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Article

Giovanni Federico

The literature on market integration explores the development of the commodity market with data on prices, which is a useful complement to analysis of trade and the only feasible approach when data on trade are not available. Data on prices and quantity can help in understanding when markets developed, why, and the degree to which their development increased welfare and economic growth. Integration progressed slowly throughout the early modern period, with significant acceleration in the first half of the 19th century. Causes of integration include development of transportation infrastructure, changes in barriers to trade, and short-term shocks, such as wars. Literature on the effects of market integration is limited and strategies for estimating the effects of market integration are must be developed.

Article

African financial history is often neglected in research on the history of global financial systems, and in its turn research on African financial systems in the past often fails to explore links with the rest of the world. However, African economies and financial systems have been linked to the rest of the world since ancient times. Sub-Saharan Africa was a key supplier of gold used to underpin the monetary systems of Europe and the North from the medieval period through the 19th century. It was West African gold rather than slaves that first brought Europeans to the Atlantic coast of Africa during the early modern period. Within sub-Saharan Africa, currency and credit systems reflected both internal economic and political structures as well as international links. Before the colonial period, indigenous currencies were often tied to particular trades or trade routes. These systems did not immediately cease to exist with the introduction of territorial currencies by colonial governments. Rather, both systems coexisted, often leading to shocks and localized crises during periods of global financial uncertainty. At independence, African governments had to contend with a legacy of financial underdevelopment left from the colonial period. Their efforts to address this have, however, been shaped by global economic trends. Despite recent expansion and innovation, limited financial development remains a hindrance to economic growth.

Article

Thilo R. Huning and Fabian Wahl

The study of the Holy Roman Empire, a medieval state on the territory of modern-day Germany and Central Europe, has attracted generations of qualitative economic historians and quantitative scholars from various fields. Its bordering position between Roman and Germanic legacies, its Carolingian inheritance, and the numerous small states emerging from 1150 onward, on the one hand, are suspected to have hindered market integration, and on the other, allowed states to compete. This has inspired many research questions around differences and communalities in culture, the origin of the state, the integration of good and financial markets, and technology inventions, such the printing press. While little is still known about the economy of the rural population, cities and their economic conditions have been extensively studied from the angles of economic geography, institutionalism, and for their influence on early human capital accumulation. The literature has stressed that Germany at this time cannot be seen as a closed economy, but only in the context of Europe and the wider world. Global events, such as the Black Death, and European particularities, such as the Catholic Church, never stopped at countries’ borders. As such, the literature provides an understanding for the prelude to radical changes, such as the Lutheran Reformation, religious wars, and the coming of the modern age with its economic innovations.

Article

The highly integrated world economy at the outbreak of World War I emerged from discoveries and technological change in previous centuries. Territories unknown to the economy of Eurasia offered profitable opportunities if capital and labor could be mobilized to cheaply produce products that could bear the high cost of transportation that prevailed before industrialization. In the 16th century, American monetary metals mined using European technology and local labor, and sold worldwide, had major repercussions, including increasing trade between Europe and Asia. From the mid-17th century, sugar and tobacco in the Americas, developed on the backs of imported African slaves, produced an Atlantic economy that included the mainland colonies of British America. In the 19th century, technological innovation became the main driving force. First, it cheapened textile production in Britain and creating a massive demand for raw cotton. Then technology radically reduced the cost of transportation on both land and sea. Lower transportation costs spurred greater international specialization and, equally importantly, brought frontiers in continental interiors into the world economy. During the later 19th century, commercial and financial institutions arose that supported increased global economic integration.

Article

Anthropometrics is a research program that explores the extent to which economic processes affect human biological processes using height and weight as markers. This agenda differs from health economics in the sense that instead of studying diseases or longevity, macro manifestations of well-being, it focuses on cellular-level processes that determine the extent to which the organism thrives in its socio-economic and epidemiological environment. Thus, anthropometric indicators are used as a proxy measure for the biological standard of living as complements to conventional measures based on monetary units. Using physical stature as a marker, we enabled the profession to learn about the well-being of children and youth for whom market-generated monetary data are not abundant even in contemporary societies. It is now clear that economic transformations such as the onset of the Industrial Revolution and modern economic growth were accompanied by negative externalities that were hitherto unknown. Moreover, there is plenty of evidence to indicate that the Welfare States of Western and Northern Europe take better care of the biological needs of their citizens than the market-oriented health-care system of the United States. Obesity has reached pandemic proportions in the United States affecting 40% of the population. It is fostered by a sedentary and harried lifestyle, by the diminution in self-control, the spread of labor-saving technologies, and the rise of instant gratification characteristic of post-industrial society. The spread of television and a fast-food culture in the 1950s were watershed developments in this regard that accelerated the process. Obesity poses a serious health risk including heart disease, stroke, diabetes, and some types of cancer and its cost reaches $150 billion per annum in the United States or about $1,400 per capita. We conclude that the economy influences not only mortality and health but reaches bone-deep into the cellular level of the human organism. In other words, the economy is inextricably intertwined with human biological processes.

Article

Trade policy is one determining factor of 19th-century globalization, alongside transport and communication innovations and broader institutional changes that made worldwide commodity and factor flows possible. Four broad periods, or trade policy regimes, can be discerned at the European level. The first starts at the end of the French Revolutionary and Napoleonic wars that had led to many disruptions in trade relations. Governments tried to recover from the financial impact of the wars and to mitigate the adjustment shocks to domestic producers that came with the end of the wars. Very restrictive trade policies were thus adopted in most places and only slowly dismantled over the following decades as some of the welfare costs of, for example, agricultural protection became evident. The second period dated from the mid-1840s, which saw the liberalization of protective grain tariffs in many European countries, to the mid-1870s, when trade liberalization reached its maximum. This period witnessed unilateral trade liberalizations, but is most famous for the spread of a network of bilateral trade agreements across Europe in the wake of the Cobden–Chevalier treaty between France and the United Kingdom in 1860. From the 1870s, industrial and commercial crises and falling prices in agriculture due to global market integration led governments to search for solutions to these policy challenges. Many European countries thus increased protection for agriculture and manufactured goods in which domestic import-competing producers struggled. At the same time, demands for renegotiations threatened the treaty network, and lapsing agreements were only provisionally prolonged. From the late 1880s, the struggle between protection for import-competing producers and market access abroad for export-oriented producers led to internal and external conflicts over trade policy in many countries, including trade (or tariff) “wars.” A renewed network of less ambitious trade treaties than those of the 1860s restored a fragile equilibrium from the early 1890s, to be renewed and renegotiated roughly every 12 years as treaties approached their expiration date. When looking at the country and commodity level it can easily be appreciated that the more or less common shifts during these periods at the European level were more pronounced in some countries than in others. For example, the United Kingdom, the Netherlands, Switzerland, and Belgium shifted more decisively to free trade and remained there, while liberalization was much less pronounced and more decisively undone in Portugal, Spain, Russia, and the Habsburg monarchy. The experiences of the Scandinavian countries, Germany, and France lie somewhere in between. Turkey and the countries that gained independence from the Ottoman Empire in the 19th century started as (forced) free traders and from the 1880s increased their duties, in part to meet growing fiscal demands. At the commodity level, tariffs on raw materials remained generally low and did not follow the protectionist backlash that affected foodstuffs. One exception was (initially) “tropical” goods such as sugar, coffee, tea, and tobacco, where many countries levied high tariffs to extract fiscal revenue. For manufactured goods, liberalization and protectionist backlash were milder than in agriculture, although there are many exceptions to this rule.

Article

The Ottoman Empire stood at the crossroads of intercontinental trade for six centuries until World War I. For most of its existence, the economic institutions and policies of this agrarian empire were shaped according to the distribution of political power, cooperation, conflicts, and struggles between the state elites and the various other elites, including those in the provinces. The central bureaucracy managed to contain the many challenges it faced with its pragmatism and habit of negotiation to co-opt and incorporate into the state the social groups that rebelled against it. As long as the activities of the economic elites, landowners, merchants, the leading artisans, and the moneylenders contributed to the perpetuation of this social order, the state encouraged and supported them but did not welcome their rapid enrichment. The influence of these elites over economic matters, and more generally over the policies of the central government, remained limited. Cooperation and coordination among the provincial elites was also made more difficult by the fact that the empire covered a large geographical area, and the different ethnic groups and their elites did not always act together. Differences in government policies and the institutional environment between Western Europe and the Middle East remained limited until the early modern era. With the rise of the Atlantic trade, however, the merchants in northwestern European countries increased their economic and political power substantially. They were then able to induce their governments to defend and develop their commercial interests in the Middle East more forcefully. As they began to lag behind the European merchants even in their own region, it became even more difficult for the Ottoman merchants to provide input into their government’s trade policies or change the commercial or economic institutions in the direction they preferred. Key economic institutions of the traditional Ottoman order, such as state ownership of land, urban guilds, and selective interventionism, remained mostly intact until 1820. In the early part of the 19th century, the center, supported by the new technologies, embarked on an ambitious reform program and was able to reassert its power over the provinces. Centralization and reforms were accompanied by the opening of the economy to international trade and investment. Economic policies and institutional changes in the Ottoman Empire began to reflect the growing power of European states and companies during the 19th century.

Article

Traditional historiography has overestimated the significance of long-distance trade in the medieval economy. However, it could be argued that, because of its dynamic nature, long-distance trade played a more important role in economic development than its relative size would suggest. The term commercial revolution was introduced in the 1950s to refer to the rapid growth of European trade from about the 10th century. Long-distance trade then expanded, with the commercial integration of the two economic poles in the Mediterranean and in Flanders and the contiguous areas. It has been quantitatively shown that the integration of European markets began in the late medieval period, with rapid advancement beginning in the 16th century. The expansion of medieval trade has been attributed to advanced business techniques, such as the appearance of new forms of partnerships and novel financial and insurance systems. Many economic historians have also emphasized merchants’ relations, especially the establishment of networks to organize trade. More recently, major contributions to institutional economic history have focused on various economic institutions that reduced the uncertainties inherent in premodern economies. The early reputation-based institutions identified in the literature, such as the systems of the Maghribis in the Mediterranean, Champagne fairs in France, and the Italian city-states, were not optimal for changing conditions that accompanied expansion of trade, as the number of merchants increased and the relations among them became more anonymous, as generally happened during the Middle Ages. An intercommunal conciliation mechanism evolved in medieval northern Europe that supported trade among a large number of distant communities. This institution encouraged merchants to travel to distant towns and establish relations, even with persons they did not already know.

Article

Sheilagh Ogilvie

Guilds ruled many European crafts and trades from the Middle Ages to the Industrial Revolution. Each guild regulated entry to its occupation, requiring any practitioner to become a guild member and then limiting admission to the guild. Guilds intervened in the markets for their members’ products, striving to keep prices high, limit output, suppress competition, and block innovations that might disrupt the status quo. Guilds also acted in input markets, seeking to control access to raw materials, keep wages low, hinder employers from competing for workers, and prevent workers from agitating for better conditions. Guilds treated women particularly severely, usually excluding them from apprenticeship and forbidding any female other than a guild member’s widow from running a workshop. Guilds invested large sums in lobbying governments and political elites to grant, maintain, and extend these privileges. Guilds had the potential to compensate for their cartelistic activities by creating countervailing benefits. Guild quality certification was one possible solution to information asymmetries between producers and consumers, which could have made markets work better. Guild apprenticeship had the potential to solve imperfections in markets for skilled training, and thus to encourage human capital investment. The cartel profits generated by guilds could in theory have encouraged technological innovation by enabling guild masters to appropriate more of the social benefits of their innovations, while guild journeymanship and spatial clustering could diffuse new technical knowledge. A rich scholarship on European guilds makes it possible to assess the degree to which guilds created such benefits, outweighing the harm they caused. After about 1500, guild strength diverged across Europe, declining gradually in Flanders, the Netherlands, and England, surviving in France and Italy, and intensifying across large tracts of Iberia, Scandinavia, and the German-speaking lands. The activities of guilds contributed to variations across Europe in economic performance, urban growth, and inequality. Guilds interacted significantly with both markets and states, which helps explain why European economies diverged in the crucial centuries before industrialization.

Article

Occupations are a key characteristic for analyzing momentous changes in economy and society. Classical economists rooted their analyses in occupational divisions, emphasizing the division of work and its continuous evolution. Modern economists and economic historians also debate the wealth of nations by looking at the global changes in the labor force, at changing labor force participation rates, at winners and losers in the class structure, and in variations in this across the globe—stressing the importance of human capital for work and of changes therein for economic growth. To study such momentous changes over past centuries, historical occupational data are needed as well as measures and procedures to work with these data systematically and comparatively. The Historical International Standard Classification of Occupations (HISCO) maps occupational titles into a common coding scheme across the globe. HISCO-based measures of economic sector and economic specialization have been derived. To answer a number of interesting questions, the HISCO family has been extended to include HISCO-based measures of social status (HISCAM) and social classes (HISCLASS). Armed with his toolbox, scholars are able to study the development of the economy and society over past centuries.