Early Starts, Reversals and Catchup in the Process of Economic Development

Abstract

Early states like China, India, Italy and Greece have been experiencing more rapid economic growth in recent decades than have later-comers to agriculture and statehood like New Guinea, the Congo, and Uruguay. We show that more rapid growth by early starters has been the norm in economic history, and that the "reversal of fortune" associated with the European overseas expansion that began around 1500 was both exceptional and temporary. We demonstrate not only that the post-1500 reversal was in the process of being reversed between 1960 and 1998, but also that the growth rate advantage conferred by early development in the latter period was several times greater than the growth rate disadvantage that it conferred during 1500-1960, implying a rapid undoing of the first reversal.

Keywords: Economic growth, economic development, economic history

JEL Classification: O40, O10, N00