Banking and economic development: some lessons of history

The great differences in methods of production, levels of living, and quality of life that currently exist between rich and poor nations emerged for the most part within the last two centuries-even, one might argue, within the past century. Although one can detect obvious differences in these matters in the eighteenth century and earlier, perhaps as early as the fifteenth century for Eurasia, the width of the gap increased enormously in the course of the nineteenth century as a result of the phenomenon of industrialization, which, beginning in Great Britain, spread with greater or lesser rapidity to some but by no means all of the nations of Europe and North America, and established beachheads in a few other areas. In the first half of the nineteenth century Belgium and France followed Britain's lead; by the middle of the century Germany was on the eve of its great industrial expansion. After about 1850, and especially after 1870, nations that were beginning to industrialize could imitate or borrow from the accumulation of skills, techniques, experi ence, liquid capital, and institutional innovations of these more advanced nations.