China had experienced an early lead in technology than Europe and its technology kept on evolving ahead of Europe this was in the early 1350s. But China was overtook by Europe in technology by 1600 Europe had mass production of machinery which they were even trading than China. The growth of the economy of the two countries took two contrasting angles China manufacturing was done in the rural areas while European manufacturing was in the urban areas.
Setting of manufacturing companies in the urban centers hastened urbanization, this was characterized by massive migration of laborers from rural areas to the urban centers. Those who were working in the urban centers earned more than their counterparts in china whose industries were in the village. Their higher earning changed their lives styles and become high consumers hence improved their economy much faster than the Chinese (Rosenthal and Wong 1999). China chooses to settle its company in the rural areas because raw materials and food were cheap and there were fewer diseases.
Setting up of the company in the rural areas reduces the production costs (Kenneth, 2000). The amount which is reduced is the one which would have participated in improving the countries economy by empowering its citizens financially.
The two countries had different political economy which lead the ruler to decide on where the industries would be set either in the urban centers or in rural areas. Europe was also more capital abundant and capital markets were more active in the cities hence cost of capital was much lower at Europe cities than in the country side of China. Weapon industry is one of the industries which differentiated both countries, European was more prone to war due its Economic growth the neighboring countries were not friendly hence it had to improve its weapon production industry so as to protect its territories. Unlike China which had less enemies at the time.
The other different in their economic policies, China had bad policies pertaining to its economic growth as compared to Europe whose economic policies were well structured and had intended objectives of improving their status. That’s the reason why china was unable to relocate its industries to the urban centers where they would be much more vibrant and participate in economic welfare of the country.
The European had sound economic policies which had stipulated on how they would be able to attract more skilled laborers to their territory to speed up growth of the economy. Inclusion of skilled laborers ensured that the country become was much more innovative in its production and its technology improved and they were able to produce many types of machinery which are high quality than China.
The two countries also had different political structure for instance China had unified political control, it is a peaceful area which had hence there was no civil unrest or war. However, Europe had competitive politics and it experienced a lot of civil unrest and war even during peace time its leaders were always preparing to go to war hence their weapon industry was much better developed.
War is expensive and destructive there for due to frequent wars much of the achieved economical gains were eroded by this war. China improved on its crafts goods which were being produced by rural households this improved the textile industry which grew to be a large economic industry.
Rosenthal and Wong have a feeling that starting of the industries in the urban area in Europe and China in the rural areas is a divergence which needs to be understood how it affected their economic growth. This is an issue which they emphasized and argued out that they should first elaborate on why Europe decided to set its industries in the urban centers instead of rural areas. This was a strategic move as we have seen in another divergence of economic policy making which they tie.
The reason why it was a strategic move, the European had foreseen on how the effect of introducing industries at the urban areas will boost the growth of the economy and actually it did. People migrate to the urban areas to the cities which increase its economic activities. Those who were in the cities were being supplied with consumables like food from rural areas. So it also created employments to the rural residence who were supplying the cities. The cycle continued growing big and big as all economic sectors improved financially than China.
Idea of hiring foreign laborers came in after demand of skilled labor was high than those in the country. Employing foreigners in rural areas would not be convincing enough, so they were convinced and went for those Jobs because the industries were built urban centers. This is a move which boosted the economy of Europe very first.
Any economy is mostly driven by skilled human resource who area innovative to improve the existing technology and even invent new technologies to ease their operations and improve productivity. Investment of skilled labor improved on quality and quantity of goods produced hence they were much more competitive and they increased productivity which in turn sets the economy to grow much faster.
Europe experience more conflicts than China in the period of 1350 to 1650, the conflict affected its industrialization more because such conflicts target cities where there are infrastructures and large populations. There is little violence to the countryside’s so the industries in China remained intact when there was civil unrest or war which was a rare occurrence in China. Cases of war in China was instigated mostly by struggle of dynasties as they try to control power in their territories or even capturing of other territories but they were not destructive as in Europe because they didn’t even have good weapons which would do mass destructions as in Europe (Stephan, 2000).
I do concur with Rosenthal and Wong on their findings of comparison of China and Europe on their divergences on how they dealt with the economy those early days. The methods which Europe used in improving its Economic sectors are still useful today in building up industrialization, creation of Jobs and hiring of professions are management traits which are still in use today.
War has been featured prominently in the article and its effect to economy is evident that war is destructive it destroyed the economic wellbeing of Europe. These are real scenarios today as well countries which are constantly in war do not have a stable economy to support all the economic sectors and be self reliance.
Rosenthal, Laurent and Wong, Bin. 1999. ‘Fiscal Regimes & Economic Growth in Europe and China in 1500-1800’, UCLA, Vol. 1, No. (4), pp. 1-36
Kenneth, Pomeranz. Great Divergence of China & Europe. New Jessie: Princeton University press, 2000
Stephan, Epstein. Rise of States & Markets in Europe in1300-1750. London: Routledge, 2000