ec104-a1.pdf - u1606776 When did the Great Divergence occur...

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u1606776 When did the Great Divergence occur? Do you think it was the result of Chinese failure or European Success? Over the last decades, there has been a disparity of living standard between Europe and Asia as Europe overtook China and became the most powerful and wealthy area, opened up an increasing gap known as “Great Divergence”. The cause and timing of Great Divergence is still a debate. The Revisionist, Pomeranz (2000) argued that Great Divergence was a product of 19th century Industrial Revolution while the traditionalist showed that the divergence was well underway since 16th century. This essay attempts to analyse different approaches to provide insights to the matter. Firstly, European wages have been converted into gram of silver and grain per day using market price to compare with Asian wages. Data from Broadberry, S. and Gupta, B. (2006) then showed that North-western Europe was the silver wages leader before 19th century which saw substantial growth despite low grain wage. Britain seeing the largest increase in silver wages (nearly 83%) for both skilled and unskilled workers from 1500-1800 . Meanwhile, Southern, Central and Eastern Europe lagged behind with fluctuation but weak trend in silver wages growth although had the highest level of grain wages. Chinese and Indian wages showed the same pattern as the more stagnating peripheral Europe rather than the developed parts with Indian silver wages being little more than one-fifth of its English counterpart at the end of the 16th century, and it fell to just over one-seventh of the English level during the 18th century ( Broadberry, S. and Gupta, B (2006) p.17). The silver wage data suggested that by 1900, nominal silver wage of more economically advanced parts of Asia (India, China) was much lower than Europe but grain wage data showed the same level. However, as grain wages were costly to transport and prices might not have been equalized between different areas, silver wages were argued to be a better indicator of comparison which reflected labour productivity on tradable goods as well as standard of living. Also, because

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