At the time that Europe was moving from the Middle Ages to the Modern Era, certain events driven across the continent set the course for the development of European economies, that followed different paths of growth or decline, depending on their decisions and their ability to face these changes. This situation is the one that created the so called “Little Divergence”: the evidence of the differences between European nations based on their actions and the effects on their economies. In the case of Spain, what we aim to explore is until which extent this nation applied the right policies and which was the result of them.
As we said, certain events took place in these ages and without doubt the Black Death is the most significant of all of the, leading the social, economical and political changes that would determine European future (Pamuk, 2005). The demographical shock constrained continental population by one third, and had a massive effect in economy and production, as consecutive outbreaks of the place took place. The population reduction was greater than the decline of total output so this also affected the labor force, which became scarce, leading wage increases.
Regional differences explain why the levels of population pre-plague were reached in different centuries. These differences also explain the economic development of some of these regions, while others were declining.
As Van Zanden (2004) appointed the institutional changes were the ones that stated the future economic growth. The most reliable case is the Dutch Kingdom of the total transformation of their governmental structure that opened the path of development by the application of certain. Changes in agriculture and land-owning, due to the peasants’ conflicts, improved the production and led to surpluses that were used to trade. Trade and commerce were markedly supported: trade networks were highly developed and State defended these trading interests. This economical activity had their core in the process of urbanization of cities: they become the best environment to trade, to adapt technological innovations, supported by universities, and to develop manufactures, that improved their quality with this new knowledge.
Allen (2001) studied this situation by comparing the wages of skilled and unskilled workers across Europe and stated that the divergence started by the XVI century, when England and Low Countries maintained an increasing trend in wages, while the rest of Europe was declining.
The case of Spain differs from their neighbors’ development. In opposition to the rest of Europe, Spain achieved its highest growth and living standards by 1340[1] (Alvaréz-Nogal, Prados de la Escosura, 2012). During this period, Spanish sustained development was supported by the improvement of trade but especially for the gains of the Reconquest against the Muslims, by the appropriation of massive extensions of land and the taxation by tributes.
The Black Death represents an interruption to this growth that was maintained until the end of the XVI century. Event the plague didn’t have mild demographic impact, the economic cost was dramatic, as commercial networks disappear and frontier communities were isolated. 1600 represent the inflexion point for the Spanish development: the drop of the exports, the decline of the value of silver and the debt incurred by cities to maintain the elevated cost of American Empire finally constrained economic activity.
We can conclude stating that the location of Spain in the list of declining nations after the “Little Divergence” wasn’t a fully reversal of fortune. As they expend large amount of resources, firstly in the Reconquest, then in America, they didn’t allocate efficiently the gains of the previous growth and trade. By not focusing on the institutional transformation that were successful in other nations, they didn’t have the capacity to implement and adapt these changes and catch-up their growth path.
[1] Two distinctive regimes are distinguished in Spain over half a millennium. The first one (1270s–1590s) corresponds to a high land–labour ratio frontier economy, which is pastoral, trade-oriented, and led by towns. Wages and food consumption were relatively high. Sustained per capita growth occurred from the end of the Reconquest (1264) to the Black Death (1340s) and resumed from the 1390s only broken by late fifteenth-century turmoil. A second regime (1600s–1810s) corresponds to a more agricultural and densely populated low-wage economy which, although it grew at a pace similar to that of 1270–1600, remained at a lower level (Alvaréz-Nogal, Prados de la Escosura, 2012)
____________________________________________________________________________________________
Bibliography
- Allen, R. C (2001) ‘The great divergence in European wages and prices from the middle ages to the First World War’, Explorations in Economic History, 38, pp. 411–47.
- Alvaréz-Nogal, Prados de la Escosura (2013) “The Rise and Fall of Spain”, Economic History Review, 66, 1, pp. 1-37
- Fouquet, Roger and Broadberry (2015), “Seven Centuries of European Economic Growth and Decline”, Journal of Economic Perspectives, Volume 29, number 4, pp. 227-244
- Sevket Pamuk (2005), “The Black Death and the Origins of the ‘Great Divergence’ across Europe 1300-1600”, European Review of Economic History, II, pp. 289-317.
- van Zanden, J. (2005) ‘Una estimación del crecimiento económico en la Edad Moderna’, Investigaciones de Historia Económica, 2, pp. 9–22.
PABLO RUIZ 
Leave a comment