Essay about The Great Divergence

Essay about The Great Divergence

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Up until the 19th and 20th centuries, economic prosperity was still largely based on the idea put forth by Jared Diamond of the Great Divergence. He claimed that some countries were better off simply because of where they were located. However, as the 19th century began to wind down, Jeffery Williamson claims that increasing globalization allowed for more interconnected world markets and that smaller countries saw the greatest relative economic increases of globalization due to the transport revolution and changes in worldwide trade laws.
First, Professor Williamson establishes measures by which to determine which countries were made better off. He claims, “Globalization debates can be better understood if we look at what is called the factor-price-dual of GDP, namely wages, land rents, and the user cost of capital goods and the commodity-price-dual of trade volumes” (p. 58). He ultimately decided that by looking at commodity-price convergences across countries, he would be able to determine exactly how factor-prices moved and who became better and worse off. He claims, “the best measure is the behavior of commodity-price gaps between trading markets” (p. 61). Further, when posed with the question as to why price convergences in these regions were higher than elsewhere in the world, Williamson claim, “Declining transport costs accounted for two-thirds of the integration of world commodity markets over the century following 1820, and for all of world commodity market integration in the four decades after 1870” (p.57). However, this transportation revolution was twofold in it’s contribution to price convergence. First, technology led the charge when “A series of innovations in subsequent decades… all served to produce a spectacu...


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...hat everything is relative. First, Williamson touches on the fact that per capital incomes rose more in the smaller developing countries. With an increase in demand for their good, labor markets ticked up and people made more money. Second, since prices were low in the industrialized centers to begin with, as global trade began to occur, these prices became more expensive relative to other smaller countries and vice versa.
Technology and ideology has always been the driver of growth. Just like the Glorious and Industrial Revolutions, globalization was dictated by advances in technology and ideologies. However, unlike the revolutions before, the outcomes of globalization leveled the playing field instead of building up already strong economies. While there were relative winners and losers, in the long-run globalization made the cumulative world economy much stronger.

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Essay about The Great Divergence

- Up until the 19th and 20th centuries, economic prosperity was still largely based on the idea put forth by Jared Diamond of the Great Divergence. He claimed that some countries were better off simply because of where they were located. However, as the 19th century began to wind down, Jeffery Williamson claims that increasing globalization allowed for more interconnected world markets and that smaller countries saw the greatest relative economic increases of globalization due to the transport revolution and changes in worldwide trade laws....   [tags: International trade, Economics, Trade]

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