Figure 1.--The capitalist economies of Western Europe in sharo contrast to the socialist economies of Soviet-controlled Eastern Europe achieved eniormoud successes. Only a few years after the devestation of World War II, modern new buildings were going up and people were experiencing prosperity beyond that before the War. At the center of this was the German Economic Moracle. European automonile compamies like Volkwagen, Renault, and Fiat began making inexpensive cars that workers coulld aford. Amother symbol of the new afflience was the Italian Vespa motor-scooter. This 1950s sbapshot is unidentified, but it looks like a German farm family has just purchaded a brand mew Vespa. Not yet apparent was how Europe could prosper without colomial empires.

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.

Austria

Any historical assessment of the Austrian economy is very complicated because the Austria as a state has changed so dramatically over time. Under the Hapsburgs it began as a tiny Alpine principality. It evolved into the Austrian Empire. The Hapsburgs were commonly chosen as the Holy Roman Empire and the dimensions of their personal empire spread east from Austria into Central and Eastrern Rurope, including Bohrmniua, Hungary, and parts of Romania, Hungary, Poland, and Ukraiune and south into northern Italy and the Balkans. For several centuries it was one of the great powers of Europe. The ecionomy iof the Empire was based on agriculture and bonded labor. Serfdom was an important part of the economy of the Empire. This was not unusual in mediueval Europe, but at the time that Austria expsnded into the East, serfdom was declining in Western Europe as the modern economy began to take shape in the West. In the East, however, serfdom became more enhtenched. And as a result, the Austrian economy and Eastern Europe in geneal remained primarily focused on agriculture. While the emancipatiuoin of the serfs began (1781), but fedudal obligations continued until the Revolution of 1848. Even so the economy of he Austrian Empire continued to be dominate by the agricultural production of large estates wrked by landless former serfs. Even the German portion of the Haposburgs Empire, a small part of the of the overall Empire, lagged behind the other German states at the beginning of the 19th century. Vienna was an exception, but even ruyral Austria as well as the non-Germam provinces of the Empire were backward compared to many of the developing Westerin European states. Here we are talking about literacy, science, art, living standards, snd other economic indicators. This included Hungary, he largest part of the Austrian Empire. Before the Industrial Revolution, this economic divide was not readily apparemy. After the Napoleonic Wars and the rise of modern economies it significantly impacted Austria's standing in Europe. The Imperial Governmrnt made lottle effort to indudrilize. This was in part due to the influence of the aristocrsvy which oned and operate lsrge estates with an uneducated, landless workforce--the descendents if the former serfs. Austria and Prussia comoeted over which country would lead the unification of Germany. The only significant industrial development in the Austrian Empire occurred in Bohemnia, the only regiuon with coal desposits, and with little Imperial support. Austria did make some ecoinomic progress, but not at the same pace as the German states to the north. Austria was excluded from the Zollverein (Custom Union) because of its protectionist trade policy. Prussia in contrast began a major indudstrialization effirt, priomoted and directed by the Hohnzillern monarchy. The result was a Prussian viuctory in the Austro-Prussian War (1866) which essentially ejected Austria from Fermsny and kled to German Unification under Prusdia. The Austrian Empire was transformed into the Austro-Hungarian Empire, but few economic changes occurred. As a result, Austria-Hungary was unable to bear the burden of World War and was disolved. Austria became a small Alpine republic which had trouble adjusting to the massive econimic challenge of separtion from its former eastern empire. Like Germany, it sucumed to the Hitler and the NAZI vision, ending in World War II massive loss of life and destruction. After the War, Austria has arisen like a phonexix. After the departure of the Soviets (1955), Austria kept pace with the German Economic Miracle. Austria today is one of the most prosperous countries in the world.

Belgium

Flanders was a center for textile production during the medieval era. The region developed a vibrant trading economy, in particular importing the needed wool from England. Flanders played a role in leading Europe out of the medievl era. It became one of the richest provinces in Europe. Unfortunstely this attracted wanted attention from France which after Spain had separated Beklgium fvrom ghe Netherlsnds invaded what the tgime was called the Spanish Netherlands. Iron processing developed in Walloon. There were large coal reserves in the south and east of the country. The Industrial Revolution began in DEnglnd (mid-18th centuty). It began on tbhe Conyinent in in Belgium. These develioment were important early steps leading to the Industrial Revolution. Belgians maintained close economic and iuntekdctual contacts with Britain. The first steam engine on the continent went into operation near Liège (1720). The engine made by Thomas Newcomen in Englkand was used to pump out waste water from a coal mine. Anotherr Britush ebfine was used in the coal region around Mons and Charleroi. This would be the founfation upon which Bekgium's modern coal and steel industries wiukd be built. Durubg the French Revoluution, Belgiun and the Netherlands were conquered by the Frebacjh (1792). The occupation had some positive effect on the economy. The French abolished the old guilds and introduced freedom of trade. In addition , an imprtant new market opening up in France, especially for coal. Belgium would become Europe most highly induatrialized country.

Belarus

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.

Bulgaria

Denmark

England

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."

Estonia

Finland

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.

France

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

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.

Georgia

Agriculture has dominated the economy. Crops include frit, tea, tobacco, silk, and wine produced in the warmer, well-watered areas of the west. Manganese is mined at Chiatura. Mostly during the Soviet era, manufacturing developed for machinery, chemicals, and iron and steel works. These industries operated in the closed Tsarist and then Soviet system. Like other Soviet industries they were highly inefficent. They could only function in a closed system which shielded them from competion. The inefficencies, however, impaired the contribution to the Soviet economy and the wages they could pay workers. The economy imploded with the collapse of the Soviet Uniin and independence (1991). Inefficent Soviet socialist enterprises could not survive once subjected to competition. Since independence, however, the economy and workers have benefitted from free market reforms. The economy gradually recovered as private enterprises began to function. Growth rates reached double digits as a result economic (capitalist market-based) and democratic reforms brought by the peaceful Rose Revolution. In 2007, the World Bank (WB) named Georgia the World's number one economic reformer (2007). The WB has since continuously ranked Georgia at the top of its ease of doing business index. [GT] Georgia has continued its upward economic trajectory 'moving from a near-failed state in 2003 to a relatively well-functioning market economy in 2014.' [U.S. State Department] Georgia's free market reforms are supported by a relatively free and transparent national poliical and social atmosphere. Georgia has been identified as the least corrupt nation in the Black Sea region, not only outperforming all of its neighboring states, but even closeby European Union member states . [TI] Georgia has developed is a mixed news media environment. As a result it is the also the only country in the region where the press is basically free. [Freedom House] Georgia joined the European Union's (EU) Free Trade Area (2014). The EU is Georgia's largest trading partner. More than a quarter of Georgia's overall trade is with the EU. [European Commission] Georgia signed a trade agreement with EU (2015). This has resulted with exoanded trade ith the EU and declining trade with the Russian controlled Commonwealth of Independent States (CIS). [Georgia]

Greece

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.

Hungary

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

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

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.

Latvia

Lituania

Macedonia

Macedonia throughout most of its historty has had an agrciculturan economy. The relatively poor rocky soil and mountenous terraine has meant that it has been a poor country. This is why the explosionnof culture known as the Greek Golden Age was to the south of Macedonia. Maccedonia did, however, generate the military power to conquer Greece. The limited economic resources, however, ome Alexander's E,pire collapsed maenth atit could not resist the empires that formed around it. The Macedonian Empire fell to Rome (148 AD). Since then Macedonia has been a province of larger more powerful neighboring states. This has meant Rome, the Byzantines, and the Ottomans. Ottoman control meant that like other Balakan ststs, Macedonia did not experience the major cultural and economic developments sweepoing Europe. Innthe aftermath of the GrenchbRevolution, ideas of nationalism and the desires for independennce swept through the Ottoman-controlled Balkans (19th century). Unlike the surrounding states (Greece, Bulgaria, Serbia, and Albania, Macedonia failed to gain independenceas these states emerged from Ottoman control and rather became a province these states fought over in a series of Balkan wars. Throughout all of this. Macedonia remained a poor agriculturaL area. Much of it became souther Serbia which expanded into Yugoslavia after World War I (1914-18). As part of Yugoslavia there was some industrial development, especially during the Communist era (1945-91), although much of tgis was ineffucent, uncompetitive satate-owned enterprises. Macedonia gained independence from the former Yugoslavia (1991). This ended Communist rule, but Macedonia hardly embraced free market capitalism. .

(The) Netherlands

The economic history of the Netherlands is one of the most imprtant developments in understanding the modern world. The Netherlands was on the fringe of Roman Empire. German tribes from what is now the Netherlands playeda an imprtant role in the Anglp-Saxon invasioins of Briutain. In the medival era, the Netherlands included what is now Belgium. This area became the economic engine of the late-medeval period. An early economic revolution powered by wind, water and peat, land reclamation from the sea, and agricultural advances created the basis for the development of a vital textile industry supplied by English wool. This creation of capital laid the foundation of what happened next--the creation of 'the first modern economy'. [De Vries and der Woude] This is a starteling development because for much of modern history after the fall of Rome (5th century AD), it was China that was thge richest countryin the world and the engine vfor technologicalm advance. Many of the technolgies that would thrust Europe forward originated in China. And one problen the Europeans had when they ininiated maritime commerce with China is that they had very little the Chinese wanted in exchange for their lurxury goods like porcelin and silk. The Europeans had to pay with huge quabtities of silver. The rise of this modern economy was centered on the small, Protestant Dutch Republic that sucessfullly resisted the might of the Catholic Sapanish and French armies, the most poewerrfukl armies of their day. After gaining independent with English aid from Philip II's Spain Empire (around 1585), the Dutch generated almost a century of explosive economic growth. One of the imprtantbissues of history and economics is why this expolsive growthn occurred in the relatively poor West and not the much richer East. This is a questiin addressed by realtively few scholars because of the domination of modern academia by left-wing professors who canot bring themselves to write about the powerful capability of capitalism to generate technological asvances and create wealth and prosperity. A technological revolution in shipbuilding gave the Dutch led to a competitive advantage in shipping. As a result, the new Dutch young Republic become the dominant tradeing power in Europe (mid-17th century). The Dutch merchant marine totalled 568,000 tons of shipping —- about half the European total (1670). The fundamental pillars of this merchant flkeet was the dominance of the Amsterdam Entrepôt in Europea and that of the Dutch East and West India Companies (VOC and WIC) in intercontinental trade. This was in part made possible by the silver mines of the Spanish Empire (Mexico and Bolivia/Peru). As Spain did not develop economically, they paid for the vproducts of more adbance economies like the Dutch with that silver. The Soanish Comquistadores thirsted fir gold, biut it was silver that gthe Soanish Empire proiduced in great quantity. This trade and the invention of capitalism enabled the Dutch economy achieve the highest standard of living in Europe, surpassing even China (mid-17th century). And unlike China, this affluence was shared by the a=verage citizen. Such affluence launched a Golden Age in culture typified by the great Dutch and Flemish masters. The Netherlands is avery small country. While they foughtboff the samish and Portuguese, ievitably they could not stand off their onand off again rvial--Engkand. Esoecially after the Engkish adopted the capitalist econoimy that the Dutch had invented.

Norway

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.

Poland

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.

Portugal

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

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.

Russia

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.

Scotland

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.

Slovakia

Slovenia

The Slovenia economy was dominted by agriculture. The country like Austria has a long tradition of crafts, and like Austria little industry. Only in the early-20th century did Slovenia begin to modernize and diversify the economy. This continued during the royal period. Slovenia emerged as the most propsperous area of Yugoslavia and this continued during the Communist post-World War II era. Stalinist economic models called for heavy investment in heavy industry with little consideration of profitability. Thes big enterprises were all state owned. Coal resources helped fuel the news heavy industries. Economic development continued adter Tito's break with Stalin (1948), but with a degree market-oriented 'self-management' form of socialism for smaller rnterprises not permitted in the rest if the Soviet empire. While this was not as efficent as market capitalism, it was more efficent than the economies of the East Bloc countries. The Slovene economy proved to be the star of the Yugoslav federation. Slovenia was a small part of the Yugoslavia, less than 10 percent of the country's population. But with its well educated population, Slovenes 20 percent of the country’s GDP and 30 percent of its exports. Gradually Slovenia dominted by Serbian Communist leaderhip began to stagnate economically. Communist controls limiting market forces and rising debt levels caused increasing problems. Especially galling to the Slovenes was the Communist central government’s policy of distributing subsidies from the more prosperous northern market-oriented republics to the less-affluent and often corrupt southern republics. This essentially was a policy punishing economic efficency and rewarding coruption and inefficency. Combined with ethnic differences it was a major driver leading to the breakup of Yugoslavia and independence from Yugoslavia, meaning essentially Serbia and Communism. This led to major problems. The inherent unprofitability of 'socially owned' enterprises were exposed. And Slovenia lost it s markets which before independence werre primarily in the former Yugoslavia.

Spain

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

Wales

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).

Created: 6:23 AM 3/15/2011
Last updated: 10:19 AM 6/14/2021