The Great Divergence

Why Western Europe pulled ahead of China and India economically from around 1800, and the competing explanations historians offer.

Around 1700, living standards in the most advanced parts of China and India were broadly comparable to those in Western Europe, according to many historians. By the late nineteenth century, Western Europe and its offshoots, like the United States, had become far richer. This dramatic separation is called the Great Divergence.

How big was the gap?

Economic historians such as Angus Maddison estimated that in 1700, China and India together produced around half of the world’s output. By 1950, their combined share had fallen to well under a fifth, while Western Europe and North America had surged ahead.

Competing explanations

Historians and economists debate why the divergence happened:

Coal and colonies: Kenneth Pomeranz argued in his influential book The Great Divergence, published in 2000, that Britain was lucky to have coal deposits near its industries and access to resources from its colonies in the Americas, which relieved land and energy constraints.
High wages and cheap energy: Robert Allen argued that Britain’s high wages and cheap coal made labour-saving machines profitable, encouraging the Industrial Revolution.
Institutions: others emphasise property rights, limits on rulers’ power, and competition between European states.
Science and culture: Joel Mokyr highlighted a culture of useful knowledge and the links between scientists and craftsmen in Europe.
Colonialism and extraction: many Indian historians emphasise how British rule drained resources from India and damaged its textile industry.

India’s experience

India had been a major exporter of cotton textiles. During colonial rule, British machine-made cloth flooded Indian markets, and Indian handloom production declined. Economists debate how much of India’s relative decline was caused by colonial policy and how much by global technological change.

Machines and wages

In eighteenth-century Britain, wages were high and coal was cheap. A spinning machine that saved labour but used energy was profitable to build. In places where labour was cheap and energy costly, the same machine would not pay. Allen argued that these prices shaped where industrialisation began.

Why it matters

Understanding the Great Divergence helps explain today’s world: why some countries industrialised first, and why others, like China and India, are now catching up rapidly.

Thinking Europe was always richer

For most of history, Asia's leading regions were as advanced and prosperous as Europe's. The large gap between the West and the rest is relatively recent, emerging mainly in the nineteenth century.

Key takeaways

The Great Divergence describes Western Europe pulling ahead of Asia from around 1800.
In 1700, China and India produced around half of world output.
Explanations include coal, colonies, high wages, institutions, culture and colonial extraction.
China and India's recent growth marks a partial reversal of the divergence.