TY  - JOUR
AU  - Shiue,Carol H.
AU  - Keller,Wolfgang
TI  - Markets in China and Europe on the Eve of the Industrial Revolution
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10778
PY  - 2004
Y2  - September 2004
UR  - http://www.nber.org/papers/w10778
L1  - http://www.nber.org/papers/w10778.pdf
N1  - Author contact info:
Carol H. Shiue
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
E-Mail: carol.shiue@colorado.edu

Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu
AB  - Prevailing views suggest the Industrial Revolution began in Europe because markets had gradually become more efficient and by the 18th century the scope of economic activity was far larger than in other parts of the world. This paper compares the actual performance of markets in Europe and China, two regions of the world that were relatively advanced in the pre-industrial period, but would start to industrialize about 150 years apart. The analysis covers economies that account for about two-fifths of the world's population in the mid-18th century, and it considers some three centuries of data. Our findings suggest that relative levels of market function in China and Europe were similar prior to the Industrial Revolution. Higher efficiency in Europe is seen only in the nineteenth century when industrialization was already underway. Moreover, these improvements occurred in a dramatic and sudden fashion, further casting doubt on an evolutionary view of market development. Rather than being a key condition for subsequent growth, gains in efficiency appeared simultaneously with the turning point of modern growth. We discuss the implications of these findings for a number of explanations for long-run growth and the Industrial Revolution.
ER  -