Britain in an international context

Abstract

Introduction How does Britain’s experience of long-run economic growth and development, as revealed by the output-based estimation of GDP per head set out in Part I of this book, compare with that of other countries? Maddison’s (2010) historical national income estimates show that by the middle of the nineteenth century Britain had become the most developed economy in the world, with higher output per head than any other country in Europe, Asia or the Americas. A majority of its population lived in towns, agriculture contributed less than a quarter of employment and a fifth of value-added output, after centuries of mercantilism it was trading across the world under the banner of free trade, and the value of that international commerce accounted for a fifth of national income and was rising. Demographic and economic growth were proceeding in tandem and thereby fulfilling one of Kuznets’s (1966) key requirements of modern economic growth. Contrary to Malthus’s gloomiest predictions, the population was not only growing but it was becoming richer. The Great Exhibition of 1851, conceived to make clear to the world Great Britain’s role as industrial leader, could not have been better timed. Eight centuries earlier, when William of Normandy had cast his covetous eyes upon the Crown of England, the country had been less a land of plenty than a kingdom with plenty of land. Its relatively sparse population of 1.7 million was overwhelmingly rural, towns were small and London alone had more than 10,000 inhabitants, commerce was limited and commercial institutions and infrastructure weakly developed, and exports were chiefly of unprocessed primary products, most notably wool and tin. England may have been resource-rich but its lack of development meant that its GDP per head was only a quarter what it would become in 1850. It was poorer than most of its immediate continental neighbours, significantly poorer than northern and central Italy, at that time Europe’s economic leader, conspicuously poorer than the world’s most successful economy, China under the Northern Song Dynasty (960–1127), and poorer than the core economies of the Roman Empire a millennium earlier under Augustus (Lo Cascio and Malanima, 2009).