New Comparative Economic History

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Introduction: The New Comparative Economic History

Timothy J. Hatton, Kevin H. ORourke, and Alan M. Taylor

The cliometric revolution in economic history is now nearly half a cen-tury old. By applying formal economic methodology to historical ques-

tions, it marked a sea change in the way that issues such as slavery or

the Industrial Revolution were debated, and thus fully deserves its revolu-

tionary label. This books purpose is to showcase a more recent trend in

economic history, which is an evolution rather than a revolution but

which still represents a distinct change in the way that many economic

historians view their role, do their work, and interact with the broader

economics profession.As the label suggests, the New Comparative Economic History reflects

a belief that economic processes can best be understood by systematically

comparing experiences across time, regions, and, above all, countries. As

such, it diers from much traditional work in cliometric history in the na-

ture of the questions it asks and in the nature of the answers it provides.

But like cliometrics, it has a long ancestry. It draws inspiration from such

giants as Simon Kuznets, W. Arthur Lewis, and Douglass North, all three

Nobel laureates. For pioneers like these, comparative thinking was socentral, so natural, and so ingrained that it hardly needed to be men-

tioned as a point of reference and warranted no special rhetorical logo.

From these towering intellectual figures and their many followers

emerged what we might callonly with the benefit of hindsightthe

old comparative economic history. In its time a flourishing new intellec-

tual direction, this field set out some of the big questions and the earliest

pieces of evidence on which todays scholarship builds. The New Com-

parative Economic History has taken up some of these earlier themes,

brought in new perspectives, and built on the achievements of the earlier

pioneers. But the transition from the old to the new has taken time, and

it needed the evolution of economic historyand just as important, of


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economicsto set the stage for a second and quite distinctive burst of

comparative economic history.

Cliometrics initially cut its teeth on questions that had emerged from

national historiographies, and thus it had two limitations: it was national

in scope, and it sought questions from the historians agenda rather than

from the economists agenda. The aim of early cliometrics was to show

that these questions could be better understood by using economic theory

and rigorous quantification. As such, the lessons to be learned were

largely of interest to other economic historians, who were usually focused

on their own countrys experience.

By contrast, the New Comparative Economic History is motivated by

questions being posed by economists that are less nation-specific inscopequestions such as the sources of economic growth, the importance

of institutions, and the impact of globalization. For example, its practi-

tioners are less interested in the first, British Industrial Revolution as a

specific historical episode than in what it tells us about the nature of eco-

nomic growth. If the latter is the motivating question, then it makes sense

to study not just this episode but other transitions to modern economic

growth (and just as important, failures to achieve such transitions) as

well. To take another example, New Comparative Economic Historypractitioners will tend to be interested in the impact of specific economic,

political, or cultural institutions, such as slavery, democracy, or religion,

not just in and of themselves, but also in how institutions influence eco-

nomic development. As such, it makes sense to exploit the fact that

history provides an immense variety of institutional arrangements that

allows us to arrive at conclusions with a general validity, rather than

simply improving our understanding of an institution embedded in a par-

ticular time and place.

The New Comparative Economic History is motivated by current

debates among academic economists and policymakers rather than fol-

lowing agendas set by historians. At the same time, it aims to convince

the rest of the economics profession that they have a lot to learn from

taking history seriously. History can inform current debates by focusing

on long-run trends rather than on short-run ups and downs in economic

activity. As a result, it can provide an antidote to analysis that looks only

at the present or the very recent past. It also provides a powerful

reminder that one model may not fit all circumstances, because economicrelationships that may seem immutable to economists familiar only with

the present may in fact be highly time- or place-specific.

2 Timothy J. Hatton, Kevin H. ORourke, and Alan M. Taylor


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A good example of this concerns the relationship between openness

and economic growth. While many studies have shown that the two are

positively correlated for the post-1950 or post-1960 period, Clemens and

Williamson (2004b) find that the correlation was reversed in earlier

epochs and (to complicate matters further) that it diered across geo-

graphical regions. In turn, such findings can help economists think more

carefully about what are the underlying assumptions driving their models

predictions and the changing regimes driving their econometric results.

Economists are also reminded that the political, institutional, and eco-

nomic environment can play an important role in shaping the relation-

ships between policies and outcomes. This institutional sensitivity, a

distinguishing feature of economic history in general, is finding a recep-tive audience among todays mainstream growth, development, and inter-

national economists.

Three other closely related features of the New Comparative Economic

History have been its emphasis on the interactions between economies,

the economic mechanisms driving aggregate correlations in the data, and

political economy questions. Consider, for example, the issue of whether

economic growth leads to country or regional convergence (Williamson

1965; Abramovitz 1986). A vast literature has tried to answer this ques-tion by exploring regressions of country-specific growth rates on initial

income, trying to uncover evidence of unconditional, or possibly condi-

tional, convergence. This methodology implicitly assumes that each

country is an island, with its growth rate determined by a series of

country-specific variables. At best, openness to trade or some other indi-

cator of integration with the rest of the world will appear in the equation

as a country-specific right-hand side variable.

However, economic intuition, common sense, and experience all tell us

that whether poor countries catch up with rich countries will depend crit-

ically on the nature of the economic interactions between them, on the

extent to which capital, more productive technology, better policies, and

more ecient institutions are transferred to backward countries, or on

the nature and extent of commodity trade and labor migration. In this

light, no country is an island, and thus the researchers attention is drawn

irresistibly to the study of international capital flows, migration, trade,

technological transfer, and the diusion of good public policy. In turn,

studying these flows can tell us a lot about what drove economic con-vergence (and divergence) between poor and rich regions at particular

times and in particular parts of the world. Thus, economic convergence

Introduction 3


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between poor and rich countries in the late nineteenth-century Atlantic

economy was mostly driven by labor migrations (Hatton and Williamson

1998; ORourke and Williamson 1999; Taylor and Williamson 1997).

Capital flows occasionally played a supporting role (as in the case of Swe-

den) but more often were a force for divergence rather than conver-

gence. This leads to the historical questions, Why has capital never

flowed more systematically to poor countries (Clemens and Williamson

2004a)? And why has migration not played the pro-convergence role in

the twentieth century that it played during the nineteenth (Hatton and

Williamson 2005)? The latter question is obviously one that requires a

political economy explanation. Indeed, policy is clearly one of the key

drivers of economic integration between countries, and it can help explaincross-country variations in economic performance more generally. Why

the New Comparative Economic History is concerned with political econ-

omy issues is thus easily understood.

The New Comparative Economic History not only asks dierent ques-

tions from those posed by earlier cliometricians; it also diers in the type

of answer it provides. One key rule is never to throw away information;

history is the only laboratory we have, and it is important to exploit any

variation in the data that can be found there. One important characteris-tic of the field, therefore, is its constant tendency to expand the range of

countries being explored, from Great Britain and the United States (Wil-

liamson 1974; 1985; 1990), whose histories inspired the first cliometri-

cians, to Japan (Kelley and Williamson 1974), the Atlantic economy

(Hatton and Williamson 1998; ORourke and Williamson 1999; Taylor

and Williamson 1997), Latin America (Coatsworth and Williamson 2004;

Bertola and Williamson 2006), and the wider world (Hatton and William-

son 2005; Williamson 2006). In particular, the developing world is not

only where most people live, but it comprises a variety of countries with

dierent institutions and endowments whose economic histories are full

of lessons for policymakers and growth economists. Uncovering these les-

sons has been and will continue to be one of the key tasks of the New

Comparative Economic History.

If long-run cross-country variation is a key to understanding long-run

economic processes, and consequently individual country experiences,

then that has implications for the methodologies that economic historians

will tend to use. Cliometrics became famous for its use of counterfactualanalysis, and this made sense in a field where economists were asking

country-specific questions, such as what was the impact of railways in

the United States? The answer could be found by comparing the United



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States as it actually was with a counterfactual United States without the

railroad. Of course, such an approach implied that the researcher had to

commit to some theoretical model, because otherwise the counterfactual

comparator would remain forever unobserved. A lot of cliometrics thus

involved theory with numbers, calibrating models ranging from back-of-

the-envelope partial equilibrium models to full-scale general equilibrium

models.

By contrast, the New Comparative Economic History instinctively tries

to compare actual economies, not with counterfactuals but with each

othera dierent solution to the specification problem (Fogel 1967). If

they wanted to explore the impact of railroads, its practitioners first

thought would be to exploit the fact that railroads were introduced atdierent times into dierent economies; they would be aware of the pos-

sibility that railroads would have had dierent eects in each because of

diering geographies, dierent patterns of specialization, dierent political

contexts, or other factors. Thus, comparative or counterfactual statements

are closely linked to the range of historical experience. By allowing the

data to speak in this manner and by avoiding theoretical assumptions

that might narrow the range of possible answers, researchers can move

away from the tyranny of the Harberger triangle, which always producesthe answer small, or the tyranny of partial equilibrium, which ignores

the interaction between markets, or any other theoretical tyranny that

imposes prior restrictions on the analysis and thus the answers.

We would not wish to exaggerate or oversimplify. It is not the case that

the New Comparative Economic History never uses counterfactual anal-

ysis or computable general equilibrium models. The field is method-

ologically catholic, as the chapters in this book illustrate. Traditional

cliometrics always made wide use of econometric analysis, relying on

comparisons across time, agents, or place, as its 1970s British moniker,

econometric history, clearly indicates. Economic history, including

cliometric history, has certainly produced comparative work in the past,

such as the classic comparisons of French and British economic develop-

ment (OBrien and Keyder 1978; Crouzet 1991). Clearly, we are dealing

with tendencies here. Nonetheless, it seems to us that there has been a dis-

cernible shift toward more comparative work in recent years. For exam-

ple, economic history research and training networks have sprung up in

Europe that are devoted explicitly to exposing students to other countriesexperience. The move away from narrowly national economic history

to broader approaches is further symbolized by the recent Cambridge

Economic History of Latin America (Bulmer-Thomas, Coatsworth, and

Introduction 5


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Cortes-Conde 2006), which stresses a comparative approach. The con-

tributors to the present volume have all been actively involved in compar-

ative economic history projects over the years, ranging from comparative

banking history, to comparative famine history, to even broader com-

parative questions about growth and development.

This trend toward comparative economic history was probably inevita-

ble. After all, cliometrics required data, and data tend to be gathered at a

national level. Early cliometric eorts were thus largely devoted to col-

lecting these data and analyzing them systematically, starting with the

construction of national income aggregates. This enterprise implied, al-

most by definition, a nation-specific approach to economic history. The

barriers to entry for would-be comparative cliometricians were for a longtime prohibitively high. Now, however, a broad range of comparative

data is easily available, partly as a result of the extraordinarily coopera-

tive tendencies of the worldwide cliometrics community, and partly as a

result of collaborative data-gathering projects, such as those devoted to

the systematic compilation of comparable wage and price data across as

many countries and time periods as possible, illustrated by projects led by

Robert Allen, Jan Luiten van Zanden, and Peter Lindert. With the bar-

riers to entry falling, it is small wonder that the number of cliometriciansdoing serious comparative work has been rising over time.

There is a second reason for the growth in comparative work in recent

years, and that is the intellectual leadership of Jerey G. Williamson. His

influence across the world has been immense, particularly in regions such

as Europe or Latin America, where economic historians have had no

alternative but to take seriously the open-economy thinking that has

characterized so much of his work. He has been a generous supporter of

attempts to build up the cliometric profession in continental Europe,

Latin America, Asia, and elsewhere, attending summer schools, giving

keynote lectures, collaborating with local economic historians, and pro-

viding encouragement to those academic communities. In Europe he has

been a much-valued supporter of the European Historical Economics So-

ciety, and he was crucially involved in the debates that led to the setting

up of the societys journal, the European Review of Economic History, on

whose editorial board he has served.

The immense regard in which he is held across Europe is reflected in the

large number of European contributions to this book. In Latin America,Je has worked with numerous scholars, inspired many students in train-

ing, and traveled extensively to help develop and encourage new net-

works, conferences, and research projects, and in doing so, he has played



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an invaluable role in promoting the recent growth of Latin American eco-

nomic history as a field. Through frequent visits to Australia, he has

injected new vitality into a discipline that had been in retreat there. And

through his insistence on the importance of Asia to global economic his-

tory, he has helped to foster comparative work in that region, too. In-

deed, he plans to pursue an economic history program beginning in

the Philippines. The fact that the New Comparative Economic History

exploits such a wide range of experience has boosted interest in countries

and regions previously considered to be peripheral to the main story.

More than anyone else, Je has carried this message to all corners of the

globe.

Most of all, as the many references cited here indicate, Je has led byexample, helping to shape the intellectual agenda that others are now

following. His own career has anticipated broader trends within the pro-

fession, its focus moving from U.S. and other single-country studies to

globalization and comparative economic history more generally. He has

influenced the New Comparative Economic History directly, through his

work with students and collaborators, and indirectly, via his many writ-

ings. He is a giant in the field and in economic history more generally,

and this volume is gratefully dedicated to him.

References

Abramovitz, A. 1986. Catching Up, Forging Ahead, and Falling Behind. Journal of Eco-nomic History 46: 385406.

Bertola, L., and J. G. Williamson. 2006. Globalization in Latin America before 1940. In TheCambridge Economic History of Latin America. Vol. 2, The Long Twentieth Century, ed. V.Bulmer-Thomas, J. H. Coatsworth, and R. Cortes Conde. New York: Cambridge UniversityPress.

Bulmer-Thomas, V., J. H. Coatsworth, and R. Cortes-Conde, eds. 2006. The CambridgeEconomic History of Latin America. New York: Cambridge University Press.

Clemens, M. A., and J. G. Williamson. 2004a. Wealth Bias in the First Global Capital Mar-ket Boom, 18701913. Economic Journal 114: 311344.

. 2004b. Why Did the Tari-Growth Correlation Reverse after 1950? Journal of Eco-nomic Growth 9: 546.

Coatsworth, J. H., and J. G. Williamson. 2004. The Roots of Latin American Protection-ism: Looking before the Great Depression. In Integrating the Americas: FTAA and Beyond,ed. A. Estevadeordal, D. Rodrik, A. Taylor, and A. Velasco. Cambridge, Mass.: HarvardUniversity Press.

Crouzet, F. 1991. Britain Ascendant: Studies in British and Franco-British Economic History.

Cambridge: Cambridge University Press.Fogel, R. W. 1967. The Specification Problem in Economic History. Journal of EconomicHistory 27: 283308.

Hatton, T. J., and J. G. Williamson. 1998. The Age of Mass Migration: Causes and Eco-nomic Impact. New York: Oxford University Press.

Introduction 7


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. 2005. Global Migration and the World Economy: Two Centuries of Policy and Per-formance. Cambridge, Mass.: MIT Press.

Kelley, A. C., and J. G. Williamson. 1974. Lessons from Japanese Economic Development:

An Analytical Economic History. Chicago: University of Chicago Press.OBrien, P. K., and C. Keyder. 1978. Economic Growth in Britain and France: Two Paths tothe Twentieth Century. London: Allen and Unwin.

ORourke, K. H., and J. G. Williamson. 1999. Globalization and History: The Evolution ofthe Nineteenth Century Atlantic Economy. Cambridge, Mass.: MIT Press.

Taylor, A. M., and J. G. Williamson. 1997. Convergence in an Age of Mass Migration. Eu-ropean Review of Economic History 1: 2763.

Williamson, J. G. 1965. Regional Inequality and the Process of National Development: ADescription of the Patterns. Economic Development and Cultural Change 13: 384.

. 1974. Late Nineteenth Century American Development: A General Equilibrium His-tory. Cambridge: Cambridge University Press.

. 1985. Did British Capitalism Breed Inequality? London: Allen and Unwin.

. 1990. Coping with City Growth during the British Industrial Revolution. Cambridge:Cambridge University Press.

. 2006. Globalization and the Poor Periphery before the Modern Era: The 2004 OhlinLectures. Cambridge, Mass.: MIT Press.


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