DP4947 The Early Modern Great Divergence: Wages, Prices and Economic Development in Europe and Asia, 1500-1800

Author(s): Stephen N Broadberry , Bishnupriya Gupta

Publication Date: March 2005

Keyword(s): wages , prices , development , europe , asia

JEL(s): N10 , N30 , O10

Programme Areas: International Macroeconomics

Initiatives: Economic History

Link to this Page: www.cepr.org/pubs/dps/DP4947.asp

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