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Jaime Reis. El crecimiento económico de Portugal 1500-1850. ¿Existe un modelo ibérico?
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Jaime Reis. El crecimiento económico de Portugal 1500-1850. ¿Existe un modelo ibérico?

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Conferencia impartida el 21/11/2013 en la Fundación Ramón Areces de Madrid por el profesor Jaime Reis, del Instituto de Ciências Sociais de la Universidad de Lisboa, bajo el título 'El crecimiento ...

Conferencia impartida el 21/11/2013 en la Fundación Ramón Areces de Madrid por el profesor Jaime Reis, del Instituto de Ciências Sociais de la Universidad de Lisboa, bajo el título 'El crecimiento económico de Portugal durante la edad imperial, 1500-1850: ¿Existe un modelo ibérico?'

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Jaime Reis. El crecimiento económico de Portugal 1500-1850. ¿Existe un modelo ibérico? Presentation Transcript

  • 1. The economic growth of Portugal, 15001850: Is there an “iberian model”? Jaime Reis* The Laureano Figuerola Lecture for 2013, Fundacion Areces, Madrid, 21st November 2013 *ICS-University of Lisbon Contact: jaime.reis@ics.ul.pt
  • 2. Como profesor y como orador académico ha mostrado siempre el Sr. Figuerola muy altas cualidades. Concibe con claridad las ideas, y del mismo tenor las expresa. No se agolpan a su cerebro introduciendo turbaciones ni desórdenes; proceden todas en correcta formación y están dispuestas a salir a la primera señal. No hay monotonía en sus discursos, aunque arrastre bastante la dicción, porque en todo tiempo y lugar su palabra es la expresión de un pensamiento vigoroso
  • 3. Opening thoughts • Traditionally, Spain and Portugal have lived with their backs turned to each other (except when fighting or engaging in dynastic alliances – pop say) • Our economic historians and their histories have not escaped this rule • Two facets they have in common: 1. 2. • A profoundly pessimistic view of national economic performance; this is founded on comparisons with the advanced economies (Britain or USA); A lack of interest in looking for answers in the experiences of closer and more similar countries Are Spain and Portugal very different? Have their paths often diverged over the last 600 years? If not, why? The points of arrival and departure are known: what about the paths followed in between?
  • 4. GDP pc: Spain and Portugal, 1500-1990 600 500 400 300 Spain Portugal 200 100 0 1500 1550 1600 1650 1700 1750 1800 1850 1900 1950 1990
  • 5. GDP pc: Spain and Portugal, 1500-1990 600 500 400 300 Spain Portugal 200 100 0 1500 1550 1600 1650 1700 1750 1800 1850 1900 1950 1990
  • 6. Objectives • This lecture is a modest attempt to bring closer together these two economic historiographies, mostly from the Portuguese angle • Good knowledge of these 2 economies in the 19th and 20th centuries: so we concentrate here on the shadowy but critical reality of an earlier period – 1500-1850 • The starting point is a recent effort to evaluate Portugal’s GDP and GDP pc during these years; this is the 1st part of my lecture • The 2nd part: to compare these results with the excellent Spanish benchmark provided by Alvarez-Nogal and Prados de la Escosura (2013) • Our aim is a trifle ambitious: is there an “Iberian model” which can help explain patterns of long-term economic growth in our Peninsula?
  • 7. The first step • Much work recently on quantifying the macroeconomic performance of Early Modern nations: several justifications 1. It meets the concern to seek the roots of the Industrial Revolution in a very long run analysis, going back many centuries 2. It allows new empirical tests of Unified Growth Theory (Galor, 2000), a major field in Growth Economics, which has been excessively dependent on a single case study - Britain 3. It contributes a major debate in Economic History – on the Great and Little Divergences – remember the Figuerola lecture in 2012 by Steve Broadberry 4. Very important: quantifying GDP pc in the long run enables us to integrate the multitude of micro studies which are difficult to interpret outside a macroeconomic framework
  • 8. Motivation: Why Portugal? • At present, 6 estimates of long run national GDP (HL, GB, SP, IT, SW, GY); 3 more on the way (DK, FIN, NY); do we need Portugal (PT) too? • Specific reasons: 1. One of cradles of Western overseas expansion: what is the connexion? 2. A case of long run stagnation or decline - more representative of pre1800 performances than NL or GB 3. PT often (e.g. Maddison) identified with SP or IT – were they really so alike as often (too often?) assumed ? The “Iberian model” question!
  • 9. The Portuguese economy, 1500-1850: State of the art 1. For most economic historians, Pt had a stagnant economy, no capacity for growth. Why?? 3 main reasons 2. Semi-peripheral status in capitalist world-system (Wallerstein) stunted Portugal’s development 3. Low-productivity agriculture: absence of technological change; incomplete property rights distorted incentives and discouraged investment 4. Colonial empire: drained population; prevented agricultural improvement; encouraged bloated, parasitic tertiary; prevented emergence of a national bourgeoisie
  • 10. Estimating Portugal’s Early Modern GDP (I) The method: • Standard, indirect output approach in two steps: 1. Agricultural output is derived from food consumption; problem of estimating income (wages, skills and rents) 2. Non-agricultural output: backcast from 1850 benchmark; instead of tying non-agriculture to urbanization we use a sliding inter-sectoral productivity gap
  • 11. Estimating Portugal’s Early Modern GDP (II) • The raw materials: • a new data base in construction over the last 5 years with prices, wages and rents: coverage of data • Focus on Lisbon – the issue of the “representativity” of the central city • Population and occupational structure (décima)
  • 12. The results, 1500-1850 • Portuguese economy far from stagnant: overall increase = 321 % • But, population growth was more vigorous; • GDP pc: mild downward very long run trend – 1850=85, 1500=100; • Traditional historiography is right! Maddison is wrong!! GDP Portugal 450 GDP pc Portugal 180 400 160 350 140 300 120 250 100 200 80 150 60 100 40 50 20 1500 1516 1532 1548 1564 1580 1596 1612 1628 1644 1660 1676 1692 1708 1724 1740 1756 1772 1788 1804 1820 1836 1500 1516 1532 1548 1564 1580 1596 1612 1628 1644 1660 1676 1692 1708 1724 1740 1756 1772 1788 1804 1820 1836 0 0
  • 13. The profile of a ‘typical’ non-core Early Modern European country (cf. High-growth Holland - HL) • Both had growth episodes: HL’s were persistent; PT had clear swings of growth and recession GDP pc Portugal 180 • Structural change; HL it was considerable; PT: hardly any ; 160 140 120 • Both had productivity increases: PT’s apparently concentrated in agriculture, HL’s in all sectors; 100 80 60 40 20 0 1500 1515 1530 1545 1560 1575 1590 1605 1620 1635 1650 1665 1680 1695 1710 1725 1740 1755 1770 1785 1800 1815 1830 1845 • Role of Middle Ages/ Black Death; (see fig)
  • 14. Portugal: Structural change Fig 12 Ratio of agriculture to non agriculture output (%) 80 70 60 50 40 30 20 10 0 Series1 1838 1812 1786 1760 1734 1708 1682 1656 1630 1604 1578 1552 1526 1500 Linear (Series1)
  • 15. Profile of a ‘typical’ non-core Early Modern European country (cf. high growth Holland - HL) • Both had growth episodes: HL’s were persistent; PT had swings of growth and contraction GDP pc Portugal 180 160 • HL: considerable structural change; PT: hardly any (see fig); • Both had productivity increases: PT’s apparently concentrated in agriculture: HL’s in all sectors; 140 120 100 80 60 40 20 0 1500 1514 1528 1542 1556 1570 1584 1598 1612 1626 1640 1654 1668 1682 1696 1710 1724 1738 1752 1766 1780 1794 1808 1822 1836 1850 • Role of Middle Ages/ Black Death;
  • 16. Medieval mystery? • We can only consider real wages as a proxy • Pre-BD level of income was high – higher than in all of the 16c. • Immediate post Black Death strong increase (33%) due pop fall (extent unknown) Real wage (wheat deflated) 60 50 • Followed by long real wage decline in 15c. with wages in 1500=1347; population recovery: 1520= 1347 40 30 10 1594 1580 1566 1552 1538 1524 1510 1496 1482 1468 1454 1440 1426 1412 1398 1384 1370 1356 Pt’s level was by 16 c. below the pre-BD medieval level; probably in 1340 > Sp 0 1342 The 15 c. wiped out for Pt the income advantage of the pre-BD; 1328 • 20 1314 • HL’s GDP pc had doubled by early 16 c. compared to pre-BD 1300 •
  • 17. Two questions about the Portuguese economy, 1500-1850 • Can a Malthusian model explain satisfactorily Portugal’s economic history? YES • Was Portugal an outlier among the majority of European nations? No
  • 18. The (simplified) Malthusian regime • In a classical MR, economic and demographic outcomes are purely determined by economic forces; the economy depends on a fixed factor of production (land) • In such pre-industrial economies, when the pop level is low, Y pc is high because labour productivity is high; • But as pop rises, Y pc gradually falls owing to DMR; • ultimtely, demographic checks kick-in and the equilibrium subsistence level is reached; and so on… • Productivity shocks can exist too, but the gains are always dissipated by population growth – higher Y pc, pop growth, downward pressure on the real wage • In a classical MR, sustained (per capita) economic growth is not possible; in the long run welfare converges to a steady state at the subsistence level;
  • 19. Does MR explain Portugal’s economic history? • • 16th c. : strong pop increase (0.7%), land clearances but stagnant technology; diminishing returns; GDP pc falls dramatically (-0.5% p.a.) GDP pc (1500=100) 120.00 100.00 80.00 60.00 40.00 • 1750-1850: pop growth (0,4%) responds to earlier high Y pc; technological progress and positive institutions exhausted? ; empire runs out; GDP pc declines for a century (-0.43%) 4 3.5 3 2.5 2 1.5 1 0.5 • Malthusian but with modifications? We return to this later 0 Population of Portugal (m.) 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 1… 0.00 1… 20.00 1600 to 1750: pop growth much slower (0.13 vs 0.70%); long rise real wage and GDP pc (0,5%); technological + institutional shocks; colonial boom; 1… •
  • 20. Two questions about the Portuguese economy, 1500-1850 • Can the Malthusian model explain Portugal’s economic history? It does but the fit of model is not perfect • Was Portugal an outlier among the majority of European nations? No
  • 21. Was Portugal an outlier among European nations? 1. Portugal was a “leader” in early 16c. (and therefore a precocious colonizer?)! 2. Performance in long run not outstanding but “normal” among the majority of nations 3. 1750-1850, Portugal gets detached from the rest of Europe GDP pc: 8 countries 120 100 80 60 40 20 0 1500 1550 1600 1650 1700 1750 1800 1850 4. Presumably, it fails to absorb the impact of 19c. MEG and globalization; Britain NL Germany France Italy Spain Sweden Portugal
  • 22. We turn now to part II of this lecture • What points in common do we detect in the Spanish and the Portuguese economies of the pre-industrial era? • Did the two countries have similar cycles ? • What determined these cycles and how similar were they? • In other words, were these 2 countries’ economies, though barely integrated, like one?
  • 23. Which structural features of the Iberian peninsula were relevant for growth patterns, 15 c.-19 c.? 1. A common early history – Reconquista : abundant land, free labour, strong towns, limited central power 2. Geography: difficult internal communications, arid environment, opportunities for Medit. Agriculture and for international trade specialization in them 3. A precocious seaborne empire: gains to home country from a mercantilistic system based on forced occupation overseas 4. Institutional framework: state power centralised but constrained; peculiar forms of access to land ownership and use, with strong negative effects on efficiency
  • 24. What followed? Two very (dis)similar secular macroeconomic profiles Spain GDP pc • 3 similar cycles over 1500-1850; but non-coterminous, nor of same length 120 100 80 • Different from traditional periodization – eg. Sp 60 40 • • • Long run outcomes: over 350 years, Sp grew slightly, Pt declined slightly Hypothesis: both economies Malthusian; with common origins and similar subsistence levels (?) Both subject to large variety of idiosyncratic shocks 20 0 Portugal GDP pc 160 140 120 100 80 • The latter produced significant economic divergences and therefore different histories 60 40 20 • It is the latter we need to explain 1500 1519 1538 1557 1576 1595 1614 1633 1652 1671 1690 1709 1728 1747 1766 1785 1804 1823 1842 0
  • 25. The Malthusian model in Iberia: swings and deviances (rates of change) Portugal (Pt) Portugal (Pt) Population Population 1500-1600 1500-1600 GDP pc GDP pc real wage real wage Population Population 1600-1750 1600-1750 GDP pc GDP pc real wage real wage Population Population 1750-1850 1750-1850 GDP pc GDP pc real wage real wage Spain (Sp) Spain (Sp) 0.7% 0.7% -0.5% -0.5% Population 0.6% Population 0.6% 1500-1590 1500-1590 GDP pc 0.1% GDP pc 0.1% -0.7% -0.7% real wage -0.5% -0.5% real wage 0.1% 0.1% 0.5% 0.5% Population 0.2% Population 0.2% 1590-1680 1590-1680 GDP pc -0.2% GDP pc -0.2% 0.4% 0.4% real wage real wage -0.1% -0.1% 0.4% 0.4% -0,4% -0,4% Population 0,5% Population 0,5% 1680-1850 1680-1850 GDP pc 0.2% GDP pc 0.2% -0.4% -0.4% real wage real wage 0.0% 0.0%
  • 26. Iberia’s first cycle: 15th -16th centuries • The CAN and LPE (2013)’s challenge: Sp in 14c.-15c. was exceptional: sparse population; pastoral and trade oriented economy; high wage and food consumption; strong urban sector = positive for growth • Sp circa 1500 therefore wealthy and powerful enough to build a seaborne empire and reap its benefits (?) • However, by 1600, sustained pop. growth (0,6%?) caused shift to a new regime: high pop density, arable agriculture, low food consumption and low wages - they became hallmarks of this 2 countries • 1500-1600 real wages fell but GDP pc rose; WHY? an “industrious revolution”? a massive income distribution shift? technological shocks? Urban sector recovery? • Why did these effects end circa 1600 and allow the classical MR to reassert itself?
  • 27. Does this model fit Portugal? Figure 8 Land-population ratio (ha per inhabitant) 5,0 4,0 • PT had same “frontier” economy coming from 14 c. and BD 3,0 2,0 1,0 1794 1773 1752 1731 1710 1689 1668 1647 1626 1605 1584 1563 1836 food consumption fell 40%, but then stabilized: is this the subsistence level? 1836 • 1815 • Real wages fell 40-50 % 1815 • Land-population ratio halved, 1500-1600; agric productivity fell despite land clearances 1542 0,0 1521 shift to another regime in 16c.; rapid pop growth– like Sp 1500 • Figure 9 Agricultural consumption per capita 120 100 80 60 40 20 1794 1773 1752 1731 1710 1689 1668 1647 1626 1605 1584 1563 1542 1521 0 1500 • A canonical Malthusian process – no deviation from model!
  • 28. The Malthusian model in Iberia: swings and deviances (rates of change) Portugal (Pt) Population 1500-1600 GDP pc real wage Population 1600-1750 GDP pc real wage Population 1750-1850 GDP pc real wage Spain (Sp) 0.7% -0.5% -0.7% 0.1% 0.5% 0.4% 0.4% -0,4% -0.4% Population 1500-1590 GDP pc real wage Population 1590-1680 GDP pc real wage Population 1680-1850 GDP pc real wage 0.6% 0.1% -0.5% 0.2% -0.2% -0.1% 0,5% 0.2% 0.0%
  • 29. Iberia’s 2nd cycle : divergence again • 1600-1760 - PT had a sustained rise in GDP pc and a slowdown in population; PT regained leadership of the non-core group by 1750! • Sp, 1590-1680: sustained per capita income decline plus slow population growth; “little agricultural improvement and lack of investment by Church and Nobility”; vine/maize expanded but small scale • Determinants? 1) PT re-organized its agricultural sector; SP did not 2) PT colonial feedback began to be significant; not in Sp • How did PT raise agricultural productivity? 1)The usual land clearances and 2) continuous shifts from pastoral to arable production; but mainly...
  • 30. Share (per cent) of the real wage attributable to empire, 1500-1800. Spain Holland Portugal France England with gold and silver Without gold and silver with gold without gold 1500 0.9 0.8 0.4 0 0 0 0 1600 4.3 4.2 1.2 0.3 0 0 0 1700 7.4 6.9 1.4 0.3 2.3 3.7 0.3 1750 17.0 13.0 1.7 0.8 2.9 6.5 0.1 1800 22.8 18.4 1.9 0.9 16.1 5.4 0
  • 31. Iberia’s 2nd cycle : divergence again • 1600-1760 - PT had a sustained rise in GDP pc and a slowdown in population; PT regained leadership of the non-core group by 1750! • Sp, 1590-1680, sustained per capita income decline and slower population growth • Determinants? 1) PT re-organized its agricultural sector; SP did not (?) 2) PT colonial feedback began to be significant; not in Sp • How did PT raise agricultural productivity? 1)The usual land clearances and 2) continuous shifts from pastoral to arable production; but mainly...
  • 32. The great agricultural “surge”in PT: wine and maize • 2 major changes: 1) expansion of commercialized wine (200% - 17001770) 2) the “maize revolution” • Both changes were land and labour enhancing (fig) • Both required significant investments and coordination in field management, specialization, technical improvement and, in case of wine, marketing and trade • Special conditions for the success of these shocks: 1) maize (millet) and wine well known to PT cultivators: a gentle learning curve 2) Land//water abundant (half country suitable for maize) 3) favourable institutional conditions for latter: Anglo-Portuguese political/trade partnership gave PT privileged access to British wine market (Methuen)
  • 33. Rise of agricultural efficiency in Portugal Agricultural output per worker Fig 11 Land yield Average agric product per worker (1500=100) Figure 10 Average land yield 90 80 120 70 100 60 80 50 60 40 30 40 20 20 10 1840 1820 1800 1780 1760 1740 1720 1700 1680 1660 1640 1620 1600 1580 1560 1540 1520 1840 1820 1800 1780 1760 1740 1720 1700 1680 1660 1640 1620 1600 1580 1560 1540 1520 1500 1500 0 0
  • 34. The great agricultural “surge”: wine and maize • 2 major changes: 1) expansion of commercialized wine (200% - 17001770) 2) the “maize revolution” • Both changes were land and labour enhancing (see fig) • Both required significant investments (by whom?) and coordination in field management, specialization, technical improvement and, in case of wine, marketing and trade • Special conditions : 1) maize (millet) and wine well known to PT cultivators: a gentle learning curve 2) favourable institutional conditions for latter: Anglo-Portuguese political/trade partnership gave PT privileged access to British wine market (Methuen)
  • 35. John Methuen (1650-1706) (father of the treaty, inspirer of Ricardo)
  • 36. The Malthusian model in Iberia: swings and deviances (rates of change) Portugal (Pt) Population 1500-1600 GDP pc real wage Population 1600-1750 GDP pc real wage Population 1750-1850 GDP pc real wage Spain (Sp) 0.7% -0.5% -0.7% 0.1% 0.5% 0.4% 0.4% -0,4% -0.4% Population 1500-1590 GDP pc real wage Population 1590-1680 GDP pc real wage Population 1680-1850 GDP pc real wage 0.6% 0.1% -0.5% 0.2% -0.2% -0.1% 0,5% 0.2% 0.0%
  • 37. Iberia’s third cycle, 1750-1850: the begining of PT’s modern “backwardness” • Othe eve of Modern Economic Growth, GDP pc back to 16c, PT falls to tail of Europe in 1850. Why? Population of Portugal (m.) 4 3.5 3 2.5 2 1.5 • 1 Malthusian explanation: pop. growth rises strongly and land/labour ratio falls 0.5 0 Fig 11 • Agricult. productivity falls and high pre-1750 real wage is srongly eroded Average agric product per worker (1500=100) 120 100 80 60 40 20 1840 1820 1800 1780 1760 1740 1720 1700 1680 1660 1640 1620 1600 1580 1560 1540 0 1520 But 3 non-Malthusian shocks: 1) loss of privileges in BR wine market 2) decline in availability of suitable maize land 3) loss privileged colonial market - 20 % of GDP after 1800. 1500 •
  • 38. Iberia’s third cycle, 1680-1850: a puzzling but deviant growth in Sp? Spain's population • High pop growth but no overall sustained productivity decline • Improvements in various sectors (pastoral; wine, fruit, rice) but too dispersed geographically or too limited? • No signs of strong nonMaltusian shocks to counter rapid pop. increase 18 16 14 12 10 8 6 4 2 0 Sp 1500 1600 1700 1750 1800 1850 Spain’s real wages 350 300 250 200 150 Spain 100 50 0 1500 1516 1532 1548 1564 1580 1596 1612 1628 1644 1660 1676 1692 1708 1724 1740 1756 1772 1788 1804 1820 1836 • Exceptions: release of large amounts municipal land, new Liberal institutions. Significant productivity effect?
  • 39. Final thoughts • The periodization of Sp and PT’s Early Modern economic histories: a case of “variations on a theme by Malthus”… • Sp and Pt fit into a single model, but not an “Iberian” one • The model is in fact the Maltusian model which prevailed all over Europe • What made these 2 economic profiles both different and alike were common idiosynchratic shocks, differently distributed over time • some were clearly exogenous (natural endowments, colonial location, geostrategic factor), others probably not (economic inequality, differences in institutions)
  • 40. Final questions • Why did respective levels of GDP pc not diverge in the long run? • A question of similarity of endowment (a very difficult variable to quantify)? • Was it because the Malthusian “subsistence levels” of Sp and Pt were the same, something likely but that we really do not know yet?
  • 41. Thank you!
  • 42. Fig 2 Inter-sectoral productivity gaps (p): agriculture vs non-agriculture 1,2 1 0,8 0,6 0,4 0,2 0 France (1840) Germany (1850) Sweden (1880) Spain (1850) Britain (1840) Portugal (1850)
  • 43. Fig 4 Occupational shares of Population 1500-1850 0,8 0,6 0,4 0,2 0 1500 1550 urban 1600 1650 rural non agric 1700 1750 agric 1800 total non agric
  • 44. Recent revisions • Maddison and Valerio’s quantitative challenge using proxies • Estimated a rise of 52-72 % in long run GDP pc • Problems: a) implausibly high result (PT=NL!) b) shaky empirics c) at variance with welfare ratios (pale yellow) Fig 1 GDP per capita (Maddison and Valerio) and Welfare ratio (1500=100) 200 150 100 50 0 1500 1550 1600 1650 1700 1750 1800 1825 1850 Maddison Valerio Welfare ratio
  • 45. Share (per cent) of the real wage attributable to empire, 1500-1800. Spain Holland Portugal France England with gold and silver Without gold and silver with gold without gold 1500 0.9 0.8 0.4 0 0 0 0 1600 4.3 4.2 1.2 0.3 0 0 0 1700 7.4 6.9 1.4 0.3 2.3 3.7 0.3 1750 17.0 13.0 1.7 0.8 2.9 6.5 0.1 1800 22.8 18.4 1.9 0.9 16.1 5.4 0
  • 46. Our objectives 1. Describe the methodology, data and sources for estimating yearly GDP, GDP pc, etc. 2. Outline the long-run economic profile of Portugal as a typical noncore member of the Early Modern European economy 3. Show PT’s economy as a clear Malthusian case where demography however was not the only determinant – but also show that Malthusian analysis can be more complex that its “canonical” version 4. Examine the specificities of Spain and Portugal: Were they a part of a single model? Or were their paths divergent? What caused these divergences? Structure+ exogenous shocks?
  • 47. Was Portugal an outlier in Europe? GDP pc (ppp) Britain NL Germany France Italy Spain Sweden Portugal 1500 39 37 49 50 68 50 na 55 1550 39 37 na na 64 54 35 36 1600 37 68 34 50 60 53 36 40 1650 34 69 na na 62 41 na 43 1700 55 54 40 54 65 48 53 43 1750 61 60 45 55 68 46 41 59 1800 75 67 42 56 60 54 40 38 1850 100 79 61 78 66 64 52 46