Urbanization Rates as a Proxy for Economic Prosperity

Acemoglu, Johnson, and Robinson used urbanization rates as a proxy for economic prosperity in their study of European economic development between 1500 and 1850. They define urbanization as the percentage of people living in urban areas, and treat this concept as a proxy for GDP per capita.55 Their study concluded that Atlantic trading cities played a central role in the growth of western Europe after 1500. In their estimation, the pattern of evidence "weighs against theories that emphasize the continuity between pre-1500 and post-1500 European growth and link the rise of Europe to certain distinctive European characteristics, such as culture, religion, geography, or features of the European state system.''56 Their data on urbanization and GDP per capita is presented by country rather than by city, and embraces several continents. We narrowed the scope of their data for our purposes to include northern, western, and central Europe. We excluded from our purview Lithuania (modern Russia) and countries that were primarily Muslim (e.g., the Ottoman Empire). This left us with nineteen European countries in our truncated data set. We classified each country by dominant religion (projecting backward to circa 1600), and calculated the average, annual compound rates of growth in per capita GDP over three intervals: 1500-1600, 1600-1700, and 1500-1700. The presumption is that if there was a Protestant effect on growth, most of the results would have been produced in the first century of reform, 1500-1600. However, our calculations show longer-term growth rates as well, from which other inferences might be made.

Table 8.5 shows average, annual compound rates of growth in per-capita GDP for the nations of northern, western, and central Europe by selected intervals, calculated using the data assembled by Acemoglu, Johnson, and Robinson. By 1600, Protestantism had made serious inroads into approximately 40 percent of the countries involved (marked by the letter "P" in table 8.5). But the record of economic growth for these countries over the ensuing periods is mixed. Table 8.6 shows the rank order of countries, by selected periods, in terms of growth in per-capita GDP. At the extremes, the two countries that grew most rapidly between 1500 and 1700, the Netherlands and England, were within the Protestant orbit; the most Catholic country in all of Europe, Italy, did not grow at all during the same period. The Catholic countries on the Iberian Peninsula, Spain and Portugal, grew relatively quickly between 1500 and 1600, but faltered badly afterward. Switzerland and the Scandinavian countries grew at relatively high, steady rates throughout the two centuries after the appearance of Protestantism. Switzerland, a country of divided religious loyalties, was also a relatively strong performer

Table 8.5

Country growth rates in per capita GDP, Europe, 1500-1600, 1600-1700, and 1500-1700

Average annual compound growth (%)

Table 8.5

Country growth rates in per capita GDP, Europe, 1500-1600, 1600-1700, and 1500-1700

Average annual compound growth (%)

Country

Religion 1500-1600

1600-1700

1500-1700

Austria

C

0.1689

0.1711

0.1700

Belgium

C

0.1093

0.1589

0.1341

Czech Republic

C

0.1689

0.1711

0.1700

Denmark

P

0.1704

0.1719

0.1712

England

P

0.3144

0.2984

0.3064

Finland

P

0.1721

0.1706

0.1714

France

C

0.1458

0.1592

0.1525

Germany

P

0.1393

0.1404

0.1399

Greece

C

0.1106

0.0925

0.1016

Hungary

C

0.1106

0.0925

0.1016

Ireland

C

0.1564

0.1508

0.1536

Italy

C

0.0000

0.0000

0.0000

Netherlands

P

0.5975

0.4343

0.5159

Norway

P

0.1720

0.1692

0.1706

Poland

C

0.1106

0.0925

0.1016

Portugal

C

0.2016

0.0997

0.1506

Spain

C

0.2545

0.0000

0.1272

Sweden

P

0.1704

0.1705

0.1704

Switzerland

P

0.1707

0.1710

0.1709

Source: Daron Acemoglu, S. H. Johnson, and J. A. Robinson, ''The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth,'' MIT Department of Economics Working Paper No. 02-43, MIT Sloan Working Paper No. 4269-02, 2002, Appendix Table 2, available at http: ssrn.com/abstract-355880.

over the two centuries. France, a predominantly Catholic country, remained in the middle of the pack throughout. These ambiguous results do not provide strong evidence of a correlation between religion and economic development, but neither do they deny any such correlation.

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