Economics Summary Notes

Economics Summary (Hopefully) The Great Divergence Cultural Factors - The China the government was the sole motivator for innovation. Thus whilst the Ming dynasty's economic incentives and deliberate diffusion of ideas advanced China to 'within a hair's breadth of industrialisation', the Qing (1400)'s lack of funding led to stagnation and the abandonment of old technologies. - The cultural unification of China meant that the Emperor's decisions would affect the entire empire, unlike the decisions of Kings, Princes and Dukes in Europe - Europe had a much freer market by 1300, and merchants pushing for more freedom, which fostered innovation through state competition. - China's closed borders limited both mercantile wealth and the adoption of foreign innovations - China's policy of installing all intelligent men into the civil bureaucracy diverted possible inventors from a capitalist path. Economic Factors - The Atlantic economy added to Dutch and British merchants' wealth, and silver from the New World made Spain rich. - Property rights made the sale of ideas more profitable, and institutions such as the Bank of England and ideas of Deficit Trading Bonds (IOUs) and cheap loans made investment easier in Europe. - Merchants' pressure post Glorious Revolution made the king dissolve all monopolies asides the EITC. - Institutions such as price indexes and laws protecting merchants from piracy and theft were influential. - China's large population meant A) labour saving innovations were unnecessary and B) focus was on food production, not profit. - Europe had comparatively lower population due to EMP (late marriages and some women not marrying) so labour-saving innovations were snapped up to keep up with the competition and increase profits, especially after the abandonment of monopolies (e.g. shepherds in Spain). Geographical Factors - Europe's mountainous terrain, with many rivers, peninsulas and access to Asia and Africa made it more likely to develop many smaller states. China's inland mass and only two rivers allowed unification. 

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