Sunday, December 15, 2019

Why Is Eastern Europe Poorer?

Eastern Europe is generally poorer than Western Europe. This is a problem in an age of common migration because the educated and talented are migrating from Eastern to Western Europe. There’s a brain drain.

New research shows that this goes back about 1,000 years.

When you go back that far, you need to use to use a proxy for human capital. Keywood and Baten use “elite numeracy”. What they record is the frequency with which different countries were capable of recording the date of the birth of the child who later become the ruler. This is an indicator of understanding that some numbers will become important later on and needs to be recorded now.

What they found was that before 1000 A.D., elite numeracy was about the same across Europe (and probably not very good). But after that, and until about 1800 A.D., Western Europe took a large and sustained lead in elite numeracy. They then show that this divergence was related to military threats. In short, leaders in Eastern Europe were scared, and put their money into defense of, rather than education of, their elites.

The macroeconomic patterns we see in the world today may be very old indeed.

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