Economic Growth in Pre-Industrial Europe

A new economics article, written by Roger Fouquet and Stephen Broadberry addresses GDP per capita of six European countries six centuries before the Industrial Revolution. The main data of the article is summarized in the graph below:

The countries studied are England/Great Britain, Spain, Portugal, Italy, Sweden and Holland. A few things emerged from this graph:

(i) the authors show in the paper that economic fluctuations were not non-existent in pre-industrial Europe. There were incomes rising and falling in the long run.

(ii) there was some growth in income in the long run, although there was major fluctuations of average incomes in the short run. Except for Spain, individuals in the other five countries faced a lot of uncertainty of income from one year to the next, but in the long run, Holland, Portugal and Britain saw incomes grow. Long run incomes in Italy stabilized after 1500, although there was a lot of fluctuations,

History might help to explain why incomes of Britain and Holland rose in the long run, while Spain stagnated, even though they all were colonizing foreign lands. Britain and Holland let private enterprises engage in trade and colonization, at least till the 19th century, while Spain and Portugal kings controlled the trade.

However, the past does not necessarily dictate the present and future. At one instance, Britain, Sweden, Spain and Portugal all had similar incomes (around 1600 AD). Yet today, Sweden is wealthier than Portugal, Spain and Britain. Government policies, education and institutions all can help change growth trajectory of a country.