Globalization, Growth and Distribution in Spain 1500-1913
The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labor productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends -- from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter -- must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wage-rental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.
We gratefully acknowledge help with the data from Enrique Llopis, Arthur van Riel, David Reher, and Jan Luiten van Zanden, as well as the excellent research assistance of Taylor Owings and Sunny Ying Sun. The argument has also been improved by the comments of Leandro Prados and participants at the Seventh International Atlantic Economics conference (Madrid, March 18 2007) and the Third Iberometrics Conference (Valencia, March 23-24 2007). O?Rourke acknowledges financial support from the European Union through its Marie Curie Research Training Network programme, contract number MRTN-CT-2004-512439. He and Williamson additionally thank the IIIS for its financial support. Rosés acknowledges financial support from the Spanish Ministry of Education (Grant SEJ2006-08188/ECON). Williamson acknowledges additional financial support from the National Science Foundation SES-0001362 and the Harvard Faculty of Arts and Sciences. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.