An interesting article discussing the recent findings in economic history work on the great divergence:
One of the results is that the great divergence was definitely on its way since about 1700. By the late 18th century Japan overtakes China in GDP per capita, which they call Asia's little divergence akin to Europe's little divergence when the Netherlands and later Britain permanently overtook Italy. Chinese GDP per capita peaked in the early 11th century and briefly regained that point under the Qing empire, only to descend into a sharp fall since 1700.
Per capita GDP in 1990 dollars.
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China's fiscal state weakness is striking:
Per capita fiscal revenues (grammes of silver)
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"The two views can be reconciled once it is recognised that a balance is needed between having a state that is strong enough to enforce property rights but not so strong that can it can appropriate all the gains from trade. Indeed, Dincecco (2011) argues convincingly on the basis of Europe’s experience between 1650 and 1913 that what was needed for economic development was the establishment of a regime that was both fiscally centralised and politically limited. Fiscal centralisation was needed to ensure that the state had sufficient capacity to provide public goods such as education and transportation infrastructure, while parliamentary control was necessary to ensure that the public revenues were spent effectively and that the state did not hinder the processes of private wealth creation.
There is empirical evidence to back up the importance of the expansion of both state capacity and parliamentary control in the European Little Divergence. Early modern Britain and Holland dominated Spain and Portugal in terms of both the ability of the state to raise taxes that allowed for an expansion of state capacity and the control exercised by mercantile interests over the state through parliament
Asian states are sometimes portrayed as more centralised and autocratic than European states, thus holding back Asian economic development (Jones, 1981; Landes, 1998). However, there is little evidence to suggest that the problem was one of Asian states being too strong. In fact, it is easier to point to Epstein’s (2000) problem of states being too weak to sustain integrated markets and support the trade needed to bring about prosperity. Parthasarathi (2011) makes this claim for India, and the work of Prange (2011) on the problems of piracy in the Indian Ocean supports the idea that merchants would have been better off with stronger states able to effectively enforce property rights.
Data on fiscal revenue per capita in Table 15 suggest that China and India failed to keep up with northwest Europe in increasing fiscal capacity during the early modern period. Covering a longer span of history, Brandt, Ma and Rawski (2014: 67) suggest that China’s per capita fiscal revenue had been on a downward trajectory since the Northern Song dynasty,
falling to just 30 per cent of its Northern Song peak by the late Ming period. This decline of the fiscal state mirrors China’s decline in per capita GDP."
The full paper provides a detailed attempt at an explanation:
