreements. However, fi nally some of those new alliances and coalitions will
transform from temporal into permanent arrangements creating some fi xed suprana-
tional forms.
Thus, in the forthcoming decades one will see the emergence of a number of
countries and alliances that will play leading roles in different respects; against such
a background the winners might be those countries that will conduct the most active
policy aimed at the formation of new blocks as well as the joining of new blocks,
those countries that will be able to get the maximum number of partners in various
spheres. It may be said that a country’s infl uence will grow through “getting points”
by its participation in various alliances and blocks.
2 For the largest actors one is
likely to observe a high degree of competition as regards attempts to infl uence the
restructuring of the international system.
Consequently, we will live in such a world, where one can witness a more and
more active search for allies and alliances (though this might be accompanied by the
growth of competition in many respects); this can result in the emergence of some
institutional factors of the new world order that imply the need for a greater stability
(Grinin 2012a , b ). Naturally, it appears impossible to predict concrete combinations
of future alliances. However, it is possible to offer a few ideas about this. For exam-
ple, we believe that scenarios suggesting the global dominance of the alliance of
India and China are not realistic. However, there are some more realistic scenar-
ios—for example, the ones with the USA and the West maneuvering between the
2 This may be also done through the formation of new alliances (the emergence of the BRICs, and
then the BRICS is very symptomatic in this respect).
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
164
alliances with India, China, and other large developing countries and their blocks.
As a matter of fact, in recent years we have been observing the growing activity of
US foreign policy aimed at the neutralization of the Chinese infl uence (through the
attempts to strengthen contacts with India and other Asia-Pacifi c actors). It is also
worth noting a rather old (and additionally consolidated by the Arab Spring) alli-
ance of the USA and the Gulf States.
3
On the other hand, we are currently seeing attempts to establish alliances between
various other powers (Russia, China and the other BRICS countries, Argentina and
the other Latin American countries, which, for one reason or another, may be wary
of the West) in order to create a new center of power in the world. This only con-
fi rms that in the near future alliances may be unexpected and unstable, which does
not preclude the formation of more stable alliances on this base.
All the above described processes will also lead to a certain transformation of
national sovereignty that will generally weaken due to the explicit and implicit,
forced and voluntary delegating of some parts of sovereign prerogatives to various
international, supranational, and global entities and arrangements (see Grinin
2008b , 2012a , b for more details).
The weakening of sovereignty may be accompanied by the growth of national
self-consciousness and nationalist moods in some developing countries with inten-
sifying industrialization (see Grinin 2012a , b for more details). In the forthcoming
decades the depth of economic links will increase, which will make a powerful
infl uence on those developing countries (especially in Tropical Africa) whose popu-
lation mostly does not feel those links yet in a substantial way. As a result, the
struggle between traditionalism and globalization may intensify. In some areas con-
fl icts and instability may grow, and whole regions may experience powerful social
destabilization waves [as was observed in the case of the Arab Spring (see, e.g.,
Grinin and Korotayev 2012b ; Korotayev et al. 2011c )].
New Geopolitics and the End of the Epoch of Stable Political Blocks For many
decades one of the main factors of the emergence of political alliances was the
threat of war which dictated selection of certain allies. That is why political alli-
ances were mostly military-political. In the contemporary world the risk of the
large-scale war has diminished signifi cantly, whereas the economic interdepen-
dence between countries has increased dramatically, and it will continue to grow in
the forthcoming decades.
Unfortunately, military confl icts or interventions have not disappeared, and in
recent years, we deal quite often with the use of force or threat of force. Moreover,
crises (for example, the Ukrainian one), may help military alliances to strengthen
their positions.
Nevertheless, there certain grounds to maintain that the old style of geopolitics
gradually has to give way to a new style of geopolitics connected with the necessity
3 But today, there are some visible signs of cooling between the USA and Saudi Arabia, as they
become to a certain extent competitors in the oil market, and also because of the USA attempts to
fl irt with Iran. Politics has always been volatile, but probably it will become even more volatile.
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
165
to create optimum conditions for the economic development of a state or a group of
states. Features of this new geopolitics look rather vague at present, but they should
become much clearer in the forthcoming decades. Let us outline a few of them.
The epoch of fi rm alliances and inter-allied loyalty appears to be coming to the
end (a characteristic example is Washington’s refusal to support Pakistan and the
USA alliance with India). The selection of allies, partners and blocks will be more
and more determined by rapidly changing interests and conjunctures. But, of course,
more powerful partners will use various means to keep their wavering partners in
their zones of infl uence.
States will not look for constant allies; they will rather be looking for temporary
“fellow travelers” for particular occasions, trying to reach agreements simultane-
ously with many partners (this corresponds well to one of the principles of modern
business—to have as many partners as possible). Even now many experts are con-
cerned with the future of international system if it is only based on interests, not on
certain rules (see NIC 2012 ).
Economic interests will be clearer expressed in the foreign policy. Thus, economic
interests of some countries may become constant, whereas political interests may be
adjusted to them to a considerable degree. Political and geopolitical principles and
interests of some other states (especially larger ones) will never be dissolved in
economic aspects. However, in this case different vectors of foreign policy may turn
out to be pulled apart, that is, political and economic aspects of foreign policy will
exist more detached from each other. And, consequently, policies will become more
pragmatic than now.
4
The epoch when the creation of economic blocks was determined to a very con-
siderable extent by some (civilization, ideological, military-political etc.) proximity
evidently passes away. Today we see a growing tendency toward the situation when
close economic links do not necessarily imply any political or ideological partner-
ship, though they may impede outbreaks of open confl icts.
Consider this using China as an example. Its political infl uence is growing. In
which way is this taking place? China has to join various alliances or to establish
with them (e.g., with the ASEAN) special relations, as it tries to play there an
important role. It also tries to initiate and actively support various economic
agreements (e.g., regarding free trade with Japan and Korea). China also tries to
push the RNB as an international currency (note, e.g., recently signed agreements
with Brazil and Australia), but to achieve this China must activate its agreements
with numerous countries, simultaneously making concessions to them, and get-
ting such concessions from them. However, notwithstanding all the active eco-
nomic policy pursued by China, notwithstanding all the growth of trade with its
neighbors, this did not eliminate the political (and territorial) contradictions with
Japan, Taiwan, Vietnam, India and so on. Let us mention another example. The US
“fl irtation” with India implying a virtual permission for India to possess nuclear
4 As a result both enmity and friendship may be forgotten very soon (one of salient examples is
provided by Vietnam and the USA; they have forgotten their antagonism and are developing bilat-
eral relations in a rather active way).
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
166
weapons do not imply that a sort of fi rm allied relations have been established
between the two states.
Thus, the behavior in politics is becoming closer to business strategies where the
principles are always rather fl uid. However, new principles of the world order may
start emerging just on this fl uid soil.
World Network Community? In those historical periods when economic links
between countries and regions were not as deep and indissoluble, the development
of globalization needed a certain military and political hegemony that relied to a
considerable extent on technological superiority of certain powers. At present the
depth of economic relations has become unprecedented, which (as has already men-
tioned above) weakens the need in political and military hegemony in its present
sense; this, of course, leads to more pragmatism in foreign policy.
5
The same causes will infl uence the process of a particular shift toward the for-
mation of a global network community (from the current hierarchical structure),
within which (in addition to states and their blocks) an active role will be played by
NGOs and many other actors. This process may also be regarded as one of the
aspects of the leveling of degrees of economic development (this is likely to con-
tribute to the establishment of a new basis of global relations, whose formation
could facilitate the creation of conditions for the emergence of some effective
global coordination center).
The movement toward the network society will contribute (in conjunction with
the Great Convergence) to the growth of the world middle class, a sort of world citi-
zen’s class (NIC 2012 , pp. 8–9), whose numbers, according to the Asian Development
Bank, will grow at the rate of about 9 % annually. And, generally, even according to
conservative models, by 2030 those numbers will double—from one billion to two
billions. We tend to agree that this is a very important megatrend ( Ibid. , p. 4). The
idea that the middle class of different countries will potentially constitute a sort of
global citizenship (which gives some hope as regards the emergence of a solid basis
of economic, cultural, and even political unity of the world) appears rather interest-
ing and stimulating. In the nineteenth century intellectuals in different countries
started constituting some unity fi rst within Europe, and later all over the world, thus
paving the way toward the development of panhuman ideas and values (which were
ultimately proclaimed at the level of UN declarations). In a similar way the world
middle class may create new possibilities for globalization. It may be that due to this
it will acquire new (more mature) features, moving toward the political globaliza-
tion of the world, a world whose contours are not clear yet.
5 But, of course, such changes will not go smoothly, as the USA will try by all means to maintain
its infl uence.
5 Afterword: The Great Convergence and Possible Increase in Global Instability…
167© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9
Appendix A: Technological Innovation
Activities in Britain and Other Western
Countries (1400–1900)—A Quantitative
Analysis
As has been shown in Chap. 2, as regards the scientific-technological innovation
rates, Europe outpaced China (and the East in general) in the fifteenth century—see
Fig. 2.6 (“Number of innovations in science and technology in Europe and China
per half a century, 900–1600 CE”), which supports our idea that the Industrial
Revolution started in Europe in the fifteenth century. It started in the belt that
included the Netherlands, Southern Germany, Northern Italy, as well as some parts
of France, Spain and Portugal. We suggest identifying the last third of the fifteenth
century and the sixteenth century as the initial phase of the Industrial Revolution.
During the sixteenth and the first half of the seventeenth century, the achievements
of different European countries were consolidating and diffusing, thus creating a
new foundation for growth. This phase of modernization (in terms of inventions)
can be subdivided into two subphases: the first was characterized by comparable
levels of technological innovation activities in a number of European countries; at
the second phase an undeniable lead belonged to Britain.
As regards technological innovation, a comparison of Britain with its European
neighbors very clearly shows that the British lead began to appear only in the second
half of the seventeenth century (Figs. A.2, A.3, A.4, A.5 and A.6; in Figs. A.4 and
A.5 this can be seen particularly well). Before that, Britain clearly lagged behind
Italy, Germany, and (for some period) the Netherlands. Thus, it is clear that during
the two initial centuries of the Industrial Revolution Britain absorbed the achieve-
ments of European societies, and only then it was able to start its own innovative
climbing. This British lead gradually grew until it reached its peak in the second
half of the eighteenth century. But this superiority could not continue too long.
Already in the first decades of the nineteenth century it became visible that some
other European countries and the USA were trying quite successfully to catch up
with Britain (Figs. A.6 and A.7), and in the second half of the nineteenth century
(from the 1860s) Britain ceased to be a technological leader, and its role in the
global technological invention process decreased from decade to decade. The tech-
nological leader role started to be performed by the USA (see Figs. A.7 and A.8).
168
We emphasize again that, on the one hand, we see an evident technological
innovation leadership of Britain for two centuries (from the second half of the
seventeenth century to the first half of the nineteenth century); but, on the other
hand, for a greater part of this period, the overall innovation activity of “the rest of
the West” was higher than the one of Britain (Figs. A.9 and A.10). Thus, the primacy
of Britain in the technological invention field was relative, except for only one rela-
tively brief period of the second half of the eighteenth century and the early nine-
teenth century—i.e., the period of the final phase of the Industrial Revolution, when
the leadership of Britain was absolute (Figs. A.9 and A.10).
Methodology The main database used for calculations in this appendix is
Hellemans and Bunch (1988), which was augmented with data from Usher (1954),
Haustein and Neuwirth (1982), van Duijn (1983), Рыжов (1999), Silverberg and
Verspagen (2003), Ballhausen and Kleinelümern (2008), Challoner (2009) and
Kondratieff (1926, 1935, 1984). In this appendix we have only taken into account
technological inventions, excluding purely scientific discoveries (note that in
diagrams in Chap. 2 we try to quantify the innovation dynamics in science and
technology—hence, there we take into account both technological inventions and
scientific discoveries). In addition, in this appendix we take into account only those
inventions that were actually implemented within a century (thus, we do not take
into account those sketches of Leonardo da Vinci that remained on paper only).
With regard to scientific discoveries, the only exception was made to those of them
with a direct technological significance.
For the initial phase of the Industrial Revolution and the first half of its interme-
diate phase (the fifteenth, sixteenth, and seventeenth centuries), we have identified
five major players in the technological innovation sector: Italy, Germany, France,
the Netherlands, and Britain (Figs. A.1, A.2, A.3 and A.4). Of course, some impor-
tant technological inventions were made in some other European countries (see
Figs. A.6, A.7 and A.8), and their total number exceeded in the fifteenth and six-
teenth centuries the one recorded for France. But in general, they did not play any
significant role until the early eighteenth century. Their role began to grow after-
wards, which confirms our idea of a common European space for open innovation
during the Industrial Revolution. Figures A.6, A.7, and A.8 clearly demonstrate that
in the eighteenth century the total number of major inventions made in the rest of
Europe (including Russia) exceeded the number of innovations in such a former
leader as Germany, in which the innovative activity in the technological area during
this time slowed down.
For over a century and a half (until the early seventeenth century) Italy remained
the technological innovation leader. It also fully corresponds to an important fact
which was mentioned in Chap. 2—it is in Italy (especially in Venice) where in the
fifteenth and sixteenth centuries one could observe the most advanced legislation
and practice for registering inventions. However, the growth of its activity stopped
in the middle of the sixteenth century, while other countries were catching up with
Italy. The stagnation of the innovation activity in Italy correlated quite well with the
Appendix A: Technological Innovation Activities in Britain...
169
start of economic and political crisis, associated with changes of world trade routes,
its inability to change the political model of development and foreign policy chal-
lenges. At the same time, we note that future long-term leaders in innovation, Britain
and France at the start of the Early Modern Period were lagging far behind Italy and
Germany (Figs. A.1 and A.2, A.3 and A.4).
Figures A.1, A.2, A.3, A.4 and A.5 indicate a rather interesting point, as in the
early seventeenth century four European powers converge as regards the number of
important innovations per country, which supports the idea that for the seventeenth
century it is quite possible to speak about a general Western European level of tech-
nological innovation activity. Although the further development of innovative activ-
ity in different countries was rather different, it is evident that a certain base was
established at a fairly high level, which was necessary to begin a new breakthrough,
a new phase of the Industrial Revolution. Also Figs. A.3 and A.4 show quite clearly
the stagnation of Italy, where in the seventeenth century the technological innovaton
activity rates fell almost to zero, which correlated quite well with the political and
social decline of Italy. Innovative activity from the south of Europe moved to the
North-West (including France) (see Fig. A.2).
0
2
4
6
8
10
12
14
1400 1450 1500 1550 1600 1650
Britain
Italy
Germany
France
Netherlands
Fig. A.1 Dynamics of technological inventions (=endogenous technological growth rate) in five
leading countries of Early Modern Europe, 1400–1650. Note: the data source is Hellemans and
Bunch 1988. Datapoints for 1450 refer to the fifteenth century, datapoints for 1550 refer to the
sixteenth century, datapoints for 1625 refer to the first half of the seventeenth century. The diagram
indicates the number of important technological innovations (listed in our database) made in
respective countries per century. If a database refers for half a century, we provide the endogenous
technological growth rate as inventions per century (to make all the datapoints comparable).
Hence, for the Netherlands, the datapoint for 1450 indicating “3” means that for the fifteenth cen-
tury our database lists three discoveries (which yields a “3 inventions per century” growth rate”),
for sixteenth century it increases to “4 per century”; for the first half of the seventeenth century our
database records six inventions in the Netherlands, which yields for the Netherlands for 1600–
1650 the endogenous technological growth rate of “12 inventions per century”
Appendix A: Technological Innovation Activities in Britain...
170
In the first half of the eighteenth century a certain divergence was observed in the
European North-West itself. The endogenous technological innovation rates grew
very substantially in France, but especially in Britain (see Fig. A.3).
Thus, already in the first half of the eighteenth century the British technological
lead became quite visible. But it only became really absolute in the second half of
the eighteenth century (see Fig. A.4).
As we see, in the second half of the eighteenth century in Britain the endogenous
technological growth rate increased by more than 250 %. This happened against a
rather slow growth of this indicator in France, a weak recovery in Italy and clear
decline in Germany and especially the Netherlands. As a result, the technological
lead of Britain became almost absolute—in the second half of the eighteenth century
the overwhelming majority of all the important technological inventions were made
in Britain (see Fig. A.9). The enormous lead of Britain with respect to the techno-
logical leaders of the start of the Early Modern Period becomes especially visible if
we delete the French curve from our graph (see Fig. A.5).
0
5
10
15
20
25
30
35
40
1400 1450 1500 1550 1600 1650 1700 1750
Britain
Italy
Germany
France
Netherlands
Fig. A.2 Dynamics of technological inventions (=endogenous technological growth rate) in five
leading countries of Early Modern Europe, 1400–1700. Note: datapoints for 1625 and 1675 refer
to the first and the second half of the seventeenth century respectively. Recall that in such cases we
still measure the endogenous technological growth rate as inventions per century (to make all the
datapoints comparable). Hence, for example, for the first half of the seventeenth century our data-
base records six inventions for Germany, which yields for Germany for 1600–1650 the endoge-
nous technological growth rate of “12 inventions per century”. For the second half of the
seventeenth century five major inventions are recorded in Germany, which yields for Germany for
1650–1700 the endogenous technological growth rate of “10 inventions per century”, etc
Appendix A: Technological Innovation Activities in Britain...
171
0
5
10
15
20
25
30
35
40
1400 1450 1500 1550 1600 1650 1700 1750
Britain
Italy
Germany
France
Netherlands
Fig. A.3 Dynamics of technological inventions (=endogenous technological growth rate) in five
leading countries of Early Modern Europe, 1400–1750. Change of the leaders
0
20
40
60
80
100
120
140
1400
1450
1500
1550
1600
1650
1700
1750
1800
Britain
Italy
Germany
France
Netherlands
Fig. A.4 Dynamics of technological inventions (=endogenous technological growth rate) in five
leading countries of Early Modern Europe, 1400–1800. The absolute technological lead of the
British in the late eighteenth century
Appendix A: Technological Innovation Activities in Britain...
172
However, this British absolute technological prevalence continued just for half a
century. Already in the first half of the nineteenth century the British endogenous
technological growth rate virtually stagnated against the background of a very fast
increase in those rates in France, Germany and the USA, as a result of which those
countries caught up with Britain in a rather significant way (see Fig. A.6), whereas
the number of major inventions made outside Britain exceeded substantially the
number of British inventions (Fig. A.10).
In the first half of the nineteenth century the Industrial Revolution was com-
pleted. Figures A.1, A.2, A.3, A.4, A.5 and A.6, as well as Figs. A.9 and A.10 in
different projections well confirm our idea that the Industrial Revolution from the
fifteenth to the nineteenth century passed through three phases: initial, intermediate,
and final.
In the second half of the nineteenth century Britain finally lost its technological
lead, as in the late nineteenth century the number of major inventions made in each
of the USA, Germany, and France exceeded the number of British inventions (see
Fig. A.7), whereas in 1880–1900 the number of major inventions made in Britain
constituted just about 10 % of all the major inventions made in the West (see
Fig. A.10). The technological lead by the end of the nineteenth century was clearly
taken by the USA (see Fig. A.7).
0
20
40
60
80
100
120
140
1400 1450 1500 1550 1600 1650 1700 1750 1800
Britain
Italy
Germany
Netherlands
Fig. A.5 Dynamics of technological inventions (=endogenous technological growth rate) in four
leading countries of Early Modern Europe, 1400–1800. With France excluded the absolute techno-
logical lead of the British with respect to Germany, the Netherlands and Italy in the late eighteenth
century looks even more salient
Appendix A: Technological Innovation Activities in Britain...
173
0
20
40
60
80
100
120
140
1400
1450
1500
1550
1600
1650
1700
1750
1800
1850
Britain
Germany
France
Other
European
countries
USA
Fig. A.6 Dynamics of technological inventions (=endogenous technological growth rate) in
Europe and the USA, 1400–1850. A few Western countries are catching up with Britain in the first
half of the nineteenth century
0
50
100
150
200
250
300
1400
1450
1500
1550
1600
1650
1700
1750
1800
1850
1900
Britain
Germany
France
Other
European
countries
USA
Fig. A.7 Dynamics of technological inventions (=endogenous technological growth rate) in
Europe and the USA, 1400–1900. Convergence among the leading European countries and the
USA lead in the second half of the nineteenth century
Appendix A: Technological Innovation Activities in Britain...
174
We continue to talk about the three phases of the Industrial Revolution as an
interconnected process, during which, however, technological leaders were changing,
which is quite clearly reflected in Figs. A.7 and A.8. At the initial phase (1450–1600),
we already see a fairly high rate of technological innovation activity (especially in
comparison with earlier periods that preceded the onset of the Industrial Revolution),
which further increased during the second half of the sixteenth century. This indi-
cates a transition to the intermediate phase when the base of the industrial revolution
greatly increased. As we remember (see Figs. A.1, A.2, A.3 and A.4), at this phase
technological leaders were Italy and Germany, but one could also observe a gradual
growth of the role of some other European countries: England, France and the
Netherlands. However, in the late sixteenth century it was not clear yet which coun-
try would be the future leader. The intermediate phase was characterized by the
emergence of new centers of technological innovation, as well as by the dissemina-
tion and improvement of previous innovations. Important improving inventions
were made, which were extremely important for the future of the Industrial
Revolution. The dynamics of the process was not linear, as the further development
of the technology base required a serious political change. This is quite visible in the
diagrams (e.g., Figs. A.3 and A.9). First, we see a general continuation of the inno-
vation activity growth in the first half of the seventeenth century (except Italy, which
in terms of invention rates stagnated—though still at a rather high level) and the
convergence of the endogenous technological growth rates on all the main countries
of Western Europe. In the second half of the seventeenth century in all the main
Western European countries (except Britain) the technological invention activity
stagnated or even decreased, yet it generally remained higher than at the previous
(initial) phase of the Industrial Revolution. In Germany, after a certain decline in
1650–1700, it somehow increased in the first half of the eighteenth century, but
Germany was no longer one of technological leaders of Europe. Real technological
innovation rise started there only in the first half of the nineteenth century. However,
during this period (the seventeenth century and the first half of the eighteenth cen-
tury) a number of important innovations in military tactics and strategy as well as in
international relations were made, which, however, by definition, we could not
reflect in our calculations. In any case, in the seventeenth century in Britain (not-
withstanding the political revolution and civil war) the technological invention
activity did not stagnate or decrease at all; what is more, it increased very signifi-
cantly, indicating the preparation of the technological breakthrough in Britain (to
some extent this was also a reflection of legislation on patents and monopolies that
was enacted in the early seventeenth century). Nevertheless, it is clear (see Figs. A.9
and A.10) that in the seventeenth century and even in the first half of the eighteenth
century, the total invention activity of Continental Europe was substantially greater
than the invention activity of Britain alone. In addition, two other new technological
innovation leaders emerged in the seventeenth century—the Netherlands and
France, which reflected the well-known World System hegemony of the Netherlands
in this century (see, e.g., Braudel 1981–1984; Arrighi 1994; Modelski 1987, 2006;
Modelski and Thompson 1996) as well as military-political growth of France [this,
in its turn, reflected the growing might of France as the leading continental power,
Appendix A: Technological Innovation Activities in Britain...
175
0
50
100
150
200
250
300
1750 1770 1790 1810 1830 1850 1870 1890
Britain
Germany
France
Other
European
countries
USA
Fig. A.8 Dynamics of technological inventions (=endogenous technological growth rate) in
Europe and the USA, 1750–1900
0
20
40
60
80
100
120
140
1400 1500 1600 1700 1800
Britain
Rest of the West
Fig. A.9 Comparison of technological innovation rates in Britain and the rest of the West,
1400–1800
Appendix A: Technological Innovation Activities in Britain...
176
which was the first in Europe to create a new type of state—a mature state (see
Гринин 2011; Grinin and Korotayev 2006; Grinin 2012a)].
Return now to the idea of comparing Britain with the rest of the West (Figs. A.9
and A.10). As we can see, before 1650 the number of major inventions made in
Britain was a few times less than in the rest of Europe; in 1650–1750 this gap
decreased very significantly, but still the number of major inventions made in the
Continent substantially exceeded the number of such inventions made in the British
Isles. We draw attention once again to the point that the overall growth of innovation
in Continental Europe slowed down very substantially in the period after the 30
Years War (and in Britain despite its revolution the technological innovation contin-
ued to accelerate). A new wave of invention activity growth started in the European
Continent in the first half of the eighteenth century (see Fig. A.9). However, in the
second half of the eighteenth century one could hardly observe in Continental
Europe anything comparable with the explosive growth of major technological
inventions that was observed in Britain during this period of time (corresponding to
the industrial breakthrough). In the second half of the eighteenth century Britain
became an absolute global technological leader, the main engine of world techno-
logical progress. But if we look at Fig. A.10, we can clearly see that in the overall
picture of the Industrial Revolution this is a relatively short period when Britain had
an almost total global superiority in the field of technological innovation, when
more technological inventions were made in Britain than in the rest of the world.
Already in the first half of the nineteenth century, a few Western countries managed
to catch up with Britain in a very significant way, and by the end of the nineteenth
century the USA, Germany, and France were outperforming Britain. Just because
0
100
200
300
400
500
600
700
800
1400 1500 1600 1700 1800 1900
Britain
Rest of the West
Fig. A.10 Comparison of technological innovation rates in Britain and the rest of the West in
1400–1900
Appendix A: Technological Innovation Activities in Britain...
177
many countries of Continental Europe (as well as the USA) were ready to use those
possibilities that were opened by the Industrial Revolution, this revolution was able
to produce a world historical effect.
So in conclusion, we note that the US coming to the first place with respect to
technological innovation rates (Fig. A.8) meant not only the loss of leadership by
Britain, but the fact of the formation of the West in the full modern sense of the
word, of the West, which is not isolated only within Western Europe but includes
North America, and Central Europe. And it meant the formation of the really well
integrated World System.
Appendix A: Technological Innovation Activities in Britain...
179© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9
Appendix B: A Mathematical Model
of the Great Divergence and the Great
Convergence—Demography, Literacy,
and the Spirit of Capitalism
Reconsidering Weber1
In his classic The Protestant Ethic and the Spirit of Capitalism, Max Weber
(1904[1930]) suggested that Protestantism stimulated the development of modern
capitalism in Europe and North America. Weber disregarded the wide-spread expla-
nation of economic success of the Protestants in Europe in the Modern Age as a
result of their religious minority position. He pointed out that the German Catholics
failed to achieve similar results despite being a religious minority in many parts of
Germany.
Weber explained the significant differences between Catholics and Protestants in
their social status and economic success by the different world views inherent in the
doctrines of these two confessions. He suggested that a decisive role was played by
the formation of a peculiar “spirit of capitalism”, which implied the devotion to one’s
business, the desire to increase one’s wealth in an honest way and so on. According
to Weber, the spiritual basis of capitalism was grounded in the vulgarized versions of
the theology of Calvinism and some other Protestant sects. It was, above all, the
belief in predestination and (in vulgarized versions) in the possibility to obtain the
signs of whether one is predestined to salvation via perfection in one’s profession.
Many of Weber’s followers used to exaggerate the effect of religious ethics on
the economic dynamics. Yet, Weber himself wrote:
“… however, we have no intention whatever of maintaining such a foolish and doctrinaire
thesis as that the spirit of capitalism… could have only arisen as the result of certain effect
of the Reformation, or even that capitalism as an economic system is a creation of the
Reformation” (Weber 1930[1904]: 91).
1 This section has been prepared on the basis of Chap. 6 of our monograph Introduction to Social
Macrodynamics: Compact Macromodels of the World System Growth (Korotayev et al. 2006a) that
has been written in collaboration with Daria Khaltourina.
180
Yet, this doctrinaire thesis is still frequently attributed to Weber [see, e.g.,
Maddison (2001: 45), or Landes (1998)]. At the same time Weber, in our opinion,
showed quite convincingly that the processes of religious evolution could produce
some independent effect on socioeconomic development. On the other hand, the
mathematical model presented below in below in the section on “A Mathematical
Model of the Great Divergence and the Great Convergence” in the present suggests
another explanation for the correlation between the spread of Protestantism and
some increase in economic development, which was noted by Weber (see also
Korotayev et al. 2006a).
As is well known, the human capital development has been suggested as one of
the most important factors of economic growth, whereas education is considered to
be one of the most important components of human capital (see, e.g., Schultz 1963;
Denison 1962; Lucas 1988; Scholing and Timmermann 1988 etc.). We tested our
model below in the next section of the present Appendix and one of the assumptions
of this model was a significant positive effect of literacy level on the economic
growth during the modernization period. The model based on this assumption cor-
relates well with the historical data on the demographic, economic, and educational
dynamics of the World System (see below). Consequently, this hypothesis has
passed a preliminary testing. Let us also test it using cross-national data.
In the twentieth century, mass literacy spread around the globe, and nowadays
the differences in literacy levels between different countries tend to dissolve. At the
same time, according to our hypothesis, the differences in various countries’ eco-
nomic development during the process of Great Divergence were rooted in the
period of the beginning of modernization era. Therefore, it seems reasonable to
investigate the connection between such indicators as GDP per capita in 2000 and
the literacy level in the early nineteenth century.2 For the data on these variables, as
well as on GDP per capita in the early nineteenth century, see Table B.1.
Note that a statistical test of this dataset generally supports Allen’s (2009, 2011)
hypothesis that the average income level in a country in the early nineteenth century
is regarded as the main predictor of its average income level around year 2000 (see
Fig. B.1).
As we see, in our case the correlation in the direction predicted by Allen’s
hypothesis, has again turned out to be quite strong (r = 0.65) and statistically signifi-
cant (p = 0.02).
However, what is even more important is that the per capita GDP levels in 1800
correlate positively and in a statistically significant way with the average annual per
capita GDP growth rates in the subsequent two centuries (1800–2000) (see Fig. B.2):
What is more, we believe that Allen’s explanation for this correlation is generally
accurate. In the nineteenth century, with the onset of intensive global modernization,
the countries with higher average per capita incomes (and, hence, with generally
higher wages) had more incentives to introduce new labor-saving (and, hence,
2 Since the indicators of educational level are strongly correlated with each other, the percentage of
literate population seems to be a good integral indicator of the level of education for the early
modernization period.
Appendix B: A Mathematical Model of the Great Divergence...
181
labor-productivity-increasing) technologies (that abundantly appeared in the nine-
teenth century); as a result, the productivity of labor (and hence, per capita GDP)
grew much faster in those countries than in the countries where the average incomes
(and wages) were lower (and where, as a result, the incentives to introduce labor-
productivity- increasing innovations were weaker), which, quite predictably, pro-
duced an unconditional divergence effect (Allen 2009, 2011).
However, we believe that this factor was not the only one. Below, we will discuss
another factor, which, as we will see, turns out to be much stronger than the one
proposed by Allen. And this factor is just the literacy level.
The correlation between literacy rates in 1800 and per capita GDP in 2000 is
presented in Fig. B.3.
Figure B.2 indicates that there is a very strong (r = 0.93) and definitely significant
(p ≪ 0.0001) linear correlation between the literacy rate in 1800 and GDP per capita
in year 2000. What is more, it is much stronger and more statistically significant
than the previous correlation (see Fig. B.1). R2 coefficient indicates that this corre-
lation explains 86 % of the entire data dispersion.
However, what is even more important is that the literacy rate in 1800 correlates
much stronger with the average annual per capita GDP growth rates in the subsequent
Table B.1 GDP per capita in the countries and regions of the World in 1800 [international $ 1980,
PPP (Purchasing power parity)], GDP per capita in 2000 (international $ 2005, PPP) and % of
literate population in 1800
Country/Region
GDP per capita
in 2000
(international $
1995, PPP)
GDP per capita
in 1800
(international $
1980, PPP)
Average annual
per capita GDP
growth rates
in 1800–2000, %
% of literate
population
in 1800
USA 40,965 690 2.06 58
UK 29,445 1,030 1.69 55
Germany 30,298 790 1.84 55
France 28,210 750 1.83 38
Israel 23,213 (35)
Japan 28,889 420 2.14 33
Italy 27,717 670 1.88 30
China 2,667 500 0.84 20
Mexico 11,810 690 1.43 11
Brazil 7,906 580 1.31 8
Russia 8,613 488 1.45 8
India 1,745 440 0.69 5
Indonesia 2,679 425 0.92 5
Egypt 4,236 325 1.29 3
Sub-Saharan
Africa
1,502 (1)
Note: The source of the data on GDP per capita and literacy rate in 1800 is Мельянцев (1996); on
GDP per capita and the literacy rate in Russia in 1800 see Мельянцев (2003); on GDP per capita
in the countries and regions of the world in 2000 see World Bank (2014): NY.GDP.PCAP.PP.
KD. Our estimates are in parentheses
Appendix B: A Mathematical Model of the Great Divergence...
182
two centuries than the 1800 GDP per capita levels do (see Fig. B.4 and compare it
with Fig. B.2).
Therefore, the hypothesis that the spread of literacy was one of the major factors
of modern economic growth gains additional support. On the one hand, literate
populations have much more opportunities to obtain and utilize the achievements of
modernization than the illiterate ones do. On the other hand, literate people are
characterized by a greater innovative-activity level, which provides opportunities
for modernization, development, and economic growth.
Literacy does not simply facilitate the process of perceiving innovation by an
individual. It also to a certain extent changes her or his cognition. This problem was
studied by Luria, Vygotsky, and Shemiakin, the famous Soviet psychologists, on the
basis of the results of their fieldwork in Central Asia in the 1930s. Their study shows
that education has a fundamental effect on the formation of cognitive processes
(perception, memory, and cognition). The researchers found out that illiterate
respondents, unlike the literate ones, preferred concrete names for colors to abstract
ones, and situative groupings of items to categorical ones (note that abstract think-
ing is based on category cognition). Furthermore, illiterate respondents would fail
Fig. B.1 Correlation between per capita GDP in 1800 and per capita GDP Levels in 2000 (inter-
national $ 2005, PPP), scatterplot with a fitted regression line. Note: r = 0.65, R2 = 0.42, p = 0.02
Appendix B: A Mathematical Model of the Great Divergence...
183
to solve syllogistic problems one of the kind: “Precious metals do not get rust. Gold
is a precious metal. Can gold get rust or not?” These syllogistic problems did not
make any sense to illiterate respondents because they were out of the sphere of their
practical experience. Literate respondents who had at least minimal formal educa-
tion solved the suggested syllogistic problems quite easily (Luria 1976; Лурия
1974, 1982: 47–69).
Therefore, literate workers, soldiers, inventors and so on turn out to be more
effective than illiterate ones not only due to their ability to read instructions, manu-
als, and textbooks, but also because of the developed skills of abstract thinking.
Some additional support for this could be found in Weber’s work itself:
The type of backward traditional form of labor is today very often exemplified by women
workers, especially unmarried ones. An almost universal complaint of employers of girls,
for instance German girls, is that they are almost entirely unable and unwilling to give up
methods of work inherited or once learned in favor of more efficient ones, to adapt them-
selves to new methods, to learn and to concentrate their intelligence, or even to use it at all.
Explanations of the possibility of making work easier, above all more profitable to them-
selves, generally encounter a complete lack of understanding. Increases of piece rates are
Fig. B.2 Correlation between per capita GDP in 1800 and average annual per capita GDP growth
in 1800–2000 (%), scatterplot with a fitted regression line. Note: r = 0.47, R2 = 0.22, p = 0.05
(1-tailed)
Appendix B: A Mathematical Model of the Great Divergence...
184
without avail against the stone wall of habit. In general it is otherwise, and that is a point of
no little importance from our view-point, only with girls having a specifically religious,
especially a Pietistic, background (Weber 1930[1904]: 75–76).3
We believe that the above mentioned features of the German female workers’
behavior simply reflect a relatively low educational level of German women from
labor circles in the late nineteenth—early twentieth centuries. The spread of female
literacy in Germany and elsewhere lagged behind the male literacy (see Korotayev
et al. 2006a, Chap. 7). In the early twentieth century, the majority of women could
write and read only in the most developed parts of Germany (Мельянцев 1996).
A more rational behavior of German workers from Pietistic circles could be easily
explained by the special role of education in Protestants’ lives.
The ability to read was essential for Protestants (unlike for Catholics) to perform
their religious duty—to read the Bible. The reading of Holy Scripture was not just
3 By the way, one can easily notice that these complaints on the working qualities of the German
women workers resemble very much the complaints on the working qualities of the Indian workers
made a few decades later and reported by Gregory Clark (2007: 353–357).
Fig. B.3 Correlation between literacy rates in 1800 (% of literate people among the adult popula-
tion) and per capita GDP levels in 2000 (international $ 2005, PPP), scatterplot with a fitted regres-
sion line. Note: r = 0.93; R2 = 0.86; p ≪ 0.0001
Appendix B: A Mathematical Model of the Great Divergence...
185
unnecessary for Catholic laymen, for a long time it was even prohibited for them.
The edict of the Toulouse Synod (1229) prohibited the Catholic laymen from pos-
sessing copies of the Bible. Soon after that, a decision by the Tarragon Synod spread
this prohibition to ecclesiastic people as well. In 1408, the Oxford Synod absolutely
prohibited translations of the Holy Scripture. From the very beginning, Protestant
groups did not accept this prohibition. Thus, in 1522–1534, Luther translated into
German first the New Testament and then the Old Testament, so that any German-
speaking person could read the Holy Scripture in his or her native language.
Moreover, the Protestants viewed reading the Holy Scripture as a religious duty of
a Christian. As a result, the level of literacy and education was, in general, higher
among Protestants than it was among Catholics and among the followers of other
confessions that did not provide religious stimuli for learning literacy [see, for
example: Малерб (1997): 139–157)].
In our opinion, this could to a considerable extent explain the differences between
economic performance of the Protestants and the Catholics in the late nineteenth—
early twentieth centuries in Europe noticed by Weber. One of Weber’s research goals
Fig. B.4 Correlation between literacy rates in 1800 (% of literate people among the adult popula-
tion) and average annual per capita GDP growth in 1800–2000 (%), scatterplot with a fitted regres-
sion line. Note: r = 0.74; R2 = 0.54; p = 0.004
Appendix B: A Mathematical Model of the Great Divergence...
186
was to show that religion can have an independent influence on economic processes.
The results of our study support this point. Indeed, the spiritual leaders of Protestantism
persuaded their followers to read the Bible not to support the economic growth but
for religious reasons, which were formulated as a result of ideological processes that
were rather independent of economic life. We do not question that specific features
of Protestant ethics could have facilitated economic development. However, we
believe that we found another (and probably more powerful) channel of Protestantism’s
influence on the economic growth of the Western countries.
In the next section of this appendix we will try to use these findings in order to
develop such a mathematical model which is able to describe via six simple differ-
ential equations both the Great Divergence and the Great Convergence.
A Mathematical Model of the Great Divergence
and the Great Convergence4
In this section we suggest a simple mathematical model that is capable to describe
mathematically both the process of the Great Divergence and the one of the Great
Convergence.
In this two-component model the world was divided into the core and the periph-
ery. The core includes high income OECD countries (the USA, Japan, Western
Europe, etc.). The periphery includes all other countries (except for post-socialist
countries of Eastern Europe and former USSR).
For each of the two macro-zones the dynamics of three sub-systems are mod-
eled: (1) population; (2) technological-economic sub-system; (3) education-cultural
(human capital) subsystem. In initial conditions the level of the development of
sub-system 3 is set for the core to be significantly higher than the one in the periph-
ery. According to the model, the value of this variable affects positively the eco-
nomic growth and it affects negatively the population growth (reflecting the negative
impact of the female education on the fertility). On the other hand, the model
describes the technological transfer from the core to the periphery (the catch-up
term)—according to the model, the higher the level of the human capital in the
periphery, the easier the technological transfer takes place; on the other hand, the
larger is the gap between the core and the periphery, the higher is the value of the
catch-up term; hence, the catch-up force is very low at the initial phase with the very
low level of the human capital in the periphery, it becomes the highest at the
advanced phase when a wide gap between the core and the periphery is combined
with a rather high level of the human capital development in the periphery; and it
decreases again at the final phase with the decrease of the gap between the devel-
oped and developing countries.
4 This section has been prepared on the basis of Chap. 2 of our monograph Mathematical Modeling
and Forecasting of the World and Regional Development (Коротаев и др 2010) that was written
in collaboration with Justislav Bogevolnov and Artemy Malkov (see also Zinkina et al. 2014).
Appendix B: A Mathematical Model of the Great Divergence...
187
Note also that within the model the population growth is assumed to be affected
positively by the economic growth, but, as the economic growth (both in the model
and the real life) also promotes the development of the education, finally it leads to
the decline of the population growth rates.
Within the model, at the first phase, the core’s GDP grows much faster than in
the periphery because of the high level of human capital in the core (which stimulates
the economic growth there) and the low level of human capital in the periphery
(which inhibits both the endogenous economic growth and the diffusion of the high
technologies from the core). Within the model this generates the Great Divergence.
Note that at this phase within the model the population in the core grows faster than
in the periphery, because the high economic growth rates outweigh there the influ-
ence of the education that is not high enough there to inhibit sufficiently the popula-
tion growth rates.
At the second phase, the economic growth rates in the periphery increase mainly
due to the development of the human capital there, as this promote both the endog-
enous economic growth and the transfer of the high technologies from the core.
However, at this phase the level of education in the periphery is not sufficiently high
to inhibit decisively the population growth and to raise the economic growth rates to
the core countries’ levels; hence, at this phase the economic growth in the periphery
leads to a very substantial population growth, but as regards the GDP per capita, the
gap between the core and the periphery continues to increase.
Finally, at the third phase, the human capital in the periphery develops to such an
extent that it allows simultaneously to achieve substantially high endogenous eco-
nomic growth rates, very high levels of technological transfers (reflected in the high
value of the catch-up term), and a significant slowdown of the population growth
rates. As a result, at the third phase, the GDP per capita growth rates of the periphery
start to exceed substantially the ones of the core—thus, the explicit Great
Convergence begins within the model (note that the model also describes the fourth
phase when the convergence rate slows down due to the decrease of the gap between
the developing and developed countries, which leads to the decrease of the value of
the catch-up term).
We start with the model (B.1)–(B.2)–(B.3) [for the description of its underlying
logic see Korotayev et al. (2006a: 81–91)]:
dN
dt
aSN L
=−
()
1,
(B.1)
dS
dt
bLS=,
(B.2)
dL
dt
cS
LL=−
()
1.
(B.3)
N is the population, L is the proportion of literate population, S is the “surplus” per
capita product produced at the given level of technological development per capita
Appendix B: A Mathematical Model of the Great Divergence...
188
over the subsistence level5; a, b, c are constants. As we have shown earlier, this
“macromodel describes rather well the modernization period, which appears to
reflect the fact that [in this period] the development of human capital became the
most important factor of economic development (see, e.g., Denison 1962; Schultz
1963; Scholing and Timmermann 1988; Lucas 1988 etc.)” (Korotayev et al.
2006a: 86).
The model also assumes that under certain conditions the periphery could “catch
up” with the center through the diffusion of the technologies developed in the cen-
ter (which actually proceeds along with the capital diffusion). Naturally, this phe-
nomenon cannot be regarded unilaterally, as the diffusion of capital and technology
to the periphery becomes possible only at both center’s economic benefit (con-
nected with the costs decrease) and at the appearance of a sufficient quantity of
literate labor force in the periphery. Quantitative feature of the “convergence force”
(C, “catch-up coefficient”) was chosen as follows:
CSS
SS
L
cp
cp
p
=
−
+
⋅,
(B.4)
where
Sc is “surplus” GDP per capita over subsistence income in the core;
Sp is “surplus” GDP per capita over subsistence income in the periphery;
Lp is literacy rate in the periphery.
This equation reflects the following logic. On the one hand, the higher the difference
in per capita incomes between the core and the periphery
SS
SS
cp
cp
−
+
, the stronger the
“convergence force”, as in this case the capital in the core has more incentives to
move the production from the very high-wage core to the very low-wage periphery
(together with investments and technologies). However, the strength of this force
also depends on the level of the development of the human capital (which is mea-
sured in our model through the literacy rate L). Hence, even with a very high value
of
SS
SS
cp
cp
−
+ the convergence force will be rather low with a very low value of Lp.
This reflects the point that even if wages in a certain region are very low, invest-
ments and capitals will hardly move there if the level of the human capital develop-
ment is so low that it is unable to absorb the technologies moving from the core
[Clark (2007, 359f) describes rather vividly how this happened in reality]. Thus, in the
1950s and 1960s the wages in South Asia were much lower than in South Europe;
however, South Europe had at that time a much more developed human capital that
allowed absorbing technologies from the most advanced Western economies much
5 This level was estimated as 440 international Geary–Khamis 1990 dollars in purchasing power
parity (PPP); for the justification of this estimate see Коротаев et al. (2007: 59–60).
Appendix B: A Mathematical Model of the Great Divergence...
189
easier than this was possible in South Europe—hence, during those decades capitals
(and technologies) preferred to move to South Europe rather than to South Asia
(and the economic growth rates in South Europe were much higher than in South
Europe). On the other hand, by the 2000s the gap in the incomes between South
Europe and the most advanced Western economies had shrunk in a very substantial
way, remaining still very wide as regards South Asia6 (see Fig. B.5), whereas the
human capital had developed in South Asia by that time in a rather dramatic way
(see Figs. 3.3 and 3.4). Hence, it is not surprising that in the 2000s South Asia grew
much faster than the World System core in general, and South Europe in particular7
(see Fig. B.5).
Hence the gap between Sc and Sp continues to grow (the Great Divergence) until
the human capital development level of the periphery (Lp) reaches a certain level
after which the Great Convergence starts. Equation (B.4) seems to be the most par-
simonious way to describe mathematically the abovementioned pattern of the Great
Divergence and Great Convergence.
The model also accounts for the factor of resource limitations and fundamental
limitations (see Акаев 2010).
It should be noted that the accuracy of the mathematical description of the World
System macrodynamics regarded by the model significantly increases (especially
for the latest decades) if the model accounts for a 25 to 30-year-long lag between
literacy growth and the acceleration of economic growth rates. This is not surpris-
ing, as the databases that we used (first of all, ones affiliated with UNESCO) com-
monly regard literacy rate as the proportion of literate population aged 15+. That is
6 And—of course—the other Third World regions.
7 Note that the highest values of the convergence force are observed when a large value of
SS
SS
cp
cp
−
+
is accompanied by a very high level of the human capital development—this was just the case of
China in the recent decades.
500
5 000
50 000
1950 1960 1970 1980 1990 2000 2010
USA
Italy
East Pakistan/Bangladesh
Fig. B.5 Per capita GDP dynamics in the USA, Italy, and East Pakistan/Bangladesh in 1950–
2008, international $ 1990 at PPP. Data source: Maddison (2001) and (2010)
Appendix B: A Mathematical Model of the Great Divergence...
190
why literacy level growth (which has lately been proceeding almost only in the
Third World countries) occurs each year due to the increase in the proportion of
literate 15-year-olds (thanks to the gradual increase of primary education enroll-
ment rate).
However, the growth of the proportion of literate 15-year-olds does not lead to
any significant increase of economy growth rates, as even in modern developing
countries the majority of literate 15-year-olds do not get involved into manufactur-
ing, but continue their education (even if they start working in manufacturing, they
are likely to get only low-qualified jobs where their literacy does not lead to any
remarkable productivity growth). The effect of literacy rate growth within this given
age cohort is likely to reveal itself only in 25–30 years when the representatives of
this age cohort achieve the maximum level of their professional qualification.
Thus, the following lags were introduced into the model: 30 years between the
literacy growth and the corresponding GDP per capita growth, and 10 years between
the literacy growth and the corresponding slowdown of the population growth rates.
Since the late nineteenth century Kondratieff waves have been clearly observed
in time series, especially for economy growth rates (see, e.g., Kondratieff 1926,
1935, 1984; Schumpeter 1939; Rostow 1975; Mensch 1979; Forrester 1981; van
Duijn 1983; Marchetti 1986; Freeman 1987; Goldstein 1988; Berry 1991; Hirooka
2006; Tausch 2006; Papenhausen 2008; Korotayev and Tsirel 2010; Korotayev
et al. 2011d; Modelski 2012; Thompson 2012; Perez 2012; Grinin et al. 2012;
Korotayev and Grinin 2012a; Гринин and Коротаев 2012). Thus, Kondratieff
behavior with a 40 to 60-year-long period was externally introduced into the model.
In the wave dynamics downswing phases are 1929–1947 and 1973–1987, while
upswing phases are 1895–1929, 1947–1973, and 1987–2008.
The following equations are proposed for the formalization of what has been said
above. Let
Nc be population in the core, thousands
Sc be “surplus” GDP per capita in the core
Lc be literacy rate in the core
Np be population in the periphery, thousands
Sp be “surplus” GDP per capita in the periphery
Lp be literacy rate in the periphery
and the system of equation looks as follows:
dN t
dt aN tS tL NtCt
dS t
dt bS t
c
cc cc p
c
cc
()
=
() ()
−−
()
()
+
()
()
()
=
110t
α
(()
−
()
−
()
()
()
=
() ()
−
Lt Gt
GKt
dL t
dt
cL tS tL
c
c
cc cc
30 1
1
lim
ttKt
()
()
()
(B.5–B.7)
Appendix B: A Mathematical Model of the Great Divergence...
191
dN t
dt aN tS tLt
dS t
dt bS tL t
p
pp pp
p
pp p
()
=
() ()
−−
()
()
()
=
()
−
()
110
30 1 −−
()
()
+
()
()
()
=
() ()
−
Gt
GKt StCt
dL t
dt cL tS tL
c
p
pp pp
lim
β
1ttKtLtCt
c
()
()
()
+
() ()
γ
(B.8–B.10)
GNSNS
cc
pp
=+
Global GDP, $ thousandsa
CSS
SS
L
cp
cp
p
=
−
+
⋅
“convergence coefficient” describes the interaction of the two
components of the system
Glim = 400 trillion dollars Fundamental limitation
K(t) Kondratieff dynamics
aFollowing Angus Maddison (2001, 2010) calculations here and below are made in international $
1990, PPP
Thus, for each of the two macro-zones the dynamics of three sub-systems are
modeled:
– population, Eq. (B.5) for the core, and Eq. (B.8) for the periphery;
– technological-economic sub-system, Eq. (B.6) for the core, and Eq. (B.9) for the
periphery;
– education-cultural subsystem, Eq. (B.7) for the core, and Eq. (B.10) for the
periphery.
Table B.2 states the values of equations’ coefficients and initial values of the
variables N, S, and L (for 1800):
The component αNpC describes the migration from the periphery to the core,
while the migration from the core to the periphery is negligible. We suppose that the
volume of migration is proportionate to the periphery literacy rate and to GDP per
capita discrepancy between the core and the periphery (as it is mostly literate people
in search for better lives who migrate).
The component βScC describes the diffusion of capital and technology to the
periphery. We suppose that both capital and technology start flowing actively
only at a sufficient literacy level of the interacting regions (this is why C is
Table B.2 Values of equations’ coefficients and initial values of basic variables
Core Periphery
“Convergence
coefficient”
ac2.1 × 10−5 Nc1.6 × 105ap3.3 × 10−5 Np9.0 × 105α4.0 × 10−4
bc2.7 × 10−2 Sc580 bp3.7 × 10−2 Sp120 β4.0 × 10−3
cc1.4 × 10−5 Lc0.42 cp5.0 × 10−6 Lp0.10 γ1.0 × 10−8
Appendix B: A Mathematical Model of the Great Divergence...
192
included into Lp), as well as with a sufficient GDP per capita discrepancy S
between the regions.
The component γLNpC describes literacy diffusion to the periphery.
The second equations of the system (dynamics of S) are to be regarded sepa-
rately. Taagepera-Kremer-Tsirel-Jones equation looks like
dT
dt
bNT=.
It describes the dynamics of technology development. Taagepera (1976, 1979,
2014), Kremer (1993), Tsirel (2004), and Jones (2005) suppose that the relative
technology growth rates are proportionate to population number: the more people,
the more potential inventors. It should be accounted here that Taagepera, Kremer,
Tsirel, and Jones imply summing the innovation, i.e., not only that a larger number
of people do produce more innovations, but they produce more complementary
innovations, not repeating ones. This is possible only if the mass of people repre-
sents a coherent system. Taagepera, Kremer, Tsirel, and Jones regarded the equation
for the World System and stated that it would not work for its separate parts (see
also Korotayev 2005, 2007, 2008, 2009, 2012; Korotayev et al. 2006a, b; Korotayev
and Khaltourina 2006; Khaltourina and Korotayev 2007).
Indeed, as we have seen above, the periphery having a much larger population did not
produce a larger number of innovations than the core. Among other circumstances it was
connected with the fact that the periphery did not represent a holistic system, and did not
“sum up” its inventions: the innovations made in Africa did not contribute to the innova-
tions in Latin America, neither did they improve the living standards in South Asia.
With regard to this we proposed an alternative equation for technology growth
which in our model is associated with S:
dS
dt
bSL=.
The growth rates of technology and GDP per capita are proportionate to literacy rate.
Thus, we suppose that namely literacy provides for the additivity of innovations.
From the point of view of the basic one-component model of the World System
development, replacing N for L does not “spoil” the dynamics, because, as we have
seen above, N is proportionate to L almost in the whole diapason of the demo-
graphic transition (see Korotayev et al. 2006a, b for more details).
Retrospective Numerical Calculation from 1800 till the 2000s
Figure B.6 presents the results of quantitative calculation for the period from 1800
till the 2000s:
Figure B.7 describes the dynamics of the difference between the core and the
periphery as regards per capita GDP. Figure B.8 presents economic growth rates of
the core and the periphery.
Appendix B: A Mathematical Model of the Great Divergence...
193
Core Periphery
Population
(billions)
PercapitaGDP (thou-
sands of inter-national
dollars*)
Literacy (%)
0.9 7
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
30
25
1800 1850 1900 1950 2000 1800 1850 1900 1950 2000
1800 1850 1900 1950 2000
1800 1850 1900 1950 2000
1800 1850 1900 1950 2000
20
15
10
5
0
100
80
60
40
20
01800 1850 1900 1950 2000
100
80
60
40
20
0
6
5
5
4
3
2
1
0
4.5
4
3.5
3
2.5
2
1.5
1
0.5
Fig. B.6 Parameters of order. Empirical and theoretical curves. Note: Constant international $
1990, PPP. Here and below black curves stand for the calculation, while grey marks represent
historical data
0
1
2
3
4
5
6
7
8
9
10
1800
1820
1840
1860
1880
1900
1920
1940
1960
1980
2000
Numerical
calculation
Historical data
Fig. B.7 Difference between
the core and the periphery
with respect to per capita
GDP. Note: the figures on the
Y-axis scale denote by how
many times the GDP per
capita in the developed
countries exceeded that in the
developing countries for a
given year. Thus, the value of
7 for 1960 means that in 1960
the GDP per capita was in the
developed countries seven
times as high as in the
developing countries. Source
of historical data: Maddison
(2010)
Appendix B: A Mathematical Model of the Great Divergence...
194
Forecast
The model check on the basis of historical data shows that it describes rather accu-
rately the main trends connecting such key variables of the global dynamics as the
world population, GDP, and education. This result allows us to use the model not
only in retrospective, but also for forecasting as well. The forecast horizon was
chosen as half a century, as this is the characteristic time scale for the variables
specified. The results of the calculations made according to the model allow making
the following forecast (see Figs. B.9 and B.10).
The diagrams suggest that the Great Convergence process will continue in the
forthcoming decades, though its rate will experience a certain slowdown.8
One of the most important results of the proposed forecast looks as fol-
lows. Our inertial9 population forecast exceeded significantly the UN medium
8 In the real world this may be connected with the prospect of the “Reindustrialization of the West”,
on the one hand, and the “middle income trap” threatening the development of many middle-
income countries, on the other. As defined by Aiyar et al., the “middle-income trap” is “the phe-
nomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to
graduate into the ranks of high-income countries” (Aiyar et al. 2013: 3). For a detailed description
of the factors and mechanisms of the middle income trap see, e.g., Kharas and Kohli (2011). In
general the model predicts the slow-down of the Great Convergence speed with the decrease of the
gap between the First and the Third World in the forthcoming decades.
9 The inertial forecasts were generated by the mathematical model (4)–(9) with those values of
parameters that produced the best fit with the empirical data for the last two centuries.
Core Periphery
Annual GDP growth rate (%)
Annual per capita GDP
growth rate (%)
0
1
2
3
4
5
6
1800 1850 1900 1950 2000 –1
0
1
2
3
4
5
6
7
8
1800 1850 1900 1950 2000
2000
1
2
3
–1
1
0
2
3
4
5
6
1800 1850 1900 1950 2000 1850 1900 1950
–1
0
4
5
6
1800
Fig. B.8 Indicators of economic growth rates. Empirical and theoretical curves
Appendix B: A Mathematical Model of the Great Divergence...
195
400
4,000
40,000
1800
1825
1850
1875
1900
1925
1950
1975
2000
2025
2050
Per capita GDP in the
Center, numerical
calculation
Per capita GDP in the
Center, historical data
Per capita GDP in the
Periphery, numerical
calculation
Per capita GDP in the
Periphery, historical data
Fig. B.9 Per capita GDP. Forecast till 2050. Note: Constant international $ 1990, PPP. Data
source: Maddison (2010)
0
1
2
3
4
5
6
7
8
9
10
1800
1820
1840
1860
1880
1900
1920
1940
1960
1980
2000
2020
2040
Numerical
calculation
Historical data
Fig. B.10 Difference between the core and the periphery with respect to per capita GDP. Forecast
till 2050
Appendix B: A Mathematical Model of the Great Divergence...
196
population forecast (marked by grey asterisks in Figs. B.11 and B.12). This
forecast indicates that within the inertial development scenario the World
System will significantly exceed the Earth’s carrying capacity in the second half
of our century, which can lead to catastrophic consequences (see Fig. B.12).
Our further research has made it possible to identify the zone of the risk of
such sociodemographic catastrophes in Tropical Africa (see Зинькина and
Коротаев 2013; Zinkina and Korotayev 2014).
Fig. B.11 World population
and GDP. Inertial scenario.
Forecast up to 2100. (a)
World population, billions,
Asterisk medium UN
forecast. (b) World GDP,
trillions of dollars
Appendix B: A Mathematical Model of the Great Divergence...
197
Interestingly, the sustainable development scenario is possible only at radi-
cal increase of the core’s support for the peripheral educational programs
(especially in Tropical Africa). In the calculations, whose results are shown in
Fig. B.12, the value of the coefficient “responsible” for education diffusion (γ
coefficient in Eq. (9) above) was increased twice in comparison with the value
characteristic for the current time.
Fig. B.12 World population
and GDP. Sustainable
development scenario.
Forecast up to 2100. (a)
World population, billions,
Asterisk medium UN
forecast. (b) World GDP,
trillions of dollars
Appendix B: A Mathematical Model of the Great Divergence...
198
Note also that the model suggests that we should expect a rather high correlation
between the gap in GDP per capita between the First and Third World, on the one
hand, and the growth rates of world population, on the other (see Fig. B.13).
This hypothesis will be tested in the next section.
The Phases of Global Demographic Transition as Correlated
with Phases of the Great Divergence and Great Convergence10
The mathematical model described in the previous section suggests that we should
expect a rather high correlation between the gap in GDP per capita between the First
and Third World, on the one hand, and the growth rates of world population, on the
other. To start testing this hypothesis, consider the general dynamics of the gap in
GDP per capita, shown as the ratio between the GDP/capita in the First and Third
Worlds from AD 1 to 2008 (see Fig. B.14a).
The curve shown in Fig. B.14a displays a rather close similarity to the curve of
the world’s population growth rate (shown here as the annual increase per thousand)
10 This section has been prepared on the basis of our article “Phases of global demographic transi-
tion correlate with phases of the Great Divergence and Great Convergence” (Korotayev et al.
2015).
y = 0,36x + 1,34
R² = 0,81
0
1
2
3
4
5
6
7
8
9
10
0510 15 20
25
Core per capita GDP/Periphery GDP per capita
Average annual world population growth rates (‰)
Fig. B.13 Correlation between the gap in GDP per capita between the developed and developing
countries and the growth rate of world population (‰)
Appendix B: A Mathematical Model of the Great Divergence...
199
presented in Fig. B.14b. This similarity becomes especially salient when both curves
are plotted in the same graph (Figs. B.14c, d), and persists when looking at the full
span of two millennia or only at the two most recent centuries.
Regression analysis indicates that the correlation between the relative growth
rates of the world population and the GDP per capita gap between the First and
Third World has a remarkably high value (see Fig. B.15).
We are dealing here with a very tight correlation, accounting for 92 % of all the
variation. In fact, it is even higher than the correlation generated by our mathemati-
cal model (see Fig. B.13). The match between the dynamics of world population
growth, on the one hand, and the dynamics of the gap between the First and the
Third World GDP per capita, on the other, looks especially salient in Fig. B.16,
where a logarithmic scale is used to facilitate the comparison across different scales.
0
1
2
3
4
5
6
7
8
9
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Years, CE
Gap in per capita GDP between
the 1st and the 3rd world
0
5
10
15
20
25
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Years, CE
World population annual growth
rate, ‰
0
5
10
15
20
25
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Years, CE
World population
annual growth rate, ‰
Gap between the 1st and
the 3rd world, times
0
5
10
15
20
25
1800
1820
1840
1860
1880
1900
1920
1940
1960
1980
2000
2020
Years, CE
World population
annual growth rate,
‰
Gap between the 1st
and the 3rd world,
times
ab
cd
Fig. B.14 Dynamics of the gap in GDP per capita and annual world population growth rates.
Note: In (a) the figures on the Y-axis denote by how many times the average GDP per capita in the
First World countries exceeded that in the Third World countries for a given year. Thus, the value
of 7 for 2000 means that in 2000 the GDP per capita was seven times higher in the First World
states than in the Third World countries. In (b) the Y-axis gives the global population growth rate
in annual increase per thousand. Until 1940, the world population growth rate curve depicts the
trend line and does not take into account cyclical and stochastic fluctuations
Appendix B: A Mathematical Model of the Great Divergence...
200
The high correlation of the two time series is apparent. The significant accelera-
tion of the world population growth rate observed in the nineteenth century (from
4.1 ‰ per year c. 1820 to 7.95 ‰ by 1870) corresponds to an explosively acceler-
ated widening of the per capita income gap between the First and Third World.
During the period of 1870–1940 the deceleration of world population growth cor-
responded to a certain slowdown in the pace of the Great Divergence. Then, follow-
ing the Second World War, a surge of acceleration of world population growth took
place; and, as expected, it coincided with a renewed, corresponding acceleration of
the global Divergence. Even a certain hitch in the acceleration of the world popula-
tion growth rates that was observed in the 1950s was accompanied by a certain hitch
in the Divergence speed. Both the gap between the First and Third World GDP per
capita and the relative world population growth rate reached their peaks almost
simultaneously (at 8.1 times for the gap and a rate of 20.65 ‰ per year for world
population growth) in the late 1960s. There followed a decade in which the values
of both variables declined, commencing the Great Convergence. However, in the
late 1970s and early 1980s both the slowing-down of the world’s population growth
rate and the decrease of the per capita income gap were interrupted (almost simul-
taneously). One could observe, throughout most of the 1980s, certain proportional,
and mostly simultaneous, increases in both the per capita income divergence
between the First and the Third World, and the world population growth rate. Then
y = 0,37x + 0,96
R² = 0,92
0
1
2
3
4
5
6
7
8
9
0510 15 20
1st World per capita GDP/3rd World GDP per capita
Average annual world population growth rates (‰)
Fig. B.15 Correlation between the gap in GDP per capita between the First and Third World and
the growth rate of world population (‰). Note: Data in Methods and data summary for this
appendix
Appendix B: A Mathematical Model of the Great Divergence...
201
in the late 1980s there began a sharp and mostly steady (though not without certain
hitches) decrease of both the GDP gap and the world population growth rate that has
continued to the present day.
The Income Gap and World Population Growth
as Tightly-Coupled Processes
It could not be entirely ruled out, of course, that at least some of the consistency in
this picture may be attributable to coincidence. However, as is suggested by the
mathematical model presented in the previous appendix, the existence of a high
correlation between the two time series can be explained. In truth, both of the global
2
20
1800
1810
1820
1830
1840
1850
1860
1870
1880
1890
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
World population annual
growth rate, ‰
Gap between the 1st
and the 3rd world, times
Fig. B.16 The gap in GDP per capita between the First and the Third World, 1–2008 and the
growth rate of world population (‰), logarithmic scale
Appendix B: A Mathematical Model of the Great Divergence...
202
processes (the global demographic transition, otherwise known as the global
demographic modernization, on the one hand, and the Great Divergence turning
into the Great Convergence, on the other) ought to be viewed as interrelated and
showing two sides of one phase transition in the development of the World System—
the global modernization.
As is described by the mathematical model in the present appendix, and as is
confirmed by the empirical data, the explosive acceleration of the Great Divergence
in the nineteenth century was quite naturally accompanied by a significant accelera-
tion of the world population growth rate. The economic and technological
modernization of the West, which propelled it to global leadership in labor produc-
tivity and per capita income, was then the major factor that determined the scope of
divergence (e.g., Mokyr 1990b; Goldstone 2002, 2008b; Clark 2007; Allen 2009,
2011). At the same time, these positive developments in the West led to substantial
improvements in the production, harvesting, storage, and transportation of food, and
gains in public health and sanitation, resulting in increasing life expectancies and
significantly declining mortality rates across all industrializing countries. In other
words, the vast economic improvements brought about by the Industrial Revolution
advanced the Western countries to the first phase of the demographic transition (e.g.,
Chesnais 1992; Caldwell et al. 2006; Dyson 2010; Reher 2011). In this phase, last-
ing throughout most of the nineteenth century in the industrializing countries, mor-
tality declined sharply while fertility remained at a high level (e.g., Caldwell et al.
2006; Gould 2009; Dyson 2010; Reher 2011; Livi-Bacci 2012). It resulted in a rapid
acceleration of population growth in the countries of the West, which was a very
important factor in the acceleration of world population growth rates in the nine-
teenth century (Gould 2009; Dyson 2010; Reher 2011; Livi-Bacci 2012).
From 1870 to 1920, most industrialized countries entered the second phase of the
demographic transition, in which fertility began to decline and population growth
slowed. This decelerated the growth of world population. The gap in GDP between
the First and Third worlds continued to grow, but more slowly. While in the First
World slowing population growth and continued economic development led to ever-
higher per capita GDP, the Third World also began to benefit from the rapid growth
in international trade and the diffusion of railroads and international investment.
In the period after the Second World War, the acceleration of world population
growth and the increase in the speed of Divergence were also rather strongly inter-
connected. At this later phase of global modernization, the main contribution to the
acceleration of world population growth was made by the entrance of the majority
of the Third World countries (where the overwhelming majority of the world popu-
lation lived) into the first phase of the demographic transition (e.g., Caldwell et al.
2006; Gould 2009; Dyson 2010; Reher 2011; Livi-Bacci 2012). It is of note that in
most cases their entrance was not primary (i.e., connected to radical increases of
their economic growth rates, as was observed in the Western countries during the
prior period), but rather secondary. That is, it arose from the diffusion of healthcare
technologies that caused a very rapid decline in infant and child mortality (from
350+ ‰ to 35 ‰ or less). The drop in mortality associated with the Third World’s
first phase of the demographic transition was therefore even more rapid than that
Appendix B: A Mathematical Model of the Great Divergence...
203
which occurred in the First World; combined with still high fertility it resulted in a
dramatic acceleration of world population growth.
The resulting population growth in the Third World was more rapid than any
seen in the world history; the growth rates of 30 ‰ or even 40 ‰ pushed world
population growth rates to new highs. However, such rapid growth rates also held
down the growth of per capita incomes in developing countries relative to the rapid
gains being made in the First World in the decades after WWII (even though the
First World also experienced a brief surge in population growth rates after the War).
It was only when the Third World countries also began to limit fertility, entering
their second phase of the demographic transition that their per capita GDP growth
sharply accelerated to levels above those of the First World. With this transition,
world population growth rates began to drop sharply, as did the income gap; we
have since been seeing the Great Convergence.
The crucial role of population dynamics in driving GDP/capita in this phase can
be seen in the fact that overall GDP growth rates in the Third World were already
roughly as high as those in the First World in the 1950s and 1960s, as shown in
Fig. B.17. However, in the Third World this growth arose against the background of
a demographic explosion [that is very characteristic for the first phase of the demo-
graphic transition (see, e.g., Chesnais 1992; Caldwell et al. 2006; Dyson 2010;
Reher 2011; Livi-Bacci 2012)], whereas by then the First World countries were in
the second phase of the demographic transition and were experiencing a slower
population growth. From 1950 to 1970 the population of the Third World countries
increased by 56 %, more than twice as much as that of the First World countries,
which grew only by 24 % in this period. As a result, during the 1950s and 1960s the
gap between the First and Third World in per capita GDP increased substantially
despite the fact that overall GDP growth in the developed and developing countries
was almost identical in those years.
100
120
140
160
180
200
220
240
260
280
1950 1955 1960 1965 1970
1st world
3rd world
Fig. B.17 Relative GDP dynamics of the First and Third World 1950–1970, 100 = 1950 level
Appendix B: A Mathematical Model of the Great Divergence...
204
Hence, the close coupling between economic and demographic dynamics in both
of these phases of global modernization is clear. However, it differed rather signifi-
cantly as regards its contents and direction across the periods. In the West of the
nineteenth century it was per capita GDP that served as the main independent vari-
able whose growth then led to the decrease of mortality and the acceleration of the
population growth, whereas in the postwar Third World it was the population growth
rate that led; the initial acceleration of population growth initially held back per
capita GDP growth, but the deceleration of population growth then produced a
demographic dividend (more workers and fewer dependents) that helped produce
much higher GDP growth rates.
Figure B.18 demonstrates how closely the economic and demographic dynamics
were linked. The peak of the gap in GDP per capita in the late 1960s also coincided
with the absolute minimum in the share of the working-age population in the total
population in the Third World countries (UN Population Division 2014). It was pre-
cisely when the impact of falling fertility started to produce a rising percentage of
workers—the “demographic dividend”—in developing nations (e.g., Bloom et al.
2001; Bloom and Sevilla 2002; Mason 2001, 2007; Hawksworth and Cookson 2008:
7–10) that the income gap with the First World started to decline (see Fig. B.18).
Therefore, we can argue that the peak in the income gap between the First and
Third World occurring with almost perfect accuracy at the same time as the peak in
world population growth rates is no coincidence. It is because the onset of the great
Convergence depended on a slow-down in growth rates in the Third World that
decelerated world population growth. Indeed, throughout the modern era the gap
between First and Third world incomes has been determined mainly by the timing
of their entry into the first and second phases of the demographic transition.
54
%
56
%
58
%
60
%
62
%
64
%
66%
1950
1960
1970
1980
1990
2000
2010
Fig. B.18 Dynamics of the percentage of the working age population (15–65 years old) in the
total population of the Third World countries, 1950–2010
Appendix B: A Mathematical Model of the Great Divergence...
205
We can hardly say that the dynamics of the Great Divergence and Great
Convergence are determined entirely by the dynamics of the global demographic
transition. The onset of the modernization process, including the reorganization of
politics, the economy, and social life, was due to many factors (see, e.g., Mokyr
1990b; Barro 1991; Sachs et al. 1995a, b; Sala-i-Martin 1996; Quah 1996c; Lee
et al. 1997; Pomeranz 2000; Yifu Lin 2003; Allen 2009, 2011; Clark 2007; Korotayev
et al. 2011a, b, c, d; Spence 2011; Goldstone 2002, 2008b, 2012b). However, we are
quite ready to claim that, once begun, the impact of modernization on incomes was
strongly dependent on the timing of the phases of the demographic transition in dif-
ferent regions. The dynamics of global population growth and the Great Divergence
and Great Convergence therefore may be considered so closely coupled as to be two
sides of the same coin.
Methods and Data Summary for Appendix B
GDP and population data were obtained from Maddison (2010) and the World
Bank’s World Development Indicators Database (World Bank 2014). First World
countries comprised 30 Western European Countries, the USA, Canada, Australia,
New Zealand, and Japan. GDP was totaled across these countries, and divided by
total population to obtain First World GDP per capita. We designated as Second
World countries the USSR, Yugoslavia and their successor republics, and five east-
ern European countries. The Third World population and GDP were obtained by
subtracting the sum of First World and Second World GDP and population from the
World totals. Full specification of the country lists for First and Second worlds is
given below. The data was taken for the following years, to span the entire period
1–2012AD, at points spaced to capture the movements of GDP/capita: AD 1, 1000,
1500, 1820, 1870, 1913, 1940, 1952, then every 5 years up through 2012.
The Gross Domestic Product (GDP) per capita is a widely used national account-
ing measure of economic prosperity. The World Bank defines it as “the sum of gross
value added by all resident producers in the economy plus any product taxes and
minus any subsidies not included in the value of the products. It is calculated with-
out making deductions for depreciation of fabricated assets or for depletion and
degradation of natural resources” (World Bank 2014). We obtained the long-term
data (from 1 up to 2008 AD) on the GDP dynamics (in 1990 International Geary–
Khamis dollars at purchasing power parity) from Angus Maddison’s database
(Maddison 2010). For the period after 2008 the data have been obtained from the
World Development Indicators Database (World Bank 2014).
To secure the compatibility of data, the World Bank GDP data have been recal-
culated in accordance with Maddison’s coefficients of conversion of current US
dollars into international dollars at purchasing power parity. The following countries
from Maddison’s country list have been identified as the “First World countries”: 30
Western European countries (Austria, Belgium, Denmark, Finland, France,
Germany, Italy, Netherlands, Norway, Sweden, Switzerland, UK, Ireland, Greece,
Appendix B: A Mathematical Model of the Great Divergence...
206
Portugal, Spain + 14 small Western European countries, for which Maddison only
provides summary estimates of their GDP and population), 4 “West European off-
shoots” (Australia, New Zealand, Canada, USA), and Japan. The GDP values for
the First World for particular years were calculated by summing up Maddison’s
GDP estimates for each of the 16 Western European countries, 4 Western European
offshoots, Japan, and the summary estimate for the 14 small Western European
countries. We applied a similar procedure to obtain the population numbers for the
First World. The First World GDP per capita for each year in the time series results
from dividing the year’s total GDP of the First World countries into their total popu-
lation that year. Computations of the Second World’s GDP, population, and GDP
per capita have been conducted similarly. We put these former Eastern Bloc coun-
tries in the “Second World” category: former constituent republics of the Soviet
Union, Czechoslovakia, and Yugoslavia + Albania, Bulgaria, Hungary, Poland, and
Romania. We calculated the “Third World” GDP by subtracting the First and Second
World GDP from the world GDP. The Third World population figures were pro-
duced the same way. We calculated the Third World GDP per capita for each year in
the series by dividing the total GDP of the Third World into its total population for
the given year.
We obtained the population data from Angus Maddison’s database (Maddison
2010). We decided to use this database because Angus Maddison provides popula-
tion estimates precisely for the time-points and countries for which he provides his
GDP figures. Hence, this is the only database that allows us to calculate the long-
term dynamic estimates of the per capita income gap between the First and Third
World. We opted to use the UN Population Division (UN Department of economic
and social affairs, Population Division 2014) data for the world population relative
growth rate past 1950 (no estimates for the earlier period are available there). The
UN Population Division provides its estimates for the world population annual
growth rates for 5-year intervals (for example, for the period of 1950–1955 it states
the average annual estimate for this period of 1.786 % per year). For comparison,
we used mid data points as regards the values for the gap between the First and
Third World.
As we are interested in the correlation between phases of global demographic
transition and phases of Great Divergence and Great Convergence, Figs. B.14, B.15,
B.16 and B.17 for the period before 1940 display the trend line only, omitting those
data points that reflect cyclical and stochastic fluctuations (specifically, the data
points for the years 1600, 1700 and 1900). Thus, the following dataset has been
used to construct Figs. B.14, B.15, B.16 and B.17 (see Table B.3).
For years from 1 to1940, figures in Column 2 indicate the average annual world
population growth rate in the period starting with the respective year. For example
figure 7.95 in row #5, in column #3 (next to 1870) indicates that the average world
population relative annual growth rate in 1870–1913 was equal to 7.95 ‰ per year.
For years 1952–2017 they indicate the average annual world population growth rate
for a respective 5-year period. For example figure 20.65 in row #11, in column #3
(next to 1967) indicates that in 1965–1970 the average world population relative
annual growth rate was equal to 20.65 ‰ per year. For years 1–1940 world popula-
Appendix B: A Mathematical Model of the Great Divergence...
207
tion growth rate estimates have been calculated on the basis of Maddison’s esti-
mates for the world population; for years 1950–2010 these are UN Population
Division estimates; for years 2010–2020 these are UN Population Division medium
projections.
We must note that if we add to the dataset all of Maddison’s data points (that is,
including the years 1600, 1700, and 1900), the correlation between the global
demographic growth rate and the magnitude of the Great Divergence does not
become weaker. In fact, it becomes stronger: r2 = 0.93. Thus, the exceptional cyclic
or stochastic fluctuations in GDP in these years do not affect the overall relationship
between the income gap and the rate of global population growth.
Table B.3 Data used for the construction of figures in Appendix B
Row # Year
World population annual
growth rate, ‰
Gap between the first and the third world,
times (=first world per capita GDP/third
world per capita GDP)
1. 2. 3. 4.
1 1 0.17 1.21
2 1000 0.99 0.92
3 1500 2.71 1.30
4 1820 4.06 1.95
5 1870 7.95 3.44
6 1913 9.25 5.14
7 1940 10.88 5.70
8 1952 17.86 6.72
9 1957 18.28 6.83
10 1962 19.09 7.52
11 1967 20.65 8.09
12 1972 19.59 8.15
13 1977 17.76 7.80
14 1982 17.82 7.67
15 1987 17.97 7.88
16 1992 15.23 7.67
17 1997 13.01 6.97
18 2002 12.23 6.72
19 2007 11.98 5.66
20 2012 11.48 4.52
21 2017 10.43
Appendix B: A Mathematical Model of the Great Divergence...
209© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9
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243© Springer International Publishing Switzerland 2015
L. Grinin, A. Korotayev, Great Divergence and Great Convergence,
International Perspectives on Social Policy, Administration, and Practice,
DOI 10.1007/978-3-319-17780-9
A
American leadership in technological
innovation , 147
Anti-globalization feelings , 11–12, 78–79
Asia, Great Convergence. See Great Convergence
B
Bianchi test , 85–86
Bootstrap multimodality test , 85
Bottom billion , 10, 106, 112, 113, 150, 160
Britain. See also Technological innovation
coals and colonies , 5
cotton fabrics , 29
global technological leader , 176
Industrial Revolution , 53
leadership , 10
modern industry , 9
Britain as birthplace of industrial revolution
British economic crises , 66
comparison, European neighbors , 65–66
evolutionary miracle , 66
factors , 64–65
French nobility , 66–67
legal system and patent law. ( see British
patent system)
living standards , 69–70
political and economic reasons , 66
population growth , 69–70
spinning wheel , 63
steam engines , 63–64, 68–69
technology development , 69–70
woolen and silk fabric traders , 67
British leadership in technological innovation
in eighteenth century , 170, 171
endogenous growth rate , 172
foreign government obligations , 116
British patent system
development , 72–73
economic development , 70–71
intellectual property , 70
“open letters” , 71
property and copyright of inventor , 72
Venetians , 71–72
Brownian motion , 151
C
The California School’s Great Divergence
theory , 86
Capitalist World System
antiglobalization , 78–79
forced opening of China , 79–80
formation of , 81
GDP growth in Japan , 80–81
globalization , 78–79
modernization of the West , 73–78
trade and economic relations , 82–84
Catching up divergence
agricultural technologies , 49
Chinese government , 43–44
conditions, driving forces and
consequences , 42–43
expansionism and globalization , 43
geographical discoveries and colonial
acquisitions , 43
Index
244
Catching up divergence (cont.)
growth fl ywheel , 44
growth of science and mathematics , 46, 47
import substitution in West , 44–45
innovation diffusion rate , 46–49
military revolution , 41
North-Eastern Europe, growth of literacy ,
45–46
population density , 43
population growth, China , 41, 42
precious metals , 44
scientifi c-technological innovation
activities , 50–51
shipbuilding and ship navigation , 49
Catch up effect , 139, 140
China
Eastern society , 48
energy consumption , 34, 77
foreign trade , 79
GDP dynamics , 79–80
involuted economy , 34
population dynamics , 41, 42
price of labor , 33
private initiative , 37
role of trade , 67
scientifi c-technological innovations , 19, 20,
46, 50
technologies of governance , 49
Clash of forces in the global fi eld , 12
Collapse of colonial system , 147
Collective achievements of Europe , 10, 22
Colonies. See World economic locomotives
Commercial crises, pan-European , 22
Communist Block , 96, 125, 146
Comparison of Europe and the East , 36–37
Conditional convergence
ASEAN , 143
Baumol’s data , 141
developed and developing countries , 140
factors of , 143–144
high-income economies , 142
Latin America , 142–143
OECD countries , 142
social capability , 142
Solow’s theory , 141
watershed work , 141
β-Convergence , 85
σ-Convergence , 85
Craft technologies, labor-saving , 35
Crises in the world in the forthcoming
decades , 163–164
Cross-national tests , 180
D
Defi nitions of globalization , 162
Deindustrialization of developed countries
active phase , 131
commodities shortage , 132
defi nition , 131
economy , 132
external trade with low-wage economies , 131
FDI , 133
fl ying geese paradigm , 133
and industrialization , 8
industrial share , 132
information production and services , 131
role of foreign capital , 133
service sector , 131
share of manufacturing employment , 131
share of services employment , 131
structure of international division
of labor , 132
TNCs , 131–132
unshakable globalization principles , 155
World System , 132–133
Demographic cycles , 8
Demographic transition
GDP , 96, 198
income gap , 200
phases of , 15
regression analysis , 199
second , 30
standard of living , 74
Third World countries , 96, 120
world population growth , 198
Developed countries
deindustrialization , 8
economic and socio-cultural convergence , 11
GDP per capita , 15
globalization , 7
possibility of convergence , 7–8
Developing countries
global instability , 160–161
Development of Asia and Europe
catching up divergence , 26
ecological niches. ( see Ecological niches)
First World War , 29–30
foreign trade , 27–29
global economic system , 30
globalization , 30–31
inventions and discoveries , 18
levels of innovative activities , 18–19
military revolution , 27
potential advantages , 19
process of divergence , 25–26
Index
245
production level , 17
scientifi c-technological innovations , 19–22
synergistic effect , 27
Divergence-convergence trends
dynamics of GDP of the West and the rest
of the world , 88–94
gap between the West and the Rest , 96–106
present-day convergence , 106–113
share of the West , 86, 87, 93–96
world population relative growth rates’
dynamics , 86, 87
Driving forces of industrial revolution , 42–43
Dynamics of GDP of the West and the rest
of the world
global GDP after 1980 , 88, 91, 92
share of the West , 88, 89
Thompson’s calculations , 93
unit of measurement , 90
World Bank coeffi cients , 90
World Bank data , 90–93
World Bank GDP conversion coeffi cients , 90
world convergence pattern , 93, 94
Dynamics of technical inventions in Europe.
See also Technological innovation
endogenous technological growth rate , 169
GDP , 136
political changes , 174
E
Early Modern Age
catching up divergence , 41–51
industrial revolution. ( see Industrial
revolution)
preconditions of Great Divergence , 31–40
Ecological niches
agricultural revolution, human populations ,
23–24
Malthusian trap , 23, 25
population of Western Europe , 24, 25
quality of living , 23
socio-demographic collapses , 24–25
standards of living , 22–23
Economic development
human capital , 188
religious evolution , 180
Education-cultural subsystem , 186, 191
Epidemics , 35, 36
Escape from Malthusian trap , 24, 25
Europe, Non-European World.
See Non- European world
Export of capital and technologies
communication lines , 117
foreign investments , 116–117
free trade policy , 116
investments, infrastructure of periphery
countries , 117–118
non-European countries , 11
railroad track mileage in Asia and Africa , 117
role of Great Britain , 116
F
Factors of Great Convergence
agricultural raw materials , 126–127
communist countries , 125
deindustrialization , 131–133
Green Revolution , 127–129
growing variety (and rivalry) of
development programs , 126
industrial mineral resources , 126–127
international organizations , 126
military growth , 125
political signifi cance of developing
countries , 125
reformation and modernization , 134
regional organizations , 126
TNCs , 129–131
USA role , 125
USSR role , 125
workforce decline in Western countries , 129
Financial revolution , 154
Flying geese paradigm , 133, 143, 155
Forecasts of development of world. See Global
instability
Forthcoming decades
developed countries , 160
global technological development , 161
low-income countries , 160
political alliances , 164
Western societies , 159–160
France. See also Technological innovation
and Burgundy , 48
Early Modern Period , 169
Industrial Revolution , 67
population , 24
technological lead , 172
Free trade policy , 116
G
Gap between the West and the Rest, per capita
GDP
Communist Block , 96
First and the Second World , 99–102
First and the Third World , 101, 103–106
Index
246
Gap between the West and the Rest, per capita
GDP (cont.)
First, the Second, and the Third World ,
101, 102
Second World countries , 96, 98, 99
Gap in GDP per capita
convergence-divergence pattern,
implications , 112–113
foreign investment , 111
high-income, middle-income and
low-income countries , 108, 109
high-income OECD countries and
low-income countries , 106, 107
high-income OECD countries and
middle-income countries , 106, 108
middle-income countries and low-income
countries , 106–107, 109
proportion of investments in GDP , 110–111
Solow model , 110
SSA , 110
technological diffusion , 110
TFP growth , 111
Germany
capital exporter , 116
endogenous technological growth rate , 170
Silver mines , 59
Global instability
developing countries , 160–161
development levels, technological
breakthrough , 161
economic globalization vs. political
integration of world , 162
economic interests , 165
forthcoming decades , 163–164
geopolitics , 164–165
new technologies , 161
political alliances , 164–165
political infl uence, China , 165–166
USA , 162–163
world network community , 166
Globalization
benefi ts , 145
characterization , 146
defi nition , 145
and Great Convergence , 11
law of communicating vessels, world
economy , 149–154
leadership of USA and West , 146–147
Malthusian trap , 8
scientifi c research , 145
trap , 155–158
weakening of USA , 147–148
world economic locomotives. ( see World
economic locomotives)
Globalization trap
active policies , 155
artifi cial barriers , 157
consumers and fi nancial-industrial elites , 157
deindustrialization of West , 157
economic growth of Mexico and USA ,
155–156
equalization of incomes appears , 158
GDP growth in developed and developing
countries , 156–157
tariff barriers , 156
weakening of economic positions, West
and USA , 158
Globalizing world , 1
Global Modernization , 1, 15
Global network community , 166
Great Convergence
core and periphery , 194, 195
developed and developing countries , 7–8
economic development , 1
economic growth rates , 194
First and Third world , 6, 10, 12
forecasting , 194
GDP , 192
global instability , 11–12, 159–166
and globalization , 11 ( see also Globalization)
global population growth , 207
and Great Divergence , 186–192
large-scale global processes , 8
mathematical model , 13–15
natural resources , 205
parameters of order , 192, 193
and Rise of the Rest. ( see The Rise
of the Rest)
the Rise of the West , 9–10
sociodemographics , 196
structure of , 8–9
technological innovation activities in
Britain , 12–13
UN Population Division , 206
Weber , 179–186
Western societies , 6–7
World Development Indicators , 205
world population growth , 201–205
Great Divergence
absorbing technologies , 188–189
capital diffusion , 188, 191
coeffi cients and variables , 191
convergence force , 188
demographic transition , 192
economic growth , 186
GDP , 187
human capital development , 186, 188
income OECD , 186
Index
247
literacy rate growth , 190
macromodel , 188
population growth , 187
resource limitations , 189
and the Rise of the West. ( see The Rise
of the West)
technology growth rates , 192
Great Divergence and Great Convergence.
See Great Convergence
Green Revolution , 30
agriculture of developing countries , 127
characteristics , 128
CIMMYT , 129
defi nition , 30
genetics, selection and physiology
of plants , 127–128
industrialization of agriculture , 128–129
irrigation , 128
land scarcity , 128
Mexican Agricultural Program , 129
Gross Domestic Product (GDP)
correlation , 180, 182, 198
global modernization , 204
literacy rates , 180, 184, 185
population dynamics , 203
sustainable development , 197
world population , 196, 197
H
Heavy industry , 77, 123, 125
Hegemony , 166
Holy Scripture , 185
Human capital
core’s GDP grows , 187
economic growth , 180
education-cultural (human capital)
subsystem , 14, 186
gap in life expectancy with USA , 135, 137
gap in literacy rates with Western Europe ,
135, 136
gap with advanced states , 134
growth , 131
high-income economies , 142
modern economic model , 121
in South Asia , 189
World System periphery , 124
Human capital development
economic growth , 180
education-cultural , 186
GDP , 187
modernization period , 188
I
Increasing Returns and Long-Run Growth , 141
India
borrow technologies , 35
and Chinese market , 83
colonies , 80
import, fabrics , 67
“industrial leap” , 58
level of wages , 69
railways , 83–84
yarn and fabrics , 29
Industrial crises , 60
Industrialization of developing countries
agricultural raw materials , 126–127
epidemics, control over , 129
industrial mineral resources , 126–127
reformation and modernization , 134
Industrial revolution
cost of production , 29
phases. ( see Phases of industrial
revolution)
private property and intellectual property , 38
scientifi c-technological innovations in
Europe , 19–22
Innovation diffusion rate in Europe
China innovations , 48
competition of peers , 47–48
European armies , 48–49
fi rearms and protective devices , 48
global technological and demographic
development , 46–47
individual societies , 47
siege gun scheme , 48
Innovative climb , 12, 66, 167
Innovative dynamics in different periods of
history , 8
International Maize and Wheat Improvement
Center (CIMMYT) , 129
International organizations , 125, 126, 157
Islamic world , 37
Italy
and Flanders , 57
and Germany , 12
nautical technologies , 55
political and social decline , 169
scientifi c and mathematical discoveries , 22
L
Labor-saving technologies
capitalization of agriculture , 34
craft technologies , 35
Index
248
Labor-saving technologies (cont.)
energy consumption , 34–35
industrial revolution. ( see Industrial
revolution)
investment , 69
labor and land productivity , 33
mechanization , 32
population and density , 33
watermills , 34
wheel-borrows , 55
Large-scale global processes , 8
Late Middle Ages
diffusion of innovations , 48
fi shing and hunting, aquatic mammals , 36
import substitution in Europe , 28
patent laws , 71–72
private investment , 37
Law of communicating vessels
constant transformation, international
division of labor , 153
convergent globalization , 149
defi nition , 150
developing countries , 152
development of globalization , 152–153
development of periphery , 150
divergent globalization , 149
employment and export shares , 149
labor incentives and resources , 152
middle-income countries , 151
openness of economic borders , 152
population aging , 151
population of poor countries , 151
psychology , 150–151
rich countries , 151
World Bank , 150
World System core industries , 153–154
Law of communicative vessels , 14, 125
Least developed countries (LDCs) , 143
Letters Patent , 71
M
Machine technology, industrial revolution.
see Industrial revolution
Malthusian trap
population dynamics of Western Europe ,
24, 25
Sisyphean labor , 23
standard of living , 74
Mathematical modeling. See Great
Convergence
Mexican Agricultural Program , 129
Modernization of the West
diffusion of industrialization , 76–78
industrial revolution in Britain , 73–74
mechanical spinning spindles , 75–76
paradoxes, economic growth , 74–75
water resources , 75
N
The Netherlands
capitalist relations , 21
commercial and industrial sector , 60
database records , 169
and England , 61
leadership , 22
maritime trade , 66
nautical technologies , 55
and Northern France , 22
shipbuilding industry , 57
West European societies , 58
New alliances , 163
New balance of power , 11, 28, 157
New global hegemon , 159
New world order , 163
Non-European world
Britain and Western countries , 2
California School , 4–5
development of societies , 2
economic development of East , 4
The Rise of the West , 3–4
“the Orient” , 2–3
Non-parametric density estimation test , 85
North American Free Trade Area (NAFTA) , 155
O
Oil-exporting countries , 126–127
Onset of the Great Convergence , 1, 6, 10, 31,
84, 85, 87, 204
The Orient , 2–3
P
Phases of industrial revolution
agro-industrial complexes , 58–59
Britain as birthplace of fi nal phase , 62–73
defi cit of wood , 60–61
economic crises , 61–62
growth of volumes , 59–60
innovations and achievements , 58
intensive economy of labor , 57
labor productivity , 62
preconditions , 55–56
technological changes , 56
types of businesses , 57
Phases of single process , 1, 14
Index
249
Population growth rates , 190
Prerequisites for breakthrough of the West
borrow technologies , 35
European Cities , 38–39
features , 32
fi nancial sector , 36–37
labor-saving and mechanization.
( see Labor-saving technologies)
non-agricultural population , 36
private initiative , 37–38
territorial and demographic proportions , 40
trade role , 36–37
Price revolution , 59
Protestant Ethic and the Spirit of Capitalism , 179
Protestantism’s infl uence on the economic
growth , 186
Q
Quantitative analysis. , 12 See also
Technological innovation
R
Reconfi guration of the World System , 159
Reduction of poverty and illiteracy in
developing countries , 162
Regional organizations , 126
Relay-race of achievements , 10, 22
The Rest of the West , 12, 168, 175, 176
The Rise of the Rest
cross-country distribution of world GDP , 85
divergence-convergence trends. ( see
Divergence - convergence trends)
income distributions , 85
onset of the Great Convergence , 85
statistical techniques , 85–86
unconditional convergence , 86
unconditional cross-country convergence , 85
The Rise of the West , 9–10
capitalist World-System , 73–84
development of Asia and Europe , 17–31
Early Modern Period. ( see Early Modern
Age)
industrial revolution. ( see Industrial
revolution)
S
Scientifi c forecasting , 8
Scientifi c-information revolution
advantages , 120
development of synthetic materials’
production , 120
development theory , 121
diversity of pathways , 122
economic growth in India’s development ,
122–123
evolutionary processes , 123
export-oriented models of development , 123
GDP growth rates , 122
HDI growth rates , 122
heavy industry , 123
labor resources , 121
literacy rate of adult population , 122
modern medical service , 120
non-computer electronics and
communication , 120
patterns of economic development , 122
per capita GDP growth rate , 122
population growth rates , 120–121
Third World countries , 120, 122
TNCs , 123
Western societies , 120
Scientifi c-technological innovations in Europe
acceleration in thirteenth century , 20
early industrial revolutions , 20–21
Hellemans-Bunch database , 19–20
mining operations , 22
navigation, engineering and mechanization
on watermill , 21–22
pan-European , 22
revolutionary breakthroughs , 19
shipbuilding, port facilities and fi shing , 22
substantial impact, economy , 22
Second demographic transition , 30
Second World
and First , 99–102
Third and First World , 101, 102
war , 120–124
Second World War
scientifi c-information revolution , 120–124
Share of the Rest , 88, 90, 150
Share of the West
after 1800 , 88, 89
and the rest of the world. ( see Dynamics
of GDP of the West and the rest of the
world)
in the world population , 93–96
World War I , 96
Small-scale industries , 119
Spiritual leaders of Protestantism , 186
Structure of industrial revolution
British economy , 53–54
catching-up divergence , 53
developments , 52–53
economic growth , 54–55
living standards, Britain , 54
Index
250
Structure of industrial revolution (cont.)
machines and steam power , 52
quality changes , 54–55
technological breakthrough , 53
T
Technological and political impediments , 14, 125
Technological-economic sub-system , 186, 191
Technological innovation
British and Germany , 167, 172
British leaderships , 167, 171
comparisons , 168, 175–176
convergence , 167, 173
Early Modern Period , 170
endogenous growth rate , 167, 169, 170
Europe and USA , 168, 175
global technological leader , 176
Industrial Revolution , 168, 172
integrated World System , 177
Italy , 168
leaders , 167, 171
long-term leaders , 169
modernization phases , 167
phase technological leaders , 174
Western countries , 167, 173
Western European countries , 174
Western European level , 169
World System hegemony , 174
Technologies
craft , 35
development , 69–70
early phase of industrial revolution , 56
energy , 34–35
and Great Convergence , 161
innovation activities , 167–177
innovations , 50–52
and politics. ( see Second World War)
Western , 116–119
TFP growth , 111
Third World , 1, 6, 10, 12, 15
Transformation of Great Divergence into Great
Convergence , 6, 9
Transnational corporations (TNCs) , 123,
129–131, 133
U
Unconditional convergence , 7, 85, 86,
138–141, 143–145
USA
Communism , 118
cotton industry , 69
ethnic balance , 11
Great Depression , 98
hegemony , 12, 159
leading position , 147
legalacts , 72
role , 125
USSR role , 125
V
Vector of development from Great Divergence
to Great Convergence , 14, 125
W
Washington Consensus , 155
Weber, Max
cognitive process , 182
economic growth , 180, 182
economic success , 179
female literacy , 184
GDP , 180, 181
human capital development , 180
labor production , 181
linear correlation , 181
literacy and education , 185
literate respondents , 183
protestantism , 179
researchers , 182
socioeconomic development , 180
spirit of capitalism , 179
Western domination , 11
Western technologies
capital export , 116–118
political crisis in the Western Countries ,
118–119
political rise of the peripheral societies ,
118–119
The West, Great Convergence. See Great
Convergence
World Bank data , 90–93, 101–103
World convergence pattern , 93, 94
World economic locomotives
advantage of backwardness , 138–140
conditional convergence , 140–144
development of human capital , 135
economic balance of forces , 154–155
economic reasons and factors , 126–133
effectiveness of investments in GDP ,
135, 136
gap in life expectancy with USA , 135, 137
gap in literacy rates with Western Europe ,
135, 136
globalization. ( see Globalization)
Great Convergence , 135, 137
growing variety (and rivalry)
of development programs , 126
Index
251
international organizations , 126
law of communicating vessels , 124
modernization , 134
per capita GDP growth , 134–135
political and ideological reasons and
factors , 125
regional organizations , 126
share of investments in GDP , 135
technologies. ( see Technologies)
unconditional convergence , 138–140,
144–145
Western economic development , 115
Western economists , 138
World economy
capitalist , 56
law of communicating vessels , 149–154
and politics , 81
World middle class , 166
World population growth
demographic modernization , 201–202
economic development , 202
income gap , 204
Industrial Revolution , 202
labor production , 202
modernization process , 205
mortality association , 202
World System
capitalist , 73–84
core economies , 120
development of periphery , 134, 150, 154
human capital development , 124
logic of process , 133
macrodynamics , 189
per capita GDP growth , 134–136
periphery , 6, 13, 29, 58, 88, 93, 125, 135,
153–154
structure of international division
of labor , 132
World without hegemon , 159
Index
