Education, globalization and catch-up: Scandinavia in the swedish mirror

Scandinavian Economic History Review

Volumn 43, Issue 3, 1995, Pages 287-309

  O’Rourke, Kevin Hjortshøj ^a   Williamson, Jeffrey G ^a  

^a NONE

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EID: 84951577455     PISSN: 03585522     EISSN: 17502837     Source Type: Journal    
DOI: 10.1080/03585522.1995.10415905     Document Type: Article

References (93)

1. O’Rourke, K.H. and Williamson, J. G., Open Economy Forces and Late 19th Century Swedish CatchUp: A Quantitative Accounting, Scandinavian Economic History Review, 1995:2, pp. 171-203.
2. Barro, R.J., Economic Growth in a Cross Section of Countries, Quarterly Journal of Economics. 1991:2, pp. 407-43.
3. Sandberg, L.G., The Case of the Impoverished Sophisticate: Human Capital and Swedish Economic Growth before World War I, Journal of Economic History, 1979:1, pp. 225-41.
4. Tortella, G., Patterns of Economic Retardation and Recovery in South-Western Europe in the Nineteenth and Twentieth Centuries, Economic History Review, 1994:1, pp. 1-21.
5. Williamson, J.G., The Evolution of Global Labor Markets Since 1850: Background Evidence and Hypotheses, Explorations in Economic History, 1995:2, pp. 1-54.
6. O’Rourke, K.H., Taylor, A.M., and Williamson, J.G., Factor Price Convergence in the Late Nineteenth Century, International Economic Review, 1996: forthcoming.
7. Bairoch, P., Europe’s Gross National Product: 1800-1975, Journal of European Economic History, 1976:2, pp. 273-340.
8. Explaining the Economic Performance of Nations, in Baumol, W.J., Nelson. R., and Wolff, E.N. (eds.), Convergence of Productivity: Cross-National Studies and Historical Evidence, New York: Oxford University Press 1994, except for Portugal, Spain and Italy which have been repaired by.
9. Bardini, C., Carerras. A., and Lains, P., The National Accounts for Italy, Spain and Portugal, Scandinavian Economic History Review, 1995:1, pp. 115-46. The sample excludes Argentina and Ireland, but includes Austria, Finland and Switzerland.
10. Heckscher, E.F., An Economic History of Sweden, Cambridge, Mass.: Harvard University Press 1954.
11. Jörberg, L., The Industrial Revolution in the Nordic Countries, in Cipolla, C.M. (ed.). The Emergence of Industrial Societies: Part Two, London: Harvester Press 1970.
12. Lieberman, S., The Industrialization of Norway 1800-1920, Oslo: Engers Boktrykkeri 1970.
13. Hildebrand, K.-G., Labour and Capital in the Scandinavia Countries in Nineteenth and Twentieth Centuries, in Mathias, P. and Postan, M.M. (eds.), The Cambridge Economic History of Europe: Volume VII: The Industrial Economies: Capital, Labour and Enterprise: Part I, Cambridge: Cambridge University Press 1978.
14. Persson, K.G., Introduction, in K.G.Persson (ed.), The Economic Development of Denmark and Norway Since 1870, Aldershot, Hants.: Elgar 1993.
15. Gerschenkron, A., Economic Backwardness in Historical Perspective, Cambridge, Mass.: Harvard University Press 1962.
16. Abramovitz, M., Catching Up, Forging Ahead and Falling Behind, Journal of Economic History, 1986:2, pp. 385-406.
17. Flam, H., and Flanders, M.J., Heckscher-Ohlin Trade Theory, Cambridge, Mass.: MIT Press 1991.
18. To repeat, this paper will focus on the sources of Scandinavian catch up in the late 19th century, hoping to get further insight into the forces driving convergence within the OECD club. We have nothing to say about what determines membership. However, we are well aware that European convergence may have been limited to the club. Indeed, while Table 2 offers some weak evidence of GNP per capita convergence using Bairoch’s data on the OECD club, there is no evidence of convergence when Bairoch’s full sample is used (that is, when such central, south and east European countries as Austria-Hungary, Bulgaria, Greece and Russia are added). The point was made with clarity by J. Bradford DeLong, Productivity Growth, Convergence and Welfare: Comment, American Economic Review, 1988:5, pp. 1138-54, in his debate with William Baumol, Productivity Growth, Convergence and Welfare: What the.
19. Long-Run Data Show, American Economic Review, 1986, 5. pp. 1072-85, The same is true of GDP per worker-hour in the conditional equations reported in Table 4. When Austria, Finland and Switzerland are added, the results are far weaker.
20. See, for example: Abramovitz, Catching Up. Forging Ahead and Falling Behind’, Baumol, Productivity Growth. Convergence and Welfare.
21. Baumol, W. J., Blackman, S.A., and Wolff, E.N. Productivity and American Leadership: The Long View, Cambridge, Mass.: MIT Press 1989.
22. Prados de la Escosura, L., Sanchez, T. and Oliva, J.De Te Fabula Narratur? Growth, Structural Change and Convergence in Europe, 19th and 20th Centuries, Working Paper No. D-93009, Madrid: Ministerio de Economia y Hacienda 1993 (December).
23. Williamson. The Evolution of Global Labor Markets Since 1850, and Globalization. Convergence and History. Journal of Economic History, 1996:2, forthcoming.
24. The words ₻conditional« and ₻unconditional« come from the work of the new growth empiricists like Robert Barro and Xavier Sala-i-Martin, Convergence, Journal of Political Economy, 1992:2, pp. 223- 51).
25. Gregory Mankiw, David Romer and David Weil, A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics, 1992:2, pp. 407-37. They refer to convergence conditional on, or after controlling for, schooling and other forces excluded from the standard Solow model.
26. The Maddison sample for the regressions in both Tables 2 and 3 exclude Austria. Finland and Switzerland so as to make it as comparable as possible with the real wage sample. However, when these three countries are thrown back in to the sample, the unconditional and conditional convergence results are much poorer. To repeat: the real wage sample includes Argentina, Australia, Belgium, Canada, Denmark, France, Germany, Great Britain. Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United States: the ₻overlapping« GDP per worker sample includes all of these except Argentina and Ireland.
27. Barro, Economic Growth in a Cross Section of Countries; Barro and Sala-i-Martin, Convergence Across States and Regions, Brookings Papers on Economic Activity, 1991:1, pp. 107-82 and Convergence.
28. Mankiw, Römer and Weil. A Contribution to the Empirics of Economic Growth, Prados, Sanchez and Oliva, De Te Fabula Narratur?.
29. Williamson, The Evolution of Global Labor Markets Since 1850.
30. Indeed, we still do not have an estimate of Irish national income for 1870.
31. Prados, Sanchez and Oliva, De Te Fabula Narratur?, Table 4, p. 9. The early works by Angus Maddison referred to in the text are: Phases of Capitalist Development, Oxford: Oxford University Press 1982 and Dynamic Forces in Capitalist Development, Oxford: Oxford University Press 1991.
32. Bardini, Carreras and Lains, The National Accounts for Italy, Spain and Portugal.
33. The β underlying Figure I is -0.390 (Table 2, row 1, entry 1). The rate of convergence is λ = (l/t)In(β + I) where t is the time span (43 years) and β is the coefficient for the log of initial real wages, income per capita or labor productivity. Actually, we use the term ₻speed of convergence« too loosely in this context. Speed of convergence technically is λ times the initial gap. If λ=0.01, then it would take 70 years to cut the gaps in half. Thus, had the late 19th century rate of convergence persisted, by 1940 gaps would have been half that of 1870. Eliminating big initial gaps takes a long time, even when there is fast convergence at work.
34. Mankiw, Romer and Weil, A Contribution to the Empirics of Economic Growth.
35. Barro and Sala-i-Mar-tin. Convergence.
36. O’Rourke and Williamson, Open Economy Forces and Late I9th Century Scandinavian Catch-Up, Figures 2 through 4.
37. Mankiw, Römer and Weil, A Contribution to the Empirics of Economic Growth, p. 426.
38. Prados, Sanchez and Oliva, De Te Fabula Narratur?.
39. Easterlin, R.A., Why Isn’t the Whole World Developed?, Journal of Economic History, 1981:1, pp. 1- 19.
40. Sanberg, The Case of the Impoverished Sophisticate, p. 228.
41. Jörberg, The Industrial Revolution in the Nordic Countries, pp. 386 and 396, and Structural Change and Economic Growth: Sweden in the Nineteenth Century, in Crouzet, F., Chaloner, W.H. and Stem. W.M. (eds.). Essays in the European Economic History 1789-1914, London: Edward Arnold 1969, p. 275.
42. Cipolla, C.M., Literacy and Development in the Wfcsf, London: Penguin 1969, p. 87 and Table 6, p. 72.
43. Sandberg, The Case of the Impoverished Sophisticate, p. 230.
44. Others have pursued this connection between education and economic performance in Sweden since Sandberg’s paper appeared, and some are critical of the impoverished sophisticate hypothesis. See, for example: Nilsson, A. and Pettersson, L., Some Hypotheses Regarding Education and Economic Growth in Sweden During the First Half of the 19th Century, in G. Tortella (ed.). Education and Economic Development Since the Industrial Revolution, Valencia: Generalitat Valenciana 1990.
45. Education, Knowledge, and Economic Transformation: The Case of Swedish Agriculture 1800-1870, Lund Papers in Economic History No. 13, Department of Economic History: Lund University 1992.
46. Markussen, I., The Development of Writing Ability in the Nordic Countries in the Eighteenth and Nineteenth Centuries, Scandinavian Journal of History, 1990:1. pp. 37-63.
47. Sandberg, Ignorance, Poverty and Economic Backwardness in the Early Stages of European Industrialization, Journal of European Economic History, 1982:3, p. 689.
48. Tortella, Patterns of Economic Retardation and Recovery.
49. Nunez, C.-E., Literacy and Economic Growth in Spain, 1860-1977, in G. Tortella (ed.), Education and Economic Development Since the Industrial Revolution, Valencia: Generalität Valenciana 1990.
50. Williamson, The Evolution of Global Labor Markets Since 1850 and Globalization, Convergence and History.
51. Prados, Sanchez and Oliva, De Te Fabula Narraturl, Tables 14-16, pp. 53-5, ₻escolar«.
52. Markussen, The Development of Writing Ability, p. 37 has stressed that the Nordic countries were unique in that there was a long lag, perhaps 100-150 years, between the development of reading and writing skills. Indeed, while their reading skills and enrollment rates are well above what one would expect for poor countries (Table 3), Maricussen (Table I, p. 53) shows that they were well behind in writing skills, at least based on per capita letters and postcards sent.
53. This result is surprising. After all, the real wage growth is for ₻raw« unskilled labor and only measures changing labor scarcity and labor productivity within one (un)skilled category. GDP per worker-hour growth aggregates the impact of changing labor productivity within skill categories and changing labor productivity due to country-wide shifts up the skill ladder. We have also experimented with the addition of changes in schooling, but the results were poor. Table 4 and the text sticks, therefore, with levels of schooling on the right hand side, as does most of the empirical new growth literature.
54. The magnitude of these effects should depend on ex ante factor prices; poorer but open countries should thus benefit the most from them.
55. O’Rourke and Williamson. Open Economy Forces and Late !9th Century Swedish Catch-Up: A Quantitative Accounting.
56. These schooling calculations are based on country enrollment rate differentials and the 0.349 estimated coefficient reported in Table 4. They are much smaller if the literacy differentials and the 0.531 estimated coefficient are used, ranging from 1 to 3 percent. Thus, the text overstates the contribution of schooling to late 19th century Scandinavian convergence.
57. Hatton, T.J. and Williamson, J.G., International Migration 1850-1913: An Economic Survey, in Hatton, T.J. and Williamson, J.G. (eds.). Migration and the International Labor Market 1850-1939, London: Routledge 1994, Table 1.1.
58. Taylor, A.M. and Williamson, J.G., Convergence in the Age of Mass Migration, NBER Working Paper No. 4711, Cambridge, Mass.: National Bureau of Economic Research 1994 (April), Table I.
59. O’Rourke and Williamson, Open Economy Forces and Late 19th Century Swedish Catch-Up: A Quantitative Accounting. Appendix Table 2.1.
60. O’Rourke and Williamson, Open Economy Forces and Late 19th Century Swedish Catch-Up: A Quantitative Accounting. Table I.
61. Taylor and Williamson. Convergence in the Age of Mass Migration, Table I.
62. Karlström, U., Economic Growth and Migration During the Industrialization of Sweden: A General Equilibrium Approach, Stockholm: Stockholm School of Economics 1985, p. 22.
63. O’Rourke and Williamson, Open Economy Forces and Late 19th Century Swedish Catch-Up: A Quantitative Accounting, Table 1.
64. Johansen, H.C., Danish Historical Statistics 1814-1980, Copenhagen: Gyldendal 1985, pp. 230-2.
65. Hansen. S.A., Early Industrialization in Denmark, Copenhagen: Akademisk Forlag 1970, pp. 59-64.
66. Jörberg. The Industrial Revolution in the Nordic Countries, pp. 478-9.
67. Johansen. Danish Historical Statistics 1814-1980, pp. 221-2 gives the current account surplus between 1874 and 1913.
68. Kærgård, N., Økonomisk Vcekst: En Økonometrisk analyse af Danmark 1870-1981, Copenhagen: Jurist- og 0konomforbundets Forlag 1991, pp. 516 and 578 gives the Danish capital stock from 1875 to 1913. Between 1875 and 1913, capital imports (the negative of the current account surplus) averaged 0.628 percent of the capital stock. Over the 35-year period 1875-1910, capital imports alone would thus have increased the capital stock by 24.5 percent (0.628 percent cumulated over 35 years). In fact, the capital stock increased by 74.7 percent over the period, cf.
69. Kærgård, Økonomisk vcekst, p. 516. Without capital flows, the capital stock would thus have increased by 50.2 percent. Capital flows thus augmented the Danish capital stock by 16.3 percent (=174.7/150.2).
70. Riis, C. and Thonstad, T., A Counterfactual Study of Economic Impacts of Norwegian Emigration and Capital Imports, in Gordon, I. and Thirwall, A.P. (eds.), European Factor Mobility: Trend and Consequences, London: Macmillan 1989.
71. Rjis and Thonstad, A Counterfactual Study of Economic Impacts of Norwegian Emigration and Capital Imports, pp. 120-1, state that capital exports between 1865 and 1890 lowered the Norwegian capital stock in 1890 by 3 percent: but that capital imports between 1890 and 1910 added 21 percent to the 1910 capital stock.
72. By ₻combined«, we simply mean the addition of these effects, not the joint counterfactual where both migration and capital inflows are allowed to have their impact simultaneously. The same is true of (he ₻total open economy forces« in our previous paper: O’Rourke and Williamson, Open Economy Forces and Late 19th Century Swedish Catch-Up: A Quantitative Accounting, Table I, and here in Table 5. However, the ₻combined« effect cannot be derived by the direct addition of row [I] and (2] to get total international factor flows or of the addition of row [3] to get total open economy forces. Rather, the effects must be applied to the wages underlying the wage gaps.
73. For a controversy on precisely this point, see: Nye, J.V., The Myth of Free-trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century, Journal of Economic History, 1991:1, pp. 23-46.
74. Irwin, D.A., Free Trade and Protection in Nineteenth-Century Britain and France Revisited: A Comment on Nye, Journal of Economic History, 1993:1, pp. 146-52.
75. O’Rourke, K.H., Measuring Protection, Journal of Development Economics, 1996: forthcoming.
76. Heckscher, An Economic History of Sweden, p. 238.
77. Kuuse, J., Mechanization, Commercialization and the Protectionist Movement in Swedish Agriculture, 1860-1910, Scandinavian Economic History Review, 1971:1, pp. 23-44.
78. Kindleberger, C.P., Group Behavior and International Trade, Journal of Political Economy, 1951:1, pp. 30-46.
79. Bairoch, P., European Trade Policy, 1815-1914, in Mathias, P. and Pollard, S. (eds.). The Cambridge Economic History of Europe: Volume 8, Cambridge: Cambridge University Press 1989, p. 76.
80. Anderson, J. and Neary, J.P., Measuring the Restrictiveness of Trade Policy, The World Bank Economic Review, 1994:2, pp. 151-69.
81. Estevadeordal, A., Comparative Advantage at the Turn of the Century, Ph.D. Dissertation, Harvard University 1993, p. 139.
82. Bairoch, European Trade Policy, 1815-1914. Bairoch’s source is the British Board of Trade’s Foreign Import Duties, 1913, London 1913, pp. 1065-6.
83. Grunzel, J., Economic Protectionism, Oxford: Clarendon Press 1916, as reported in Estevadeordal, Comparative Advantage at the Turn of the Century, p. 140 (who in turn used the Grunzel numbers as reported in.
84. Woytinsky, W.S. and Woytinsky, E.S., World Commerce and Governments: Trends and Outlook, New York: Twentieth Century Fund 1955, p. 275).
85. Due originally to Learner, E.E., Measures of Openness, in Baldwin, R.E. (ed.). Trade Policy Issues and Empirical Analysis, Chicago: University of Chicago Press 1988.
86. Estevadeordal, Comparative Advantage at the Turn of the Century.
87. O’Rourke, Measuring Protection did apply (he index, cf. Anderson and Neary, Measuring the Restrictiveness of Trade Policy to France and Britain, and found that it is (unfortunately) extremely sensitive to the treatment of such ‘non-competing’ imports as tea and tobacco.
88. We thank an anonymous referee for clarifying our thoughts on this matter. The following paragraph relies on his comments, as well as on Hodne, F., An Economic History of Norway 1815-1970, Tapir 1975, pp. 179-82.
89. Lund, C., Del Norske Tollvesens Historie fra 1814 til 1940, Oslo: Direkto- ratet for Toll og Saeravgifter 1977.
90. The 1905 tariffs were as follows: rye, 0 percent; barley, 2 percent; wheat, 5 percent; oats, 6 percent; potatoes, 5 percent; fresh meat, 23 percent; cheese, 30 percent; butter, 10 percent; pork, 15 ere per kilogram. See Lund, Det Norske Tollvesens Historie fra 1814 til 1940, pp. 108-9.
91. The Danish and Norwegian numbers are not always identical to the Swedish numbers, since the same increase in the domestic wage will imply different percentage changes in wage gaps for different countries.
92. And remember that the trade estimates for the latter two countries are minimum estimates.
93. We refer here to the title of a paper written twenty-five years ago by Kelley. A.C. and Williamson, J.G., Writing History Backwards: Meiji Japan Revisited, Journal of Economic History, 1971:4, pp. 729-76.