Proposal preview

Long-term regional income inequality in the core and the periphery

In recent years, research on the long-term evolution of regional economies has received special attention, in particular within European and other developed countries. As a result of collective work, historical estimates of regional GDPs for a large number of European countries over the 20th century will soon be available (Rosés and Wolf, forthcoming). This information allows not only for the assessment of the evolution of regional income inequalities within countries but also the study of its determinants. The results show that the present-day economic geography of Europe and the USA is the result of a long and complex process in which both economic and historical causes have played their role.
There are deep underlying forces explaining contemporaneous regional inequality. The most basic are related with initial factor and resource endowments (Heckscher-Ohlin model) while at a second level we find forces arising from the evolution of agglomeration economies (New Economic Geography). The interaction of these components takes place in a context with important variations in transportation costs and the degree of international and interregional economic integration. Following a successful session at the 2015 Kyoto WEHC, this session aims to gather together researchers working on the Americas, with a special focus on Latin America. This new research has the potential to provide a new perspective on the economic history of this area and to offer new insights on how the above forces interact in core and non-core countries. Research focused on Asia, Africa or Oceania is also very welcome. The new evidence will allow for a comparison between these experiences and those from Europe. In that sense, the existence of abundant natural resources and industrial backwardness in most of these countries offers a setting in which not only the evolution of spatial disparities may be different in the economic periphery but the driving forces behind its evolution may also differ.

Organizer(s)

  • Marc Badia-Miró Universitat de Barcelona mbadia@ub.edu Spain
  • Julio Martinez-Galarraga Universitat de València julio.martinez-galarraga@uv.es Spain
  • Esteban A. Nicolini Universidad Nacional de Tucumán esteban.nicolini@gmail.com Argentina

Session members

  • Giuseppe De Corso, Universidad Jorge Tadeo Lozano de Bogotá
  • Emanuele Felice, Università degli Studi “G. D’Annunzio” Chieti-Pescara
  • Chris Minns, London School of Economics
  • Anna Missiaia, Lund University
  • Esteban A. Nicolini, Universidad Nacional de Tucumán
  • José Alejandro Peres Cajías, Universidad Católica Boliviana
  • Daniel A. Tirado, Universitat de València
  • Henry Willebald, Universidad de la República
  • María Alejandra Zegarra, Brown University

Discussant(s)

Papers

Panel abstract

In recent years, research on the long-term evolution of regional economies has received special attention, in particular within European countries. New historical regional GDP estimates allow not only for the assessment of the evolution of regional income inequalities within countries but also the study of its determinants. There are deep underlying forces explaining contemporaneous regional inequality. These can be related with initial factor and resource endowments (Heckscher-Ohlin model) and agglomeration economies (New Economic Geography). This session aims to gather together researchers working on Europe and the Americas, with a special focus on Latin America, aiming to offer new evidence of regional GDPs and new analyses of the determinants of long-term regional inequality. This research has the potential to provide a new perspective on the economic history of these areas and to offer new insights on how the above forces interact in core and non-core countries.

1st half

The long-term relationship between economic development and regional inequality: South-West Europe, 1860-2010

Alfonso Díez-Minguela, Rafael González-Val, Julio Martinez-Galarraga, Teresa Sanchis, Daniel A. Tirado

This paper analyses the long-term relationship between regional inequality and economic development. Our data set includes information on national and regional per-capita GDP for four countries: France, Italy, Portugal and Spain. Data are compiled on a decadal basis for the period 1860-2010, thus enabling the evolution of regional inequalities throughout the whole process of economic development to be examined. Using parametric and semiparametric regressions, our results confirm the rise and fall of regional inequalities over time, i.e. the existence of an inverted-U curve since the early stages of modern economic growth, as the Williamson hypothesis suggests. We also find evidence that, in recent decades, regional inequalities have been on the rise again. As a result, the long-term relationship between national economic development and spatial inequalities describes an elephant-shaped curve.

This paper analyses the long-term relationship between regional inequality and economic development. Our data set includes information on national and regional per-capita GDP for four countries: France, Italy, Portugal and Spain. Data are compiled on a decadal basis for the period 1860-2010, thus enabling the evolution of regional inequalities throughout the whole process of economic development to be examined. Using parametric and semiparametric regressions, our results confirm the rise and fall of regional inequalities over time, i.e. the existence of an inverted-U curve since the early stages of modern economic growth, as the Williamson hypothesis suggests. We also find evidence that, in recent decades, regional inequalities have been on the rise again. As a result, the long-term relationship between national economic development and spatial inequalities describes an elephant-shaped curve.

Between Malthus and the industrial take-off: regional inequality in Sweden, 1571-1850

Kerstin Enflo, Anna Missiaia

This paper looks for the first time at regional inequality in a pre-industrial European economy. Using new estimates of Swedish regional GDP, we find that inequality increased dramatically between 1571 and 1750 and stayed high until the mid-19th century. This result discards the classical view that the industrial take-off occurring after 1850 was the main driver of regional divergence. We show that counties with a higher share of their GDP in agriculture followed a classic Malthusian pattern when experiencing technological advancement, while the ones with a higher share of early industry did not. We suggest that institutional factors explain this pattern that ultimately led to regional divergence.

This paper looks for the first time at regional inequality in a pre-industrial European economy. Using new estimates of Swedish regional GDP, we find that inequality increased dramatically between 1571 and 1750 and stayed high until the mid-19th century. This result discards the classical view that the industrial take-off occurring after 1850 was the main driver of regional divergence. We show that counties with a higher share of their GDP in agriculture followed a classic Malthusian pattern when experiencing technological advancement, while the ones with a higher share of early industry did not. We suggest that institutional factors explain this pattern that ultimately led to regional divergence.

Divergence in the end? Decomposing income inequality across Italy’s regions, 1871 – 2011

Gabriele Cappelli, Emanuele Felice, Julio Martinez-Galarraga, Daniel A. Tirado

Industrialization has long been regarded as the main driving force of regional divergence. But empirical studies show that inequality in many cases was already high on the eve of modern industrialization. This paper studies the extent and drivers of inequality in pre-industrial European economy. Using new estimates of regional GDP for Sweden (1571-1850), we find that regional inequality increased dramatically between 1571 and 1750 and stayed high until the mid-19th century. This result discards the view that industrial take-off was the main driver of regional divergence. The bulk of inequality from 1750 onwards was driven by structural differences rather than different regional productivity. We show that counties with higher agricultural productivity followed a classic Malthusian pattern in its population dynamics, while ones with higher industrial productivity did not. The difference in the two sectors is what boosted pre-industrial regional inequality. We suggest that institutional factors explain this exceptional pattern.

Industrialization has long been regarded as the main driving force of regional divergence. But empirical studies show that inequality in many cases was already high on the eve of modern industrialization. This paper studies the extent and drivers of inequality in pre-industrial European economy. Using new estimates of regional GDP for Sweden (1571-1850), we find that regional inequality increased dramatically between 1571 and 1750 and stayed high until the mid-19th century. This result discards the view that industrial take-off was the main driver of regional divergence. The bulk of inequality from 1750 onwards was driven by structural differences rather than different regional productivity. We show that counties with higher agricultural productivity followed a classic Malthusian pattern in its population dynamics, while ones with higher industrial productivity did not. The difference in the two sectors is what boosted pre-industrial regional inequality. We suggest that institutional factors explain this exceptional pattern.

Power to the periphery? The failure of regional convergence in Canada, 1890-2006

Chris Minns, Joan Rosés

Economic historians have long signalled the importance of location-specific resource booms in the Canadian development experience, but a full analysis of the dynamics of Canada's internal income dynamics is conspicuously absent. This article presents comprehensive estimates of regional inequality in Canada from 1890 to 2006 and assesses the sources of convergence and divergence across Canadian provinces. Our convergence decompositions support the central role of resource booms in accounting for regional income dynamics, and show that structural change contributing relatively little to the development process. Our findings are in sharp contrast to the historical experience of other countries, including the United States.

Economic historians have long signalled the importance of location-specific resource booms in the Canadian development experience, but a full analysis of the dynamics of Canada's internal income dynamics is conspicuously absent. This article presents comprehensive estimates of regional inequality in Canada from 1890 to 2006 and assesses the sources of convergence and divergence across Canadian provinces. Our convergence decompositions support the central role of resource booms in accounting for regional income dynamics, and show that structural change contributing relatively little to the development process. Our findings are in sharp contrast to the historical experience of other countries, including the United States.

2nd half

Regional GDPs in Bolivia, 1950-2010. A story of non-convergence

José A. Peres-Cajías

Economic history approaches to the study of Bolivian regions has been limited over the past two decades. Current economic research also tends to concentrate the analysis on the potentials and constraints of the regions themselves, and give little thought to how the economic differences between them affect the whole national economy. This is surprising given the magnitude of the differences. For example, over the last few decades, three of the nine departments have concentrated three quarters of the national production; the constant migration from the stagnant departments to the more dynamic departments also stands out. This paper fills this gap through the reconstruction of the following indicators: a) the Departmental Gross Domestic Product for the period prior to the one covered by official statistics (1950-1988); b) indices of economic concentration and productive specialization during the period 1950-2010. Unlike other cases in Latin America, the Bolivian case stands out by the...

Economic history approaches to the study of Bolivian regions has been limited over the past two decades. Current economic research also tends to concentrate the analysis on the potentials and constraints of the regions themselves, and give little thought to how the economic differences between them affect the whole national economy. This is surprising given the magnitude of the differences. For example, over the last few decades, three of the nine departments have concentrated three quarters of the national production; the constant migration from the stagnant departments to the more dynamic departments also stands out. This paper fills this gap through the reconstruction of the following indicators: a) the Departmental Gross Domestic Product for the period prior to the one covered by official statistics (1950-1988); b) indices of economic concentration and productive specialization during the period 1950-2010. Unlike other cases in Latin America, the Bolivian case stands out by the low persistence in the relative importance of the regions.

The evolution of regional inequality in Peru

Bruno Seminario, María Alejandra Zegarra

Over the last two centuries, the Peruvian economic space has suffered a profound transformation. At the end of the Colonial Era, the population and economic activity were concentrated in the southern regions. This structure remained from the Colonial Era and would persist even after independence. After the XIX century, several processes favored the development of the Lima, the northern coast, and the central highlands. They strengthened the regional distribution of economic activity that characterizes present-day Peru and is linked to demographic changes and the evolution of transport costs. This paper describes these changes and presents the statistical evidence that allows us to describe it. The rest of the paper is organized as follows. First, we discuss the regional division of Peru at the end of the Colonial Era and its changes across republican history. In the second section, we analyze the historical evolution of inter-region inequality based on regional and...

Over the last two centuries, the Peruvian economic space has suffered a profound transformation. At the end of the Colonial Era, the population and economic activity were concentrated in the southern regions. This structure remained from the Colonial Era and would persist even after independence. After the XIX century, several processes favored the development of the Lima, the northern coast, and the central highlands. They strengthened the regional distribution of economic activity that characterizes present-day Peru and is linked to demographic changes and the evolution of transport costs. This paper describes these changes and presents the statistical evidence that allows us to describe it. The rest of the paper is organized as follows. First, we discuss the regional division of Peru at the end of the Colonial Era and its changes across republican history. In the second section, we analyze the historical evolution of inter-region inequality based on regional and provincial data that we have estimated. In the third one, we study the changes registered in the spatial distribution of the population, both in the XIX and XX centuries. In the fourth and final section, we present our estimates of GDP for the different regions of Peru and detail the sources and methods used to derive them.

Patterns of regional income distribution in Uruguay in the long run, 1870-2008

Adrián Rodríguez Miranda, Henry Willebald, Julio Martinez-Galarraga

In this paper, we provide a new database on Uruguayan regional per-capita GDPs in the long-run (1870-2008). As regards the long-term evolution of regional inequality, we find evidence of a persistent decline from the last third of the 19th century up to the 1960s with a strong reversal of the process from then on. The first decade of the 21st century however shows a new decreasing trend in regional inequality. These results call into question that NEG or H-O approaches could explain regional development without taking account the specificities of Latin American countries and the role of public policy. Indeed, the spatial location of production may be affected by the degree of state intervention in the economy and it is very likely that this type of intervention may alter the fundamentals of the regional specialization opening opportunities to locate economic activities where previously were not profitable. In particular, industrial policies...

In this paper, we provide a new database on Uruguayan regional per-capita GDPs in the long-run (1870-2008). As regards the long-term evolution of regional inequality, we find evidence of a persistent decline from the last third of the 19th century up to the 1960s with a strong reversal of the process from then on. The first decade of the 21st century however shows a new decreasing trend in regional inequality. These results call into question that NEG or H-O approaches could explain regional development without taking account the specificities of Latin American countries and the role of public policy. Indeed, the spatial location of production may be affected by the degree of state intervention in the economy and it is very likely that this type of intervention may alter the fundamentals of the regional specialization opening opportunities to locate economic activities where previously were not profitable. In particular, industrial policies and the application of instruments aimed at improving the competitiveness and capabilities of domestic firms or at promoting structural transformation become main issues in this long-term evolution.

Regional GDP of Venezuela in the long run, 1873-2011

Giuseppe De Corso

The aim of this work is to propose for the following years: 1873, 1881, 1891, 1920, 1926, 1936, 1941, 1950, 1961, 1971, 1981, 1991, 2001 and 2011 regionals GPD for Venezuela. The Venezuelan case is very complicated since the Central Bank (BCV) has not elaborated them as a regular practice with the exception of the estate of Zulia. This state of affairs is perhaps consequence of the inner features of the Venezuela’s economy as an oil economy, highly controlled by the national executive. In effect, the oil production ruined the economic regional poles that grew during the XIX century. These economic poles were specialized in the production and export of diverse commodities: coffee, cocoa, furs, livestock, gold, etc. ensuring a grade of economic independency and their business and political elites from the central power. Once oil turns out to be a dominant factor, the local elites and their economies became...

The aim of this work is to propose for the following years: 1873, 1881, 1891, 1920, 1926, 1936, 1941, 1950, 1961, 1971, 1981, 1991, 2001 and 2011 regionals GPD for Venezuela. The Venezuelan case is very complicated since the Central Bank (BCV) has not elaborated them as a regular practice with the exception of the estate of Zulia. This state of affairs is perhaps consequence of the inner features of the Venezuela’s economy as an oil economy, highly controlled by the national executive. In effect, the oil production ruined the economic regional poles that grew during the XIX century. These economic poles were specialized in the production and export of diverse commodities: coffee, cocoa, furs, livestock, gold, etc. ensuring a grade of economic independency and their business and political elites from the central power. Once oil turns out to be a dominant factor, the local elites and their economies became dependent on the distribution of the oil income delivered by the central government. Even so with the census data and the economic information collected by the Ministerio de Fomento and Central Bank is quite possible to offer the regional products.

Regional inequality and sectoral convergence in Argentina between 1895 and 1959

Florencia Aráoz, Esteban A. Nicolini, Mauricio Talassino

Between 1880 and 1914 the impressive average growth rate of aggregate GDP in Argentina was based on the incorporation of productive factors (land, capital and labour) in a context of strong integration into international markets. After 1914 and, in particular, after the Great Depression of the 1930’s, the orientation of the macroeconomic policies of the country and the pace and nature of the economic development changed dramatically: the level of openness was reduced in terms of both international trade and movement of productive factors and the intervention of the public sector in the economy increased, the traditional specialization in agro-pastoral commodities weakened and industrial production accelerated in absolute and relative terms. Previous research has shown that before 1914 regional inequality diminished and there was convergence in income per capita among provinces. After 1914 and until the middle of the century, there was no convergence and inequality between provinces increased. In...

Between 1880 and 1914 the impressive average growth rate of aggregate GDP in Argentina was based on the incorporation of productive factors (land, capital and labour) in a context of strong integration into international markets. After 1914 and, in particular, after the Great Depression of the 1930’s, the orientation of the macroeconomic policies of the country and the pace and nature of the economic development changed dramatically: the level of openness was reduced in terms of both international trade and movement of productive factors and the intervention of the public sector in the economy increased, the traditional specialization in agro-pastoral commodities weakened and industrial production accelerated in absolute and relative terms. Previous research has shown that before 1914 regional inequality diminished and there was convergence in income per capita among provinces. After 1914 and until the middle of the century, there was no convergence and inequality between provinces increased. In this paper we explore the sectoral component of these processes of first convergence and then divergence. Given the remarkable changes in the kind of development experienced by the country, we analyze the growth of added value per worker in five economic sectors: primary production, manufactures, building, trade and services between four benchmarks 1895, 1914, 1946 and 1959. We find that the period of convergence in GDP between 1895 and 1914 is characterized by convergence in most of the sectors while the periods of no convergence in aggregate GDP (1914-1946 and 1946-1959) coexist with convergence in some sectors like trade and services in 1914-1946, and building and to some extent manufactures in 1946-1959. The lack of convergence after 1914 in the primary sector, crucial for many provinces in Argentina, helps to explain the divergence in income per capita in the central decades of the 20th century.