Chapter 2: Entrepreneurs, firms, and global wealth since 1850
We live today in a world where most people are poor and some are very rich, and the category in which you find yourself is largely determined not by your job, your age, or your gender, but by your location. Despite the fast economic growth of China and India over the past two decades, most people in the world today are very poor. Nearly 3 billion people live on less than $2 a day; almost 1 billion are illiterate. These numbers reflect the continuing wealth gaps between the West and the Rest of the world, as well as the burgeoning wealth gaps inside countries such as China and India, as well as in the developed world. Although the data are contested, most economic historians would subscribe to the view that the large inequality between regions is relatively “new,” at least in historical terms. The timing, however, remains contentious. A broad consensus that incomes had diverged between Europe and China in the early modern period was disrupted around 2000 when Pomeranz put the term “the Great Divergence” into scholarly usage by suggesting that certain regions of China, India, and Western Europe were at broadly similar levels of agricultural productivity, commercial development and the ability of some firms to raise capital in the middle of the eighteenth century. The Great Divergence in wealth between the West and the Rest, then, began with the Industrial Revolution and the advent of modern economic growth in Britain.
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