The World Economy by the OECD Development Centre

The World Economy: Conquest and Settlement

One important instance of this process was Chinese settlement of the relatively empty and swampy lands south of the Yangtse, and introduction of new quick–ripening strains of rice from Vietnam suitable for multicropping. This process occurred between the eighth and thirteenth centuries, during which population growth accelerated, per capita income rose by a third, and the distribution of population and economic activity were transformed. In the eighth century only a quarter of the Chinese population lived south of the Yangtse; in the thirteenth, more than threequarters. The new technology involved higher labour inputs, so productivity rose less than per capita income.

An even more dramatic case was the European encounter with the Americas. The existence of this continent was unknown to Europeans before the 1492 voyage of Columbus3. The discovery opened up an enormous area, for the most part thinly populated. Mexico and Peru were the most advanced and densely settled, but they were easily conquered and three quarters of their population was wiped out by diseases which the Europeans inadvertently introduced. The new continent offered crops unknown elsewhere — maize, potatoes, sweet potatoes, manioc, chilis, tomatoes, groundnuts, pineapples, cocoa and tobacco. These were introduced in Europe, Africa and Asia, and enhanced their production potential and capacity to sustain population growth. There was a reciprocal transfer to the Americas, which greatly augmented its potential. The new crops were wheat, rice, sugar cane, vines, salad greens, olives, bananas and coffee. The new animals for food were cattle, pigs, chickens, sheep and goats, as well as horses, oxen, asses and donkeys for transport.

The major initial attractions of the Americas were the rich silver resources of Mexico and Peru, and development of plantation agriculture with imports of slave labour from Africa. The neo–European economies of North America and the southern cone of Latin America developed later.

The population of the Americas did not recover its 1500 level until the first half of the eighteenth century. The full potential of the Americas began to be realised in the nineteenth century with massive European immigration and the western movement of the production frontier made possible by railways.

The present variation in economic performance within the Americas — between the United States, Latin America and the Caribbean — is partly due to variations in resource endowment, but there are institutional and societal echoes from the past. In North America and Brazil the relatively small indigenous population was marginalised or exterminated, in former Spanish colonies the indigenous population remained as an underclass, and in all the areas where slavery was important their descendants have also remained an underprivileged group. Quite apart from this, there were important differences in the colonial period between Iberian institutions and those of North America. These continued to have an impact on subsequent growth performance4.