Europe is a relatively small part of the world in both area and population. The key economic question which has to be asked is why modern economic methods first appeared in Europe allowing Europe for several centuries to dominate the world. And all modern economic theories, including mercantilism, capitalism, and socialism have come from Europe. Economomists have studied the history of European imperialism in some detailed, but much studied are the economic forced that led to European power and the creation of wealth that has allowed people to lead comfortable, fulfilling lives. The Renaissance and Reformation are both part of the story. A critical step was the incention of capitalism by the Dutch and its adoption by the English. At the time both were relatively small countries, dwarfed by the economies of France, Germany (Holy Roman Empire), and Spain. The economies of Europe were constricted for centuries by monarchial system which placed all kinds of restructions on property rights and free trade. The liberal movement of the 19th century was to end restructions on markets as well as to gain democratic rights and constitutiions limiting government power. As the liberals achieved their goals in Western Europe, ironically Socialist movements sought to impose different controls on property and free markets. In the Soviet Union the controls were basically absolute leading to industrial expansion that was not based on economic realities leaving modern Russia with essentially a third world economy based on exporting raw material. In Western Europe socialist policies have created welfare states that are unsustaninable and creating enormous drags in the economies of the countries involved. Ironically just as monarchial governments curtailed ecomomic growrh in the 19th century. Popularly elected governments now restict economic through heavy taxation and social welfare programs. And now the bill on the welfare systems financed by borrowed money has began to come due. One interesting economic approach is that of Germany which has persued more prudent fiscal policies and has attemoted to promote a harmonious alliance between labor and capital.
Belarus was part of the Soviet Union, but most of the country. like the Baltics was not annexed until the World War II era. The country like moist of the western Soviet Union and Poland ws devestated by the War. The country was traditionally agricultural with an industrial sector developed during the Soviet era. The country was futher damaged by Soviet agricultural policy. The industrial base was developed during the Soviet era. The Soviet enterorises were, however, extremely inefficent and not comprtitive after the collapse of the Soviet Union and the end of subsidies and low-priced raw materials. Thus the country was left with an industrial base that was outdated as well as energy and raw material input inefficient. The country's industry was hus highly dependent on subsidized Russian energy and preferential access to Russian markets. The Soviet education system, however, created aan educated labor force that was potenially capable of operating at European levels. Belarus is the only European country in with a higher education system that has not move to accept he Bologna Process promoting common European standards. While areas of the country have potentially rich agricultural land, the agricultural sector is also inefficent thanls to Soviet era policies. Despite the failure of Soviet era economic policies, the Belarus Government of has shown little inclination in moving toward a free-market economic policies, largely because the state would then relenquish a major level of social control. As a result, living standards in Belarus are far below European standards, even the other areas of Soviet control in Eastern Europe.
The history of the English economy is an especially important subject. A student of both economics and history has to explain why the various social, political, and economic forces came together in England during the 18th century to create the first modern economy. The economy of medieval England was based on the wool trade. Before the 18th century several important elements were in place. Laws protected private property even from royal excesses. The English appropriated capitalism which the Dutch invented. And social attitutudes a well as laws protected and even promoted free thought, including scientific inquiry which led to practical applications. This combined with the availability of key natural resources (coal and iron) led to the industrial revolution (mid-18th century). The first steps were to develop textile weaving machines. The need for efficent naval construction also helped bring about the industrial revolution. The result was an extrodiarily efficent economy and the creation of great wealth. At about the sane timne, the loss ofthe American colonies (1783) taught the British an important lesson, to allow the colonies to participate in free trade with relatuively few trade limitations compared to the other European empires. The economy allowed England to resist Napoleon and to emnerge after the Napoleon as the preminent world power. The United States followed the English system, only without an empire. The English capitalist economy is often accused of creating poverty. Marx of course wrote Das Kapital in the British Library. This is a major error. English capitalism created wealth. Poverty existed in England before the industrisl revolution. Capitalism fid create greater disparities in wealth because of the wealth it created. Gradually Germany emerged as a major economic competitor with capitalist system developing with greater government direction. After World War II, the governing British Labour Party embarked on an experiment with socialism. Some social inequities were addressed, but Britain fell behind many continental countries. The Thstcher era only partially reversed this course. Britaian today along with many other European countries is facted with Mrs. Thstcher's famous dictum, "Socialism is fine until they run out of other people's money to give away."
Finland was acquired from Sweden by Russian during the Naoleonic era (1809). at the beginning of the 20th century was still a Grand Duchy within the Russian Empire. As a Grand Duchy, Finland relatively broad autonomy in its economic and many internal affairs. It was a basically agricultural province of the Tsarist Empire. Unlike some parts of the Empire, there was little industrial development. Income levels were about half of the Unites States, but comparable to the rest of Eastern Europe. Finns fought with the Russias in World War I, but the fighting never reached Finland itself. The country was involved in the Civil War and emerged as an independent republic. The country was involved in World War II when the Soviet Union invaded--launching the Winter War (1940). The country's small population and small industrial base made it difficult to resist the overwealming Soviet power. Finland joined the NAZI German invasion of the Soviet Union, with much more limited objectives. Considerable damage was done to the country's infrastructure during the War and some of the best agricultural land was lost in the territory seized by the Soviets. The country rapidly industrialized after the War. A factor here was integration with the West and trade liberalization. This had to be carefully managed with diplomacy so as not to cause a Soviet reaction. As a result, Finnish living standards steadily improved. Finland first joined the Outer Seven with Britain, but joined the European Union (1995) and the European Economic and Monetary Union (1999). Finland at the beginning of the 21st century was classified as a small, but highly successful industrialized country. The population shares a standard of living among the top twenty in the world. It has a highly industrialized, basically free-market economy. Per capita statistics are similar to Sweden. The core of the econolny is the manufacturing sector, including the wood, metals, engineering, telecommunications, and electronics industries. Nokia is one of the world's leading high-tech companies, specializing in cell phones. The country is a major exporter, about a third of the GSP is based on trade. Finland does not have extensive natural resources. The ptimary resources are timber and minerals (especially tin). The country has to import large quantities of raw materials and energy, especially petroleum. Agricultural is limited by the country's northerly climate, but basically supplies the domestic market. The forestry sector does contribute to exports.
Until the Industrial Revolution, French economic history was dominated by one simple fact--the tremendous fertility of French agriculure. Ceasar's conquest of Gaul greatly increased the wealth and power of the Roman Empire. Until the conquest of Gaul, Rome was a Mediterranean rather than a European power. With the fall of Rome, the wealth generated by French farmers ensured that France would be an economic and thus political power in medieval Europe. This was especially true as Germany, which should have been the dominant European power, was rent by the conflict between the papacy and Emperor and would not be united until the 19th century. France was also a divided country, but gradually unified around Paris and the French monarchy, France thus became the most powerful continental power for centuries, sustined by its growing popultion and amazingly productive soil. As Europe emerged from the medieval era, France did not pursue the Inquisition like Spain and the Papacy in Italy, thus the country did not become an intelectual backwater like those countries. At the same time it did not become a major intelectual center like England. Nor did become a center of capitalis, like England and the Netherlands. Rather France was constrained by the Feudal system and royal absolutism which inhibited the ability of individuals to develop their talents and abilities. France remained a major power, but in many ways was more backward than England, a much smaller power. England and France had fought the 100 Years wars in the medieval era. At the dawn of the modern era, Louis XIV launched a major effort to expand France's borders. This initiated two cdnturies of intermittent warfare with England and other nrigbors. Given the greater size and potential richness of France, one might have expected France to emerge the victor. This did not occur. French defeats in a series of war stemmed lrgely because its economy was still largely feudal while Britain embraced capitalism fueled by a maritime economy which would give birth to the Industrial Revolution. France would not begin its own Indistrial Revolution until after the French Revolution and Napoleonic Wars. After the Napoleonic Wars, the Industrial Revolution spread to France. Brutain France, and Germany (even before unofication) began the European industrial leaders. They also becamne the leaders in science and education. The Catholic slowed the movement toward public education, although the secientific elite was competitive with Bitain and Germany. As with the rest of Europe, France was overtaken by the United States in the late-19th centyry. Interestingly, France was a rare country in Europe that did not have a substantisl emigration to America. France was different than Britain in that therewas still avey large and poliyically importnt small-holding pesant popultion in France.
Germany is the heart of Europe in both a geographic and economic sence. Germany as part of the European Union is today the driving force in the European economy. The Germany economy since the fall of Rome has been important, but vnot dominant in the European economy. Germany was prevented from dominating Europe when during the medieval Europe unlike surronding ststes, a unified German state did not coalese because of differences between the imperial government and the papacy which empowered thecGerman princes to establish their own nation states. This politicial division had economic consequences. After the Napoleonic Wars as Germany moved toward unification, the industrial revolution which fundamentally transforned Britain began to take hold in Germany.
This led to a period of rapid growth, especially in western Germabny centered on the Ruhr Valley. Rapid economic growth and associated social transformatiion brought with it some destabilizing consequences. Germany transsformed it self from a conservative agrarian society to a modern industrial society. This change occurred on a regiojnal basis. Much of Germany, particularly eastern Germany remained agrarian and traditional. The industrial revolution proceeeded differently in Germany than Western Europe, especially Britain and America. There was a much greater level of government control and regulation. The economic outlook which developed in Germany as a result of the greater government role has shaped modern German policies and played a role in German support for international economic integration. Even before political unification, the German states began moving toward economic union through the Zollverein and customs unions. The Zollverein was in fact the first critical step toward German unification. It was crucial stimulant for economic development as Germany wasindustrializing. It helped created need markets for expanding industrial firms. German was unified by Prussia and the Hohenzollerns. This meant that the ruling elite included Germans with many traditioinal values, including Prussian militarism. And the industrial power of Germany gave the conservative German elites with values different than the emerging democratic states to the west enormous power. At the same time, the German working class was being radicalized with Marxist doctrine. This created substantial social disparities between modern cities and conservative small towns and rural areas.
Unification and the establishment of Imperial Germany (the Second Reich) to standardize trade regulations on a national basis, although the Germn states still retained considerable authority. A national currency system, the Deutches Mark based on the gold standard, was a another key step. One economist writes, The German states “cleared a path to an international currency unification on the gold basis, which for the whole period up to the World War proved of the greatest importance for the rapid expansion of world trade.” The German imperial monarchy influebced by the Prussiam military tradition chose to convert a Balkan crisis into a world war (1914). The War demolished the evolving European economic system. German economic instability after the war (1920s), partially due to the punative Versailles Treaty and the Depression (1930s) led to another German military attempt to dominate Europe, ghis time with horrendous racial goals. In the aftermath, tghe future of Germany and Europe itself was at issue. The choice was between the Soviet totalitarian, Marrxist model and the American democratic capitalist model. The issue was decided by the free market policies adopted by German politicans and American occupation authorities. The result was the German Economic Miracle (1950s) and the move toward European unification (1960s) which had led to the European Union.
Greece was conquered by the Ottoman Empire (15th century) and was thus out of the European mainstream. Greece achieved its independence (1820s). It was a small, largely agricultural country with only a small industrial sector. This continued into the 20th century. The economy was devestated by World War II and the German occupation which caused a deadly famine. The economy was further damaged by a Communist onspired civil war. Greece benefitted from a recovering European economy. Greece became a popular tourist destinatiin and tourism became an important part of the Greek economy. Socialist political parties and polticans exposing socialist principles have been important in post-War Greece. They have offered the Greek people an extensive social welfare system, winning elections by making entoicing promises. The welfare system constructed as a result was so costly, however, that the Greek economy could simply not support it. This is a problem other European countries are facing. As Prime Minister Thatcher explained in the 1980s, Socialist ecomomies fail when they run out of other people's money to redistribute. This finally occurred in Greece in 2010. The problen was felayed for many years because as a member of the Euro zone, Greece could for many years could borrow money at rates similar to more finncially responsible countries like Germany. The statistics are staggering. The Greek defecit was 13 percent of GDP and the overall national debt waa 115 percent of GDP. About 60 percent of employment is in the non-productive public sector who have generous benefits. Lenders realizing that the current situation is unsustainable stopped lending to Greece and interest rates available to the Government increased to a prohibitive 17 percent. With the Euro in freefall, the Europeans with IMP assistance came up with a $0.95 trillion bailout program. It is unclear if even this huge intervention will solve the problem and it looks increasingly like the debt will have to be restructers, essentialy meaning Greece will default on part of the debt. It will also mean that Greece will have to make substantial cuts in its welfare system.
Modern Hungary was within the brders of the Roman Empire. It was the province of Pannonia and the remains of Roman roads and building exist. The Carpathenian Basin subsequently became a center for both the Huns and Avars. The conquest by the Magayars meant that this early history had almost no impact on modern Hungary. Ecoonomics is even more affected by geograpohy than history. In Roman times, Pannonia ws primarily an agricultural land. Rich pasture land attracted the Avars, Huns, and eventually after the fallpf Rome the Magyars. Mounted Magyar raiders would terroirize central Europe until subdued by Otto I. Hungary after being defeated by the Ottomn Turks was absorbed into the Austrian Empire (16th century). Hungary remained a largely agricultural area. Much of the economy ws based on lrge landed estates owned by nobels. Hungary emerged from the Feudal era later than the countries of Western Europe. The Austrians, un like the Germans, did not strongly promote industrial development. Much of the industry of the Austro-Hungarian Empire was in the Czech lands,primarily because several notable Czech businessmen promoted indusyry. Although industry was not absent from Hungary, the same level of indidtril development did not occur. After World War II, the Communists under the aegis of the Red Army seized control of Hungary (1945). The Communists launched on a massive program of industrialization. To the shock of the Communists, the economy did not grow like the economies of Western Europe. Not ony were the state-owned industries not profitable and able to pay good wages, but because of state policie, shortages developed for agricultural products. The economomic problens were only partly due to Communist inefficencies. The Soviet Union exploited allof its Eastern European subject peoples. This would prove to be a factor in the Hungarian Revolution which was brutally supressed by the Soviets (1956). After the repression that followed, more liberal outlook took hold in Hungary and an economy which came to be called Goulash Communism. There were notable improvements, but Hungarian industry was not competive outside the COMECON barter system. This was the situation when Communism fell (1989).
Ireland after independence was a quiet, backwater of Europe. It comntinued to be reltivly poor with income levels well below English and other prpsperous Western European countries. And as a result, the Irish continued to emigrate in search of decent paying jobs even after World War II. One author describes Dublin in the 1950s, "I have to make a mental effort to remember the Dublin of the 1950s, which is in many ways a Third World city," recalls Garvin. "Horses, no motorcars, children in bare feet, dirt everywhere, people living in slums, no television, no bathrooms - a really impoverished European country that really didn't seem to be going anywhere." [Gavin] Since the 1840s Potato famine, Ireland had one principal export--its people. The population of the Republic is about 3.5 million and with Ulster added on, the total population is only about 4.0 million. Yet an astonishing 70 million people in American and oher countries identify as being Irish. No other small country has such a huge diaspora abroad. In recent years the emigration has finally declined and when rising immigration, the popiulation flow balance has shifted. Some of the new immigrants are indiuviduals of Irish ancestry returning to the Old Sod. The reason is that Ireland has become the Celtic Tiger--a reference to the Asian Tigers--countries which adopted free markets economics and created roaring economies. All of a sudden high-tech companies began springing up in villages that were previously dieing. The town of Leixlip in County Kildare, is famous as the birthplace of Guinness beer. But prosperity in Leixlip now comes from Intel, which built a $5 billion plsant there. But many smaller compsanies are active. Ireland has become a leading exporter of computer software. Ireland was never industrialized like England. As a result, the country with a basicvally pristine environment is mocing from a largely agricultural economy directly into the information technology era. Many of us were apsauled by rank McCourt's description of Limerick in Angela's Ashes. He came to America because jobs were so difficult to find. Now Limerick workers are making computers. The recipie for Ireland's success is fairly simple--the same recipie used by other modern success stories. A shift away from socialism toward a business friendly environment and low taxes. The European Union Transfer Psayment to poor countries may have been a factor, but some econonmists believe they were inefficent sand even counter productive. Most economists do believe that Government subsidies and investment capital did play an important role. Here the IDA was particularly important. Major American corporations (Dell, Intel, and Microsoft) were attracted to Ireland. Many of these companies were fleeing California's Silicon Valley because of California's policies which punish business ans businessmen. European Union membership meant that production had access to the emnernse EU market. Entreprise Ireland, another a state agency in business friendfly Ireland, provides financial, technical and social support to start-up businesses. Following the U.S. investments, the International Financial Services Centre in Dublin led to the creation of many high-paying jobs in the expanding financial sector. [Flanigan] And as strange as it may seem, these policies have resulted in greater tax reveue that the Government can use to address social problems. And of course the jobs created help solve many of those social problems by raising per capita income. A well educated population and an English speaking work force were also important factors. Americans will no doubt note that the policies that Ireland followed are just the oposite what the now bsankrupt state of California followed. Of course, Ireland was not imune from the worldwide 2008-09 recession. Irish banks were heavily exposed to real estate and when prices fell the country's banks became largely insolvent. The Government stepped in which undermined public finances requiring a huge IMF and EU bailout to prevent national bankuptsy.
Italy gave birth to the Renaissance and was where modern Europe first began emerging from feudalism. Modern banking first emerged in Italy. Italian navigators played a major role in the European outreach by Portugal and Spain. Italy itself without an Atlantic coast did not share economically in that outreach. Religious conservatism and the Counter Reformatiion retarded the scientific inquiry that had begun as part of the Renaissance. Italy divided into minor states became a prize fought over by more powerful European powers emerging as unified nation states. This included the Austrians, French, and Spanish. Italy is one of the major European countries in terms of population, but was not unified until relative late (1860s). The unified country was a relatively poor country. At a tgime when national wealth was still significantly impacted by agriculture, the relatively poor agricultural land in many areas of Italy were unable to support the large Italian population. Southern Italy in particular was virtualy feudal. Northern Italy, in part because of the Austrian influence was more modern with a degree of industrialization. Italians migrated abroad to both South America (especially Argentina and Brazil) and the United States seeking jobs. Many Italians stayed in America, but larger numbers took their earnings home to buy land and small shops in their home communities. Mussolini and the Fascists set out to modernize Italy after World War I and obtain colonies. There were some suceesses, but Mussolini also led Italy into World War II and the country was devestated. European integration following the War brought led to the European Union bringing Italy fully into the 20th century. Italy has prospered as part of a united Italy. At first Italian workers went to Germany seeking jobs. Expanding Italian indidtry created jobs in Italy so Italians no longer had to seek jobs abroad. Socialists and Communists commanded widespread political support. As a result, Italy created a substantial welfare state with enormous entitlements. Unlike Germany and the northern European states, however, the Italian welfare state was created with little considerartion of the ability to pay out the commitments made. Now Italy faces the sane problem as many other European countries. The Government has promissed massive social welfare entitlements that are becoming increasingly difficult to finance and are impeading economic growth. Unlike the smaller states (Greece, Portugal, and Ireland), the financial commitments of the Government are enormous streaching the capability of the EU to finance a bailout. The fiscal position of Italian banks is also being questioned.
Norway's northerly location and mounaneous terrine limited agriculture and as the population grew abnd as the rest of the Scabdinavia, men had to seak oportunities elsewhere. Trade turned into raiding and then settlement and conquest. Scandanavia continued as a poor area of Europe as long as agriculture was the foundation of the economy. Limited economic oppotunity caused emigration to America, mostly farm weorkers seeking lsnd. With the industrial revolution came greater prosperity. While agriculture is limited, fisheries and forestry has helped expand the economy. Scandinavian countries were among the European leaders in creating the modern welfare state. Most of Europe is now finding it difficult to finance the generous benefits promised. Norway is a rare exception because of the lucrative off shore oil discoveries. The country has many other resources including, hydropower, fishery, forests, and minerals. The country's economy, however, is highly dependent on the petroleum sector. Oil and gas exports provide half of total exports and over 30 percent of state revenue, but oil production has begun to decline. Anticipating future declines, Norway has attempted to invest some of the oil income. It now has one of the world's largest sovereign wealth fund. It is a rare European country that has not borrowing huge sums to finance social welfare payments. It is also one of the few European countries that has chosen to remain out of the European Union.
Divided Germany and Korea during the Cold war were test cases for the relative merits of Socialist and Capitalist economics. The prosperity brought by capitalism was telling. In the same sence, the economic experiebces of Poland and Russia are anoyher test case. Russia never gave capitalism a chance after the fall of Communism. Poland did. It not only privatized the economy, but created a legal system and democratic political system to support it. The two countries shared many similarities, although Poland does not have the oil resource that Russia has to keep the economy alive. The first years of the transition were very difficult as inefficent Communist-era concerns were closed. People lost jobs. There was also the enormous environmental damage that had to be addressed. The results, however, have been starteling. The Polish economy is becoming a high income economy. It is one of the success stories of the post-Soviet era. Poland is now the sixth largest economy in the European Union and unlike many of its EU partners, a fast growing economy. And also unlike its partners, Poland wethered the 2008-09 recession without a drop in GDP. Percapita income (PI) is still below that of Western Europe, but the gap is narrowing. Comparison by international groups (World Bank, International Monetary Fund, and others) vary. Some suggest that the Polish and Russian PI is comparable, others that the Polish PI is somewhat higher. This is misleading, however, because a substantial portion of Russian production comes from oil exports. If the extraction center is sepsrating from the profuctive sectors, Poland's PI is much higher than Russia and that gap is widening.
We do not know much about the Portuguese economy in ancient times. All of Iberia was part of the Roman Empire. After the fall of Rome, the Iberian Peninsula was overwealmed by the Germanic tribes and became part of the Visagoths (Germanic tribe) seized control of the region as the Roman Empire fell (5th century). Portugal at the time did not exist as a separate kingdom but was just part of the Visigothic kingdom. We do not know much about the economy under the Visigoths. The Visitogthic ruling class lived apart and heavily taxed the Hispano Roman population. The Moors overwealmed the Visigoths (8th century). Again the economic picture is not fully understood. As the Reconquista began (8th century), the Iberian Peninsula is often described as an economic and cultuyral bright spot of Europe. We are not sure about Portugal specifically. As European maritime techhnology and geographic understanding grew, Portugal as the most wesrterly country in Europe had a great advantage. The same Islamic outburst that brought the Moors to the Iberian Peninsula, had created the Caliphate in the Middle East and later the Ottoman Turks. This imposed Islamic states between the East and the West, curtailing trade. Prince Henry the Navigator championed a maritime outreach to reestablish trade with the East. Success came with the Portuguese rounded the Cape of Good Hope (late-15th century). The result was great wealth and a vast colonial empire. At roughly the same time this occurred th Jews wre expelled and the Protestant Reformation rocked Europe. The Portuguese response like that of Spain was to intensify the Inquisition. The resulting supression of intelectual thought led both Portugal and Spain to become European backwaters just at the time that intelectual fermant and economic expansion was remaking Western Europe. A Socialist Revolution showed some hope of reinvigirating the country (1975). Portugal joined the European Union gaining access to extensive delopment funds. Portugal with these funds seemed to prosper, but this was largely illusionary. EU aid has proved no more effective in modernizing Europe than it has in modernizing former Europeabn colonies in Africa. Socialist governments created welfare state, but not a strong economy to support the various entitelents. The Portuguese today are the least educated in Europe. Less than 30 percent have complete high school. And the dropout rate is the highest in Europe. [OECD] The public school system is a failure and the country's impending debt crisis will make it very difficult for the Government to take needed steps to improve it. [Forelle, p. A1, 14.] Some industries prospered with low wages, but these industrites like textiles have been undercut by Asian producers. The entry of the much better Eastern Ruropean countries with a population anxious gto shake off Socialist economics has further undercut Portugal. Portugal has borrowed heavily to finance welfare payments, but lenders are increasingly reluctant to lend and the EU will probably have to bail Portugal out. It is unclear to what extent the Portuguese people will accept the austrity the EU will demand or that is needed to restore fiscal stability. One primeminister trying to introduce austerity has already lost an election (March 2011).
Romania just as Europe was emerging from the medievil era was engulfed in the Ottoman Empire. This basically froze the ecomomy in time and th country did not paricipate in the Renaisance, Reformation, and Engligtenment and the economic trends affected by these movements. When Romanians gained independemnve from the Ottoman, the economy was backward dominated almost entirely by agriculture. Some development occurred in the 19th abd early 20th century, bit the ecoinmy was largely agrcultural as late as the two World wars. The Communist Government instlled by Stalin oversaw a massive industrialization effort. As in the Soviet Union and other countries in the Soviet Empire, the country's industry was highly inefficent and produced goods that were often worse less than the raw material inputs. Romania was poor even by Soviet ruled Balkan standards as a reult of the disaterous, corupt adminitration of the Ceauşescu era. After the fall of Communism (1989), Romanian entered the European Union (EU) with a developing economy (2007). It is the poorest EU country measured in terms of GDP per capita. Romania after Communism expeienced high growth rates, especially after entering the EU. Growth rates were much higher than the established EU countries. The country was hard hit by the world financial crisi (2009), but then returned to high growth rates. It has the 11th largest economy in the 28 member EU (2013). Bucharest is a regional financial and industrial centers.
The economic history of Russia is as fascinating and varied as the country's political history. Russia after taking possession of the Ukraine from Poland (17th century) controlled a large part of the world's most productive agricultural land. At a time when agriculture was the primary base of ecomonic profuvtion, this made Russia potentially the dominant Ruropean power. This potential power was ehanced by Russia's large population and advance into central Europe as a result of the Great Northern War (17th century). The backward social structure and poor utilization of human resources, however, meant that Russia could not develop and project its potential power. Serfdom meant that a substantial part of the Russian popularion had not access to education or an opportunity to develoop their innate capabilities. Thus other European imperial powers (Austria, Britain, France, and Prussia/Germany) could compete with Russia. This essential political balance was undermined by the Industrial Revolution. For the first time in human history, agriculture was replaced as the primary ecomonic base and because of Russia's conservative social system as wll as serfdom, Russia fell behind the other European powers. This was first observed in the Crinean War(1846-48), but in World War I (1914-18) resulted in the defeat of the numerically superior Russian Army by the well-equipped German Army. At the time of World War I, Russian industry was rapidly growing, but still well behind that of Germany. In the ensuing chaos of the collapsing Tsarist regime, Bolshevick revolutionaries seized power and replaced capitalism with the still untried Marxist socialist theories. One result was as a result of Stalinist collectivization, the agricultural productivity of the new Soviet Union was far below that of Tsarist Russia and no longer produced harvests permitting grain exports. Soviet Five Year Plans significantly expanded the country's industrial capacity, although the pre-War Tsarist growth rates suggest that this could have been achieved without the horrors of Stalinism. The Soviet industrial power in World War II along with assistance from American Lend Lease enabled the Soviets to prevail over the NAZIs. Soviet industry, however, prived hopelessly inefficent. In the uncompetitive Soviet system, most companies produced products that were worth less than the value of the labor and raw materials used to produce them. And the Soviet Union was never able to repair the damage done to Russian agriculture by collectivization. The Soviet Union did create an effective education system turning out well-trained scientists and engineers. Our section on the Soviet Union includes much ecomomic information. After the disolution of the Soviet Union, this became apparent when Soviet state industries were simply unable to compete with foreign firms. Russian economic planners have not yet made the reforms needed to develop a modern free market economic system to harness the enormous potential of Russia's well-educated population. The Russian economy is today based primarily on the export of oil and other raw materials, essentially the same as Third World countries with uneducated populations. Russia today with the exception of military weapons does not produce industrial or technological products which can conpete in world markets.
The economic history of Scotland begins with the arrival of neolithic humans after the last Ice Age (about 8,500 BC). Some idea can be pieced together from th the Stone Age, Bronze Age, and Iron Age arifacts found by archeologists. Written accounts begins with the arrival of the Roman Empire (1st century AD). It is at this time modern Scotland began to form, the Romans called it Caledonia. Economic life began to differ between the Roman controlled areas and the area to the north beyond Roman control. Accounts are very limited. The traditional view is that the Picts and other northern tribes were primitive and unwilling or unable to adopt the modern technology brought by the Romans. Some historians argue that the ancient Scotts were more adaptable and advanced than has been thought. One fact is increasingly clear, sea trade was very important to the Scottish economy. This became kncreasingly important as naval technology improved. England which with the arrival of the Normans became increasingly hostile, blocked land links with REurope. But this is less significant than it may seem. Land transport into modern times was promitive. Trade was conducted by sea. An eastern Scotland faces the Norh sea which provided access to Sandanavia and more importantly the Baltic and the sctive Hanseatic League traders as well as the Low Countries which became the driving force of the late-Medevial economy. To the west, there was access to Ireland and France. After interminable dwstructive wars with England, the Act of Union joined the two countries (1707). Enormous changes followed. It led go the dereadful Higland Clearances and supression of the Clans. A significant outward migration followed. This provuded access to the developing English empire as well as participation in the Industrial Revolution. As a result, of the industrial development and Scottish Enlightenment, formerly agricultural Scotland became one of the commercial, intellectual and industrial powerhouses of Europe. The driving force here was capitalism and it was a Scott, Adam Smith that provided the first clear explanation of capitalism, ironically in the same year the American Recolution broke out (1776). [Smoth] The reliance on smokehouse industries and the swing to sovialism led to an economic decline following World War II. This has significantly affected both Scotland and northern England. Income levels declined substantially below that of southern England. Scotland in recent years beginning with the Thatcher years has begun to develop a more modern economy leading to a cultural and economic renaissance. Important secgtirs emerging have been financial services sector resulting in large measure from North Sea oil and gas development. Adding to the economic changes has been a devolved parliament. The economic future of Scotland is an open question. Many Scotts like other Europeans have been influenced by an almost religious devotion to socialism. Britain as a whole is now having to adjust to consequences of Socialist Kenysian economics. It is unclear wht the futre holds.
Geography is a powerful forcing shaping both history and economics. This is demonstrated in Spain, but also that cultural factors are also important. The most important economic sector in the ancient world was agriculture and this a cuilture's wealth was primarily determined by geography. Modern wealth is more importatly shaped by the utilization of human resources and technology. In early periods geography was more important. And two factors affected the Iberian Peninsula, climate and location. Large areas of the Iberian Peninsula are not well watered. Thus in comparison to France and other areas of Europe, agriculture is less productive in Spain. however, mineral wealth. Tin was particularly important. A trade in tin began during the Neolithic era. The Greeks and Cartheginians established colonies on the Iberian Peninsula. Mamy coastal cities like Barcelona were founded in this period. Rome seuzed control of Spain during the Punic Wars and remsained a Roman colony until the fall of the Roman Empire. The mineral wealth continued to be great economic importance. Spain was almost overwealmed by the Muslim invaders (8th century AD). Gradually the Christian kingdoms reaserted themselves and rge Reconquista began. For centuries, Spain was the only place in Europe where Christains, Mudlims, and Jews lived in relative harmony. And as a result of that toleration and resulting intelectual development, Spain during the Dark Ages was the most advanced and economically sucessful area of Europe. The modern values of tolerartion and diversity were not seen as a positive in the medieval era. And both Muslims and Christians vied for control of the Iberian Peninsula. The year 1492 was a turning point not omly politically and cukturally, but also economically. The Christia morarchs Ferdinand and Isabella completed the Reconquista when they seized Granada. Once that was accomplished they approved Columbus' voyage. Here geography was again imnportant as the Iberian Peninsula is the western most promitary of Europe--key factors in the European maritime outreach. This led to the foundation of vast colonial empires. Unbelieveable quatities of gold and silver bullion poured into Spain making it the richest both powerful country in Europe. Most of that wealth proved empheneral. Rather than founding new industries like other ciuntries as Europe entered the modern age, Spain purchased goods made abroad. Also in 1492, Spain expelled it Jews and thus lost some of its most productive citizens. The Inquisition established earlier was used to track down Jews who persisted in their faith as well as free thinking Christians. Shortly afterwards the Protestan Reformation began to reshape Europe. The Inquisition and Counter Reformation not only batteled Protestantism, but also intelectual thought in general. The result was that as science began to emerge as a powerful European development, Spain did not participate and the country gradually declined to a poverty-stricken backwater. The Spanish Civil War and the Franco's victory had the impact of continuing Spain's isolation. Only with the death of Franco did the Spanish economy begin to enter the modern economic mainstream (1975). Spain and Portugal entered the European Union (1986).
Sweden in the early 19th century was still largely an agricultural country, untouched by the Industrial Revolution. Sweden had no tradition of primogenature. Over generations family farms were divided into smaller and smaller parcels. This put increasing pressure on the land and marginal land was tilled. Despite the agricultural situation, the population continued to grow. Swedish bishop and poet Esaias Tegne'r explained why the population expanded so significanly, "peace, vaccination and potatos." Some parishes reported the population tripling. As a result, the population of tenant farmers and landless laborers increased enabling large landowners to obtain labor at low cost and reducing many Swedes to abject poverty. This helped fuel large numbers of Swedes to emigrate, many to the United States. Along with the emigration, Sweden after the mid-19th century began to industrialize. Important changes and reforms finally led Sweden into the industrial era. Sweden for many decades achieved the highest economic growth rate in the world, only exceed by Japan in many decades. As a result, Sweden transforned itself from one of the poorest to one of the richest countries in the world (measured in terms of GDP per capita). Beginning in the 1970s the rate if growth and the relative wealth of Sweden has declined. A major factor here has been the growth in government.
Wales is on of the constiuent parts of the United Kingdom after England and Scotland. After two centuries of guerilla warfarem, Edward I conquered Wales (1282). This was several centuries before union with Scotland. As a result, Wales became integrated into the English economy centries before Scotland. The economic development of Wales fell behind that of England. The peripheral location of Wales and rugged upland topography, poor transport infrastructur, and small population were all factors. [Falkus and Gillingham] Commerce was mostly active in the ports and thedrivers who drove cattle and sheep into the prosperous English Midlands. With the advent of the Industrial Revolution (mid-18th century), Welsh mineral resources became important. This included both iron ore and coal. Iron smelting by coke (a coal product) turned the South Wales Valleys an important industrial location. The Industrial Revolution began with water power, but this soon prived inadequate to power the ever-increasing number of factories. As the Indistrial Revolution developed, the demand for coal and iron/steel resulted from the development of steam power (steamships and railways). [Falkus and Gillingham] The northern rim of the South Wales Coalfield was developed around on Merthyrwhich became Britain's most important iron-producing district (late-18th century). The southwestern area around Swansea became an important center of non-ferrous metal smelting and tinplate manufscture, in part ecause of the plentiful coal supply. Tin was available in nearby Cornwall. Slate becme another important indutry (9th century). Metallurgical industries required coal which at first was largely mined for this purpose. The need for ever-increasing quantities of coal to power steam engines steadily increased which became the primary demand for coal along with hime hearting (mid-19th century). Coal mining becme the primary industry of the of the South Wales Valleys. [Falkus and Gillingham] Economic cnditions caused some econmic migration to America. Richard Llewellyn beautiful novel, How Green is My Valley describes conditions in the coal fields. South Wales became the chief coal exporting region of the world (late-19th century).
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