Decline or Growth?

European Towns and Rural Economies

1300-1600
Paolo Malanima
1. Late Medieval-Early Modern Urbanisation
2. Urban and Rural Economies
3. A Two-Sector Model
4. onclusion
A!!endi"
Paolo Malanima
Institute of Studies on Mediterranean Societies (ISSM)
National Research Council (CNR)
Naples
malanima@issmcnrit
Economic Town-ountry Relations in Euro!e in t#e later Middle A$es
and at t#e %e$innin$ o& t#e Early Modern 'eriod
University of ienna !th" #th $une %&&!
T#e !a!er discusses t#e t#ree &ollowin$ sub(ects)
a. t#e trend o& Euro!ean urbanisation &rom *3++ until
*,++ -reassessin$ t#e e"istin$ literature on t#e to!ic./
b. t#e immediate causes o& t#is trend -on t#e basis o&
town-country di&&erentials in labour !roductivity and
wa$es./
c. a model e"!lainin$ t#is reconstructed trend on t#e basis
o& rural-urban interaction.
T#e conclusion addresses t#e advanta$es and disadvanta$es o& t#e
macro and micro a!!roac#es to t#e #istory o& towns in t#e late medieval
- early modern !eriods.
2
Decline or Growth?
European Towns and Rural Economies
1300-1600
Paolo Malanima
Research on 'uropean ur(anisation pro)ressed rapidly in the
1#*&s+ in particular than,s to the -or,s of Paul .airoch and $an /e
ries+ -ho presented t-o (road reconstructions relatin) to late medieval
and early modern 'urope.1 0o-ever+ in spite of the contri(utions
(y these t-o scholars+ the period -e are dealin) -ith in this article
is the least -ell",no-n in the lon)"term reconstruction of ur(an
'urope. 1e ,no-+ in fact+ that ur(anisation pro)ressed in the hi)h
Middle 2)es+ and that (et-een 13&& and 1*&& it sta(ilised or sta)nated.
1e ,no- much less a(out -hat happened (et-een 14&& and
13&&. $an /e ries5 -or, (e)ins+ in fact+ from 16&& and pays only
mar)inal attention to the previous a)e+ -hilst Paul .airoch+ althou)h
encompassin) the late medieval a)e as -ell+ is less convincin) for the
particular epoch -e are dealin) -ith+ at least as far as ur(anisation
trends are concerned.
In the present paper+ I see, to address three main 7uestions8
1. -hat -as the trend of 'uropean ur(anisation (et-een
14&& and 13&&9
%. -hat -ere the immediate causes of this trend9
4. ho- do -e e:plain this reconstructed trend9
I start (y re"e:aminin) the data; continue -ith an analysis of
some statistical relations#i!s (et-een varia(les and I propose+ at the
end+ a model in order to e:plain the chan)es in 'uropean ur(anisation.
<he materials I -ill deal -ith are mainly+ on the one hand+ revised
data on 'uropean population and ur(an inha(itants and+ on the
other+ series of ur(an and rural -a)es. /ata concernin) population
and ur(anisation are presented in the appendi:.
1 Paul .airoch+ Cities and economic development from the da-n of history to the present+
Chica)o 1#**; $an /e ries+ 'uropean ur(ani=ation 16&&"1*&&+ >ondon 1#*?.
3
1. Late Medieval-Early Modern Urbanisation
1.1. Two reconstructions
I thin, that most economic historians -ould a)ree on the definition
of a to-n as a stable settlement o& !o!ulation mainly devoted to
secondary and tertiary activities. 1hat distin)uishes+ in fact+ a to-n
from a villa)e is that in a to-n most of the population is employed in
industry+ trades and services. 1hile there is normally a certain proportion
of peasant households in pre"modern to-ns+ it (ecomes relatively
modest as soon as the si=e of the settlements (e)ins to rise. <he
num(er of inha(itants that must (e e:ceeded in order for a settlement
to (e defined as a to-n varies from re)ion to re)ion. In Northern and
Central 'urope+ once a settlement reaches around %+&&& inha(itants+
a ma@ority of the population is employed in secondary and tertiary occupations
and then -e can re)ard it as a to-n. 0o-ever+ in some
Mediterranean re)ions a settlement of %+&&& inha(itants -ould (e
considered rural+ o-in) to the presence of a ma@ority of peasants+
sometimes even in relatively (i) a))lomerations. Conse7uently+ the
threshold of population for definin) a settlement as a to-n is hi)her.
Some scholars+ for reasons of convenience+ have chosen a
threshold of 6+&&& inha(itants to identify a to-n. .ased on this
threshold+ <a(le 1 summarises -hat -e ,no- a(out ur(anisation in
'urope (et-een 14&& and 13&&.
Ta!le 1. 'uropean ur(anisation accordin) to .airoch and /e ries 14&&"13&&
(percenta)es of total population in centres -ith 6+&&& inha(itants or more).
2lthou)h -e lac, direct ur(an population data for the period (efore
14&&+ indirect information su))ests a modest rise in the rate of
ur(anisation from the 1&th century on-ards.% 2s for the 4&& years (et-een
14&&"13&&+ ur(anisation rose after the .lac, /eath (y 4 percenta)e
points (that is (y 4% percent (et-een 14&& and 1?&&)+ accordin)
to the reconstruction presented (y .airoch; a remar,a(le rise
indeed. It declined later+ (et-een 1?&& and 16&&+ only to recover dur"
4
in) the 13th century.4 0o-ever+ if -e compare 13&& -ith 1?&&+ the
rate of 'uropean ur(anisation declined. /e ries5 data more or less
tallies -ith that of .airoch for the period 16&&"13&& (althou)h his
study does not cover the -hole continent).
1" Towns: number and population
In order to verify these results+ it is helpful to (rea, the process
of ur(an development do-n into its t-o components A a rise in the ur(an
population -ithin already e:istin) to-ns and a rise in the num(er
of to-ns.? <he distinction is useful since ordinarily either the first or
the second component prevails. In some periods the to-ns themselves
)ro-+ -hile their num(er remains almost unchan)ed+ -hilst+ in
others+ the population of the e:istin) to-ns remains sta(le (ut their
num(er increases.
<a(le % sho-s (oth ,inds of chan)e over the period -hich concerns
us. <he first column )ives the num(er of to-ns across 'urope
-ith a population e:ceedin) 1&+&&&+ and the second considers #%
to-ns -ith a population in e:cess of 1&+&&& throu)hout that period.
1e could summarise the results of this ta(le as follo-s8 over the
4&& years that concern us+ ur(anisation increased+ and this rise depended
more on chan)es in the num(er of to-ns than on the )ro-th
of the e:istin) centres. /urin) the 13th century+ the increase is documented
(y (oth series in <a(le %. 2s for the previous t-o centuries+
the series provide a mi:ed ans-er. <he num(er of to-ns drastically
declined in the 1?th century and then recovered+ -hile the ur(an percenta)e
of our sample of #% to-ns -ith a population continually in e:cess
of 1&+&&& over those three centuries+ -as more or less sta(le.
<he conclusions advanced (y .airoch+ (oth in the series discussed
a(ove and in his other contri(utions on the su(@ect+ are not
5
(orne out (y the data. In his series+ the level of ur(anisation -as relatively
hi)h (y 1?&&+ and -as not surpassed a)ain until the 1#th century.
In 1?&&+ 1%.6 out of every 1&& people lived in centres -ith more
than 6+&&& inha(itants+ -hile in 1*&& it -as 11.# out of every 1&&. In
<a(le %+ (y contrast+ the percenta)e of the total 'uropean population
inha(itin) our sample of #% to-ns remains sta(le (et-een 14&& and
16&&+ -hile the num(er of to-ns has declined stron)ly (y 1?&&. <his
can only (e (ecause ur(anisation declined in the aftermath of the
.lac, /eath+ (ut su(se7uently recovered.
13 The trend
In <a(le 4+ I present the results of a revision (oth of the ur(an
data sets proposed (y .airoch and /e ries+ and of the population of
'urope per country+ on the (asis of more recent literature. 2lthou)h
-e are concerned here -ith the late medieval and early modern periods+
if -e loo, at ur(anisation in 'urope over a lon)er period+ from
14&& until 1*&&+ -e can )et a (etter perspective. It is useful to distin)uish
(et-een t-o series8 B'urope includin) 'n)landC and B'urope
-ithout 'n)landC. <his is (ecause 'n)land sho-ed a dynamism not
shared (y other re)ions (-ith the e:ception of <he Netherlands in the
13th"1!th centuries).
1e can summarise the results (y sayin) that 'uropean ur(anisation
overall declined (et-een 14&& and 1?&&+ recovered (et-een
1?&& and 16&&+ and rose considera(ly durin) the 13th century. Since
the hi)hest ur(anisation rates in this period -ere in the south+ especially
in Italy and Spain+ the ur(an decline in these areas (et-een
14&& and 1?&& determined the overall drop in ur(anisation.6 <he
6 I discussed the late medieval chronolo)y of Italian ur(anisation in Paolo Malanima+
Ur(anisation and the Italian economy durin) the last millennium0 in8 'uropean Revie-
of 'conomic 0istory+ # (%&&6)+ #!"1%%.
6
densely populated (i) to-ns of Southern 'urope -ere hit hard (y
epidemics. Drom 13&& on pro)ress -as very slo-. 1e could spea, of
a sta(ilisation rather than a rise durin) the lon) period 13&&"1*&&+ especially
if -e e:clude 'n)land. In any case+ after a fall in ur(anisation
due to the .lac, /eath+ the 16th"13th centuries -itnessed a remar,a(le
)ro-th. <he difference -ith the only e:istin) series of data on
late medieval ur(anisation A that presented (y .airoch " is evident.
13 The geography of urbanisation
In 14&& the most ur(anised area of 'urope ran from Dlanders to
Central"Northern Italy. 0o-ever+ Spain had a hi)h level of ur(anisation
(1%.1 percent) -hile Drance -as more (ac,-ard at 6.% percent.
(Map 1) North and 'ast of these re)ions ur(anisation percenta)es
-ere lo-er. Enly in the .al,ans -as the rate of 6 percent e:ceeded.
Map 1. Ur(anisation in 14&&.
.y 13&& 'uropean ur(anisation still lar)ely maintained the late
medieval pattern+ althou)h -ith some note-orthy chan)es (Map %).
<he hi)her rates of ur(anisation -ere still located in the area e:tendin)
from Dlanders to Italy+ (ut no- included 'n)land in the North and
especially the Netherlands+ -hich -as )ro-in) rapidly. Movin) -est-ard
to-ards Drance+ Spain and Portu)al+ ur(anisation levels
dropped+ althou)h Spain still held a remar,a(le position. In Central
and 'astern re)ions ur(anisation -as lo-er+ -ith the partial e:ception
of the .al,ans.
7
>oo,in) at ur(anisation rates in different areas+ -e discover that
the most dynamic re)ions of the continent+ from the ur(an vie-point+
-ere in the North+ -hile the Centre and the South -ere more sta(le
(<a(le ?). In the 'ast+ ur(anisation -as proceedin) more rapidly durin)
the 13th century than in the North+ althou)h the overall level of ur(anisation
in the 'ast -as half that of the North+ o-in) to its modest
rise durin) the 16th century.3 <he @ump in 'astern ur(anisation in the
13th century -as partly the conse7uence of a rise in the population of
Constantinople from 16&+&&& inha(itants in 16&& to ?3&+&&& in 13&&.
2t this time it -as 'urope5s lar)est city8 more than t-ice the si=e of
Paris (%%&+&&&) and >ondon (%&&+&&&) and far more populous than
the second lar)est city in 'urope+ Naples+ -hich had %*&+&&& inha(itants.
It -as not until around 1!6& that Constantinople"Istan(ul -as
overta,en (y >ondon. <he ur(an population in the .al,ans chan)ed
little in the 16th century. In the 13th century .al,an to-ns on the -hole
recovered rapidly. 2s -e can see+ in 13&& the (i))est 'uropean cities
-ere still located in the South. In 14&& there had (een only 6 'uropean
cities -ith more than 1&&+&&& inha(itants8 Paris+ Milan and Franada+
-ith 16&+&&& inha(itants each+ and enice and Dlorence -ith
11&+&&&. In 13&& there -ere *. <hese -ere+ in order of importance8
Constantinople (?3&+&&&)+ Naples (%*&+&&&)+ Paris (%%&+&&&)+ >ondon
(%&&+&&&)+ enice (1?&+&&&)+ Palermo (1&6+&&&)+ and 2msterdam and
>is(on (-ith 1&&+&&& each).
Map " Ur(anisation in 13&&.
3 See especially the data in Ni,olai <odorov+ <he .al,an City+ 1?&&"1#&&+ Seattle and
>ondon 1#*4 (.ul)arian edition 1#!%)+ 31 ff.
2lthou)h the level of ur(anisation remained far hi)her in the
South than in the North+ the (alance moved to-ards the North (et-een
14&& and 13&&+ as can (e seen (y the proportion of 'urope5s
total ur(an population in each of our four areas (<a(le 6). More than
half the ur(an population of 'urope -as in the South in 14&& and this
proportion -as still ?% percent in 13&&. .y 1*&& it -as less than 4&
percent and (y 1*!&+ less than %& percent.
Ta!le #. Percenta)e of the 'uropean ur(an population per area in 14&&"13&&
(livin) in to-ns -ith 1&+&&& inha(itants and more).
In the late Middle 2)es+ the southern part of Mediterranean
'urope -as considera(ly more advanced (<a(le 3). <his -as a le)acy
of late anti7uity+ -hen lar)e to-ns e:isted in the South+ -hile the
North -as (ac,-ard and scarcely ur(anised at all. In 14&& it -as still
so. .eyond the 2lps and Pyrenees to-ns -ere modest and fe-.
<here -as a noticea(le unevenness in ur(an development -ithin
'urope. It -as not until the early Modern 2)e that some conver)ence
(e)an to ta,e place+ and the previous sharp contrasts faded )radually
-ith the rise of ur(anisation in the North.
Ta!le 6 /isparities in ur(anisation in 'urope per re)ion and per area 14&&"
13&& (cities -ith more than 1&+&&& inha(itants).
1$
1% The main changes
2lthou)h -e must approach data on ur(an populations for periods
as far (ac, as the late Middle 2)es and the 13th century -ith caution+
certain results can (e assumed to (e sufficiently relia(le. I summarise
here some conclusions to (e considered -hen discussin) late
medieval"early modern 'uropean to-ns8
1. there -as a decline in 14?*"1?&& (due to the decline in
the South);
%. there -as an e:pansion every-here in the 16th and 13th
centuries;
4. the North and the 'ast+ durin) the Folden 2)e of the
Ettoman 'mpire+ -ere the most dynamic areas in the
period that interests us. <he Centre and South -ere
more sta(le than their Northern and 'astern peripheries.
" Urban and Rural Economies
%.1. T#e &orces be#ind urbanisation
2 lar)e num(er of causes have (een often invo,ed in order to
e:plain the historical patterns of ur(anisation8 demo)raphic (population
)ro-th)+ economic (a)ricultural pro)ress and development of industry
and trades)+ social (the attraction of ur(an life to non ur(an
populations)+ political (the settlement of political po-er and ur(an
freedom)+ etcG! If -e loo,+ ho-ever+ at the immediate factors determinin)
ur(an )ro-th+ -e could hypothesise that the e:istence of a differential
in -a)e levels (et-een ur(an and rural @o(s played an important
role as an a))lomeratin) force. Ur(anisation is a special case of
mi)ration and mi)ration is immediately determined (y a pursuit of
hi)her incomes and (etter livin) conditions. Many other elements may
also (e involved+ (ut -ithout a differential in la(our incomes any tendency
to mi)rate to the to-n can only (e short term.
10
2 )ood e:ample of ur(anisation led (y a dynamic differential in
ur(an"rural -a)es is the process -hich too, place in many countries
after 1orld 1ar %. Increasin) -a)es in industry and trade attracted
peasant families+ -ho left the countryside in order to find (etter"paid
@o(s in the to-ns. Ur(anisation e:ploded (oth in advanced and (ac,-ard
countries.* <his development continued a trend -hich had (een
under-ay since the (e)innin) of 'uropean industrialisation in the 1#th
century. Ur(an factories attracted more and more -or,ers from the
countryside. 2round the (ase industries+ producin) for far"a-ay mar,ets+
non"(ase or local @o(s developed that -ere a(le to pull people
from distant re)ions. If -e plot the intensity of mi)ratory flo-s to-ards
the to-ns over the last t-o centuries on a )raph+ -e )et an inverted U
curve8 from the relatively lo- rates of the pre"modern -orld+ to the fast
pace of mi)ration durin) industrialisation+ and finally to a ne- decline
-hen the ur(anisation level e:ceeds 3&"!& percent and ur(anisation
(ecomes a pervasive feature of the society as a -hole.
1e can simplify this (y means of the follo-in) function8
-here u is the ur(anisation rate+ wu is the ur(an -a)e in a particular
line of -or, and wr is the rural -a)e.# <he formula merely e:presses
the ur(anisation rate as a direct function of the ur(an"rural -a)e ratio8
-henever the ratio increases+ so does ur(anisation and vice versa.
Since -a)es represent mar)inal la(our productivity+ the differential in
-a)e rates corresponds to the differential in to-n"country productivity.
ariations in ur(an"rural productivity redistri(ute population (et-een
the to-ns and the countryside. 1e could also define the differential as
a s,ill premium in favour of the to-ns and this s,ill premium -idens
-henever ur(an activities develop more rapidly than rural demand for
la(our.
It is -ell ,no-n that ordinarily death rates are hi)her in the
to-ns than in the countryside. <he conse7uence is a continuous flo-
of mi)rants to-ards the to-ns to replace the dead. <he ur(anisation
rate rises -henever this flo- increases and this increase is li,ely to (e
connected to -a)e differentials or a s,ill premium for the ur(an @o(s.
"" Urbanisation and urban-rural productivity
It seems+ ho-ever+ plausi(le to hypothesise that a differential
(et-een rural and ur(an productivity is not the only factor that favours
immi)ration into the to-ns. <his differential+ in fact+ could (e rapidly
cancelled (y these mi)ration flo-s+ -hich -ould cause la(our produc"
* 'ven thou)h+ in the (ac,-ard countries+ the hope of findin) hi)her -a)es -ill often
not correspond to the actual possi(ility of findin) an occupation.
# 1e can assume that even thou)h wu and wr refer to particular occupations+ the
movements of different rural and ur(an -a)es are similar (oth in the countryside and
the to-ns.
11
tivity to fall in the to-ns and rise in the countryside. Instead+ the increase
in ur(anisation is fed (y ur(an productivity )ro-in) faster or
declinin) more slo-ly than a)ricultural productivity over a lon) period
of time+ leadin) to a risin) differential in -a)es. Ur(anisation -ill
therefore increase -henever -e find that8
( ) ( 1) ( 2 ) ( )
-here the su(script t is the first year of our series of -a)e differentials
and -t1*. is the follo-in) year and so on. <he previous function (%.1)
could (e then e:pressed as8
-here 2u-t1n.3u-t. is the rate of increase in ur(anisation durin) the period
(et-een t1n and t and the independent varia(les represent the
increases in ur(an and rural -a)es. 1henever data on productivity
are availa(le the previous function (ecomes8
-here 4u is ur(an avera)e productivity and 4r rural productivity.
"3 Urbanisation and the demand for labour
Usually some e:o)enous shoc, A an industrial innovation+ the
settlement of the royal court in a city+ an increase in e:ports etc." is
the main cause of an increase in capital formation and in demand for
la(our in a to-n. 1a)es reflect the rise in ur(an la(our productivity
and the differential (et-een ur(an and rural -a)es -idens. <hrou)h
the employment multiplier+ the effect of )ro-th in one or several ur(an
activities spreads and involves ne- ur(an sectors ((uildin)+ services+
administration etc.). 2s a result of this ne-+ internal dynamism of the
ur(an economy and the demand for la(our+ rural -or,ers are attracted
in from (eyond the city -alls. <otal employment )ro-s. <he effect
of the e:o)enous shoc, on the to-n5s economy on the -hole can
(e represented as8
-here 2T is the chan)e in total employment; 2% is the chan)e of employment
in the innovatin) sector and T3% is the employment multiplier.
1&
Innovation+ ho-ever+ is not al-ays ur(an. Sometimes+ althou)h
less fre7uently+ innovations have (een introduced in the countryside.
Proto"industrial activities -ere pro(a(ly already developin) durin) the
late Middle 2)es+ and they certainly advanced from the 1!th century
on-ards. <he productivity of a)rarian households rose+ -hich -as
1&
12
one reason -hy mi)ration from the countryside to the to-ns slo-ed
do-n durin) the 1!th and 1*th centuries. It is less certain -hether similar
chan)es -ere ta,in) place in the late Middle 2)es. 1as the decline
in ur(anisation in the century (et-een 146& and 1?6& perhaps
partly the result of a )ro-th in industries outside the to-ns9 It seems
impossi(le to )ive a definite ans-er at this sta)e of the research+ althou)h
some medievalists -ould (e ready to reply positively.
%.?. 5a$es and urbanisation
Ur(anisation can also increase even -hen ur(an productivity
declines+ so lon) as its decline is less than that of rural productivity.
1e -ill see later that from the late Middle 2)es on-ards -a)e rates+
and therefore productivity+ diminished in 'urope. In some re)ions+
ho-ever+ -a)e differentials in favour of the to-ns persisted+ and supported
flo-s of mi)rants to-ards them to)ether -ith a rise in ur(anisation.
In the literature on the su(@ect+ the persistence of -a)e differentials
in a particular economy has often (een seen as evidence of mar,et
imperfections or as an e:ample of mar,et failure. In fact+ a dynamic
productivity differential (et-een to-n and country -as a characteristic
feature of dualistic pre"modern economies and their un(alanced
technolo)ical pro)ress (-hich -as common -ithin the to-ns
and much less so in the countryside). Since capital formation follo-ed
technolo)ical pro)ress+ productivity rose in the to-ns and attracted
la(our force from a)riculture. <he -a)e differential may -ell indicate
mar,et imperfections+ (ut these imperfections -ere a customary feature
of any pre"modern economy.
0o-ever for more distant epochs+ it is hard to find relia(le information
on ur(an and especially rural -a)es in order to test the function
set out in e7uation %.4. Eften -e have nothin) more than short
series of -a)es+ -hich are difficult to correlate -ith the movement of
ur(anisation. En the other hand+ data on ur(anisation are usually
availa(le for the (e)innin) of any century and sometimes for the middle.
1ith the e:ception of a fe- to-ns -e rarely have data for each
decade. Ur(anisation is+ furthermore+ a phenomenon that sho-s little
fle:i(ility. <he e:istence of -a)e differentials does not mean an immediate
flo- of -or,ers from the countryside. Usually+ if the ur(anrural
-a)e ratio shrin,s+ families do not a(andon the to-ns to return
to the countryside. 1e often find mi)ration into the to-ns+ (ut rarely
mi)ration from the to-ns to the countryside. 2 to-n )ro-s (ecause of
immi)ration+ (ut if it declines+ this is usually due to the interruption of
mi)ratory flo-s and to death rates (ein) hi)her -ithin the city -alls
than outside. It is note-orthy that in periods -here ur(anisation is
proceedin) more slo-ly+ the data on -a)es and ur(an population may
fail to reveal the correlation (et-een mi)ratory flo-s and -a)e differentials.
I am focusin) here on the immediate causes of a rise in ur(anisation.
1e ,no-+ ho-ever+ that many other varia(les are involved in
the same process. 1e could call them remote causes. <hese causes
include population movement+ chan)es in crop yields+ transport costs+
the import of food and the level of industrialisation. <he scarcity of
data on ur(anisation (availa(le only on a century"(y"century (asis)
and on the other varia(les means that -e cannot assess the influence
of the remote determinants of the ur(an"rural differential; at least durin)
the period in -hich -e are interested. Dor the 1#th century+ ho-ever
(-hen the relia(ility and availa(ility of data are still far from satisfactory)+
a)ricultural productivity and industrialisation turned out to (e
the main varia(les.11 Dor Italy (et-een 1*31 and 1#!1 a re)ression
analysis of variations in ur(anisation and chan)es in industrial and a)ricultural
avera)e la(our productivity sho-s a stron) correlation.1%
"# Two case-studies
2lthou)h information on rural and ur(an -a)es is )enerally
scanty and fra)mentary+ t-o 'uropean re)ions are (etter documented
than the rest of the continent8 'n)land and Central"Northern Italy.14
.oth re)ions also provide e:amples of different ur(anisation paths8
the 'n)lish one+ from a lo- level of ur(anisation to the hi)hest in the
continent+ and the Italian path+ from the hi)hest level to-ards a comparatively
lo- one. 2round 1!&& (oth countries shared the same level
(<a(le 3).
Ta!le $. 'n)lish and Italian ur(anisation 14&&"1*!& (to-ns -ith 1&+&&& inha(itants
and more).
Hu I &.1* J &.&&%3 Hi " &.&&%% Ha
(&.&&?*) (&.&?!)
R% I &.46; P"value in (rac,ets; D"value 1.&1'"1&. <he result confirms e7uation (%.?).
<he series have (een differentiated (y decade to avoid the pro(lem of the unit root.
/ata on ur(an and rural productivity in Italy are from Malanima+ Ur(anisation+ -ie
2nm. 6+ 11!.
14 Ur(anisation in the South and Islands has not (een considered here+ )iven the particular
nature of a)ro"to-ns of most South Italian cities+ as recalled in Malanima+ Ur(anisation.
If -e consider+ first of all+ the indices of the lon)"term movement
of real -a)e rates of ur(an masons and rural la(ourers in 'n)land1?
and Italy+16 -e discover some similarities over the period from 1%*& to
1*&& (Di)ures 1 and %).
&i'ure 1. Ur(an and rural -a)e rates in 'n)land 1%*&"1*&& (1?*&"
#&I1)(decadal fi)ures).
&i'ure ". Ur(an and rural -a)e rates in Italy 1%*&"1*&& (1?*&"#&I1)(decadal
fi)ures).
<he trend of -a)es in construction represents the (roader picture
of ur(an -a)es+ and+ as a conse7uence+ the movement of ur(an
mar)inal la(our productivity overall. <he do-n-ard trend clearly demonstrates
the diminishin) capital per -or,er -hen demo)raphic increase
outstrips capital formation (includin) ara(le land in capital).
1e see the -ell",no-n profile of 'uropean -a)e levels (oth in
the to-ns and the countryside8 a sudden rise after the .lac, /eath
until a(out 1?6&; a su(se7uent drop until 13&&; and a recovery durin)
the 1!th century+ -hich -as stron)er in 'n)land than in Italy. 1e also
find similar ur(an and rural -a)es (oth in 'n)land and Italy.
<he presence of the ur(an"rural differential is not so clearly visi(le
in these indices. It is partly o(scured (y the fact that the decade
1?*&"#& -as chosen as the (aseline. In order to discover the e:istence
of this differential and to correlate it -ith ur(anisation+ it mi)ht
(e helpful to calculate the ratio of the nominal ur(an -a)e to the
nominal rural -a)e (Di)ures 4 and ?).
&i'ure 3. Ratio Ur(an"Rural 1a)es 'n)land 14&&"1*&&.
&i'ure %. Ratio Ur(an"Rural 1a)es Italy 14&&"1*&&.
It -ould certainly (e prefera(le if -e could deflate real -a)es for
uns,illed -or,ers in the to-ns and countryside -ith different price indices
in order to ta,e into account different price levels. In the case of
modern economies ((oth developed and developin))+ it has (een no"
ticed that the real differential is a(out 4& percent.13 Dor the period -e
are dealin) -ith it is hard to measure the real differential. 0o-ever+
since our interest is more in the dynamics of -a)e differentials than in
their level+ this does not hinder the follo-in) analysis.
1e see that+ (oth in 'n)land and Italy+ a mason5s -a)e -as+ on
avera)e+ t-ice as hi)h as a rural la(ourer5s -a)e. 2nother similarity is
that the differential suddenly narro-ed after the .lac, /eath. 1e
should remem(er that+ althou)h the (uilder5s -a)e is ta,en to represent
ur(an -a)es as a -hole+ -e are+ after all+ dealin) -ith masons.
In the depopulated 'uropean cities of the second half of the 1?th century+
the demand for (uildin) -or,ers must have (een particularly lo-.
'mpty (uildin)s -ere numerous and house rents -ere fallin) every-here.
In 'n)land+ ho-ever+ a slo- increase in the differential had already
occurred (y the end of the century+ -hile in Italy the do-n-ard
trend continued until the mid 16th century.
In Italy the up-ard movement intensified from 1?*& on. In 16&&
the ur(anisation rate -as almost the same as in 14&&. 2 rapid sur)e
had occurred. <he hi)h ur(an"rural differential in the mid 13th century
can (e interpreted as the effect of inelasticity in the la(our supply from
the countryside+ o-in) to sta)nant or declinin) a)ricultural productivity.
It has (een sho-n that in the case of Dlorence+ this inelasticity resulted
in hi)h ur(an -a)es+ relatively lo- profits and hi)h prices for
industrial )oods. <hese prices -ere not very competitive a)ainst forei)n
imports.1! 2 lar)e differential persisted until the last decades of
the century. 2round the year 13&& this (e)an to shrin, and determine
the decline in the ur(anisation rate compared -ith that of 16&&. 2n
out(rea, of pla)ue hit some Northern to-ns in 16!6"*&; there -ere
famines in 16#&"#1 and 16#3+ and there -ere pla)ue epidemics a)ain
in 13%#"4&+ -hich struc, all of Central and Northern Italy. 2ll these
factors contri(uted to the fall. Drom then on until a(out 1*31"!1+ -hen
avera)e la(our productivity computed on the (asis of direct information
-as the same in a)riculture and industry+ the do-n-ard trend
continued -ithout interruption. Productivity declined (oth in a)riculture
and industry+ and in industry it declined more 7uic,ly.1* In 1*31+ the
ur(anisation rate -as almost 6 percenta)e points (elo- that of 14&&;
-hich means that it declined (y %6 percent in a(out 6 centuries.
In 'n)land the movement -as different. In this country -e o(serve
a )entle increase+ -ith an interruption+ ho-ever+ in the second
half of the 13th century. Drom 13&& on-ards the risin) trend resumed.
Productivity -as )ro-in) and this )ro-th -as stron)er in the to-ns
than in the countryside. Ur(an demand -as stimulatin) a)ricultural
productivity and the )ro-th of the latter -as supportin) increasin)ly
lar)er to-ns+ as 2. 1ri)ley claimed several times in his essays on the
su(@ect. 2)ricultural pro)ress helped ensure that the supply of la(our
from the countryside remained elastic and in step -ith the ur(an demand
for -or,ers.
"6 England !taly and Europe
.oth )raphs sho- a correlation -ith the 'uropean trend in ur(anisation8
the sudden fall around 1?&& (follo-in)+ and as a result of+
the epidemics)+ and the recovery in the 16th and 13th centuries+ led (y
)ro-in) differentials in -a)es. 0o-ever+ -e should note that+ -hile in
the 16th century this risin) trend -as connected to hi)h la(our productivity+
in the follo-in) century the )ap in -a)es persisted until a(out
166&+ even thou)h productivity -as declinin)+ as the trend of -a)es
sho-s and research on avera)e la(our productivity confirms.1# 2s -e
sa-+ in Italy this decline ran in parallel to the decline in ur(anisation.
In 'n)land the availa(le information is insufficient to allo- us to say
-hether ur(anisation slo-ed do-n for some decades after 16!&.
In the lon)er term+ 'n)land and Italy represent t-o e:treme tendencies
of 'uropean ur(anisation -hile other re)ions are intermediate
e:amples. <he Netherlands -ere similar to 'n)land in the 13th and
1!th centuries ((ut -ere similar to Italy in the 1*th century+ -hen their
ur(anisation rate declined). Spain and Portu)al shared the Italian
trend+ (ut )re- more rapidly in the 13th century+ their Folden 2)e. Ur(anisation
in the .al,ans increased throu)h the rapid )ro-th of Istan(ul
as the centre of the court+ attractin) a population to -or, in services
and the @o(s that depend on them. <he same -as in part true of
Southern Italy and Spain+ althou)h in these cases the e:istence of
many a)ro"to-ns+ -hich developed from the 13th century on+ ma,es
the data unrelia(le and hard to compare -ith those from other countries.
3 " Two-#ector Model
4.1. Two sectors
2s mentioned a(ove+ ur(anisation is a special case of mi)ration.
It can thus (e e:plained (y the t-o"sector models that are used in
economics to descri(e the mo(ility of la(our and capital (et-een different
countries. 0o-ever+ the model needs to (e adapted if it is to (e
used to analyse to-n"countryside relationships in a pre"modern economy.
I assume t-o sectors+ the a)ricultural"rural and the industrialur(an+
producin) t-o different types of )oods8 )rain in a)riculture and
te:tiles in industry. <heir production functions are different. In a)riculture
)oods are produced usin) la(our (La) and natural resources (R)+
-hile in industry they are produced (y means of la(our (Li) and capital
(6). <he only mobile factor is L+ -hile resources are immobile and
capital is a s!eci&ic factor (connected to a particular usa)e+ and cannot
(e converted to a different ,ind of production). <he t-o different
production functions are8
Ya = f (La,R) (4.1)
Yi = f (Li,K) (4.%)
-here 7 is the product and (a) and (i) refer to a)riculture and industry.
<he price of cereals is simply 'a87i37a and the price of te:tiles is
'i87a37i.
<he -a)e in a)riculture is )iven (y8
wa = MPLa Pa (4.4)
-here wa is -a)e in a)riculture+ M'La is the physical mar)inal la(our
productivity and 'a the price of the )ood produced in a)riculture.
In industry the -a)e is8
wi = MPLi Pi (4.?)
-here the only difference -ith e7uation (4.4) is the su(script i referrin)
to industry.
Dinally8
L = La + Li (4.6)
-here total la(our (L)+ e7ual to 1&&+ is the result of the sum of a)ricultural
la(our (La) and industrial la(our (Li).%&
Dor the follo-in) development of the model+ -e should note that
demand for te:tiles is hi)hly income elastic+ -hereas that for cereals
is inelastic.
3" Town-countryside
Di)ure 6 represents mar)inal la(our productivity in (oth sectors
(on the vertical a:is) as a function of the percenta)e of la(our employed
(on the hori=ontal a:is). En the ri)ht hand+ -e find on the vertical
a:is the a)ricultural sector+ -hile industry is represented on the
left. .oth curves decline as soon as the input of la(our increases (as
the conse7uence of the diminishin) returns to la(our). In other -ords+
la(our productivity is inversely related to the la(our force employed in
the sector.
2t point E the e7uations (4.4)+ (4.?) and (4.6) are satisfied and
e7uili(rium e:ists. <he level of -a)es is the same in (oth sectors
(wi+8wa+) since the mo(ility of la(our e7ualises productivity and
-a)es. Erdinarily+ ho-ever+ a to-n"countryside -a)e differential e:ists
-hich attracts the peasant population to the ur(an centre. In the
fi)ure+ the differential is represented (y the (ase of the trian)le -ith its
verte: at point E+ and then (y the difference (et-een wi* and wa*. <he
area of the trian)le increases -hen the to-n"country productivity differential
-idens.
&i'ure #. 2 t-o"sectors economy8 )ro-th.
>et us distin)uish no- three different developments in our t-osector
model in order to e:plain the pro)ress and decline of ur(anisation
and+ finally+ ur(anisation in a dualistic economy.
33 $rowth
.efore modern structural chan)es+ a much hi)her percenta)e of
-or,ers -as employed in a)riculture (as -e see on the hori=ontal
a:is8 the a(scissa l* in Di)ure 6). <he percenta)e of la(our in a)riculture
corresponds to the part of the hori=ontal a:is (et-een the intersection
-ith the vertical one on the ri)ht and l*. >a(our employed in
industry is the remainin) se)ment of the hori=ontal a:is on the left.
In the case of an e:o)enous shoc, (e.). an innovation in te:tile
technolo)y) and a conse7uent productivity )ro-th in industry+ the line
M'Li'i moves to the ri)ht. <he percenta)e of -or,ers employed in
industry increases from l* to l2 (as can (e seen on the hori=ontal a:is);
-hile in a)riculture this decreases. Unproductive a)ricultural -or,ers
and those -hose productivity is lo- find occupation in industry.21 <he
)ap (et-een ur(an and rural -a)es -idens. It is represented (y the
difference in the ordinates of wi2 and wa2+ -hich is (i))er than the
previously e:istin) difference (et-een wi* and wa*. <he -idenin) )ap
is caused (y the )reater rise in industrial productivity and (y the inelastic
demand for a)ricultural )oods as soon as per capita product increases.
If productivity in industry continues to rise and the line of mar)inal
product moves further to the ri)ht+ -hile the differential in ur(anrural
productivity -idens or simply remains sta(le+ the num(er of
-or,ers in industry rises and -a)es increase. <he centre of )ravity of
the economy )radually shifts from the a)ricultural to the industrial sector.
In this case the ur(an"rural differential in -a)es constitutes a dynamic
dise7uili(rium supported (y a difference in productivity.
0ere I assume that the innovative sector+ industry+ is localised in
ur(an centres. 2lthou)h this assumption holds true for 1#th"%&th century
'urope+ in previous centuries productive proto"industrial activities
also developed in the countryside. In this case the industriala)ricultural
differential in productivity does not correspond to the ur(an"
rural divide. <he interplay (ecomes more comple:. Dor the period
I am dealin) -ith here+ the presence of industrial activities in the
countryside+ althou)h sometimes important+ -as not decisive.
1henever the supply of la(our in a)riculture is elastic+ o-in) to
the presence of -or,ers -ho are either unproductive or have lo- productivity+
or o-in) to a rise in productivity -hich releases la(our+ since
fe-er -or,ers can no- produce -hat many more produced previously+
the strai)ht line M'Li'i moves further to the ri)ht. If+ in contrast+
there is no pro)ress in a)ricultural productivity+ the inelasticity of the
la(our supply from the countryside (ecomes an o(stacle to further
)ro-th. <he industrial revolution must (e accompanied (y an a)ricultural
revolution. If+ in fact+ la(our supply (ecomes inelastic+ the
strai)ht line of the mar)inal productivity in a)riculture moves to the
left+ -here -a)es are hi)her and more la(our than (efore is employed
in a)riculture. <he static nature of a)riculture can compromise the
possi(ilities of )ro-th and turn the terms of trade a)ainst the advanced
sector. ':pansion in the ur(an sectors may (e stopped (ecause
the price of su(sistence )oods rises and profits fall.
<he movement to-ards the ri)ht represents -hat actually happened
in many economies over the last t-o centuries8 innovations in
industry -ere accompanied (y a flo- of -or,ers from a)riculture to
the to-ns in search of employment in the ne- e:pandin) sectors of
industry and services. Productivity also rose in a)riculture+ increasin)
the elasticity of the la(our supply to the industrial sector. Ur(anisation+
industrialisation and structural chan)e -ere developin) at the same
time+ transformin) the -ay the economy and society -ere or)anised.
0o-ever+ this sort of development too, place in pre"modern
economies as -ell. <he remar,a(le )ro-th of >ondon and other 'n)lish
to-ns (et-een 136& and 1!6& can (e considered as a case of
ur(anisation led (y deep chan)es in ur(an and rural productivity.%%
'n)lish ur(anisation on the -hole closely follo-ed this movement
from the late Middle 2)es on-ards. In the Netherlands -e find the
same pattern in the 13th and 1!th centuries. In Italy a similar trend
must have ta,en place (efore 14&&+ in a period+ that is+ for -hich -e
lac, direct information (oth on -a)es and ur(anisation.
.ecause demand for primary )oods is inelastic relative to
chan)es in the level of income+ risin) productivity results in a structural
chan)e. In our t-o"sector model+ this is represented (y the displacement
of the economic e7uili(rium further to-ards the ri)ht and
then to-ards industry. <he -ei)ht of the a)ricultural sector shrin,s+
(oth in terms of employment -ithin the sector and its contri(ution to
the national product.
4.?. 9ecline
1hat happens if+ (y contrast+ la(our productivity declines9 <he
ans-er is that normally the opposite -ill occur (Di)ure 3).
&i'ure 6. 2 t-o" sectors model8 decline.
>et us assume that a decline of capital+ resources or (oth per
-or,er causes a decline in productivity and then a displacement of the
M'La'a line to the ri)ht. <he conse7uences -ould (e8
1. an overall fall in per capita output+ since a)riculture is (y
far the most important sector of the economy;
%. the curve of industry M'Li'i -ould move to the left (ecause
the demand for secondary )oods is elastic relative
to chan)es in income and the decline in per capita
F/P causes a decline in demand for manufactured
)oods. <he ne- intersection is no- at point 2;
4. employment in the to-ns -ould diminish (from the a(scissa
l* to l2)+ resultin) in a structural chan)e (the
ruralisation of the economy as a -hole);
?. the ur(an"rural )ap in -a)es -ould diminish (ecause of
the fall in demand for secondary )oods+ as -e see in the
difference (et-een wi2 and wa20 -hich is less that that
(et-een wi* and wa*.
<his trend applies particularly -ell to Italian lon)"term deur(anisation
and to other cases of deur(anisation in 'arly Modern 'urope.
.oth curves intersect no- more on the left. <his is the reason -hy+ in
a period of declinin) -a)es and productivity such as the second half
of the 13th century+ ur(anisation declined in Italy. /ata on other 'uropean
re)ions+ availa(le only on a century"(y"century (asis+ do not ena(le
us to o(serve any slac,enin) in the flo- of the rural population
to-ards the to-ns. In any case the ur(anisation rate is risin) -hen -e
compare a))re)ate data for the continent as a -hole.
4.6. Urbanisation in a dualistic economy
Many scholars assume that an increase in ur(anisation al-ays
depends on risin) productivity (oth in the to-ns and countryside. Increasin)
ur(anisation indicates that ur(an sectors are pro)ressin)
and can attract -or,ers+ -hile relatively fe-er a)ricultural -or,ers are
a(le to support a hi)her percenta)e of people not employed in the
primary sector (i.e. they are more productive). <his+ ho-ever+ is not
necessarily so.
1e have seen that in periods of )ro-th+ productivity rises alon)
-ith ur(anisation. In periods of decline+ productivity declines+ as does
ur(anisation. In the 13th century the movement of -a)e rates sho-s
fallin) productivity compared to the previous century+ (ut+ at the same
time+ a rise in ur(anisation. <he e:planation is that+ in the period -e
are e:aminin)+ la(our productivity declined (oth in a)riculture and in
ur(an sectors+ (ut in the ur(an sectors the decline -as less pronounced+
and the )ap in -a)es continued to attract -or,ers from the
countryside to-ards the to-ns. In this case the previously mentioned
differential wu3wr -idened (ecause of the )reater drop in the denominator
of the ratio and ur(anisation+ therefore+ continued to rise. In the
modern -orld -e can see many cases of hu)e ur(an )ro-th alon)side
very lo- levels of la(our productivity in a)riculture. People move
to the to-ns simply (ecause there is no opportunity of employment in
the countryside.
If there -ere full employment (oth in the to-ns and the countryside+
this development -ould (e impossi(le. In this case+ in fact+ a
displacement of -or,ers from a)riculture to-ards industry -ould lead
to a rise in a)ricultural prices+ since ur(an demand -ould increase
(more consumers and fe-er producers of a)ricultural )oods)+ -hilst
23
la(our productivity in the countryside -ould also increase (fe-er
-or,ers resultin) in more capital per -or,er). 2ll this -ould provo,e a
movement to-ards the ri)ht of the curve of mar)inal product of a)ricultural
la(our. 1or,ers -ould (e attracted (ac, to a)ricultural employment.
1e ,no-+ ho-ever+ that -hen a)ricultural productivity declines+
dis)uised unemployment in the countryside increases (ecause
capital and land are una(le to support more employed -or,ers. 2s
lo- or non"productive -or,ers from the countryside mi)rate to the
to-ns in search of some form of occupation or to live on charity+ ur(anisation
is li,ely to increase. In this case+ the mi)ration of unemployed
-or,ers from the countryside results neither in an increase in
a)ricultural productivity+ nor in an increase of a)ricultural prices+ as
-e -ould e:pect if there -ere full employment. <he curve relatin) to
a)riculture displaces itself to-ards the ri)ht+ -here productivity and
-a)es are lo-er. Mi)ration flo-s to-ards the to-ns also lead to a reduction
in productivity in ur(an sectors as -ell. Real -a)es drop (oth
in a)riculture and the to-ns+ (ut in the dualistic pre"modern economy
secondary and tertiary occupations are+ ho-ever+ relatively more dynamic
and -a)e differentials -iden.
In Di)ure !+ -hile (oth mar)inal product curves move+ to the
ri)ht (in the case of a)riculture) and to the left (in the case of ur(an
sectors)+ the ne- intersection in point 2 implies a -ide differential in
-a)es and more la(our employed in non"a)ricultural activities (from l*
to l2)+ resultin) in )reater ur(anisation. 2s -e see+ a drop in a)ricultural
and non"a)ricultural productivity can lead to an increase in ur(anisation.
<his is -hy ur(anisation rose -hile productivity -as declinin)
in the dualistic economy of 13th"century 'urope.
&i'ure $. 2 t-o"sector economy.
M'La' a
Li La
M'Li
w
M'L i ' i
M'La
w
l 2
wi*
wi2
wa*
wa2
*
2
l *
24
<he difference (et-een Di)ure 3 and Di)ure ! consists in the
relative -idth of the displacement of demand for la(our in the to-ns
and a)riculture and in the differential in -a)es.
Fro-th implies the movement of (oth demand curves to the
ri)ht+ and then increasin) productivity+ structural chan)e in favour of
industry and ur(anisation. /ecline means+ on the contrary+ the displacement
of (oth demand curves to the left of our )raph+ a decline in
productivity+ structural chan)e in favour of a)riculture and+ often+ (ut
not al-ays+ deur(anisation. In the first case+ the centre of )ravity of
the economy moves to-ards industry+ -hereas in the second case+ it
moves to-ards a)riculture. 0o-ever+ as -e have @ust seen+ lo- la(our
productivity in a)riculture can lead to increased ur(anisation.
2s -e have noted+ the 16th and 13th century 'n)lish and /utch
economies follo-ed the first of these t-o paths+ -hile+ from the second
half of the 13th century+ Italy follo-ed the second. 2s Di)ure 6
sho-s+ the increase in output per -or,er durin) the 16th century led to
a rise in ur(anisation throu)hout 'urope. <his up-ard trend in ur(anisation
continued even durin) the 13th century+ even thou)h productivity
-as declinin)+ as the trend of -a)es sho-s. In most 'uropean re)ions+
the economy -as shiftin) to-ards the point 2 of our Di)ure !.
<he unemployed -ere movin) from the countryside to the to-ns in
order to find employment or to live on charity. Several social historians
have often stressed the increase in ur(an poverty from the 13th century
on-ards. 0o-ever+ the process of ur(anisation -as (e)innin) to
sta)nate+ and sta)nation characterised the 'uropean ur(an system
until the onset of modern )ro-th in the 1#th century.%4
% %onclusion
I have tried+ in the precedin) pa)es+ first of all to ree:amine
some developments in late medieval and early modern ur(anisation;
then to focus on the relationships amon) the varia(les involved; and
finally to e:plain these relationships. <he results of this analysis are8
1. the 'uropean trend of ur(anisation -as not declinin)
(et-een 1?&& and 13&&+ (ut risin);
%. there is a relationship (et-een ur(anisation and the interplay
of ur(an and rural productivity+ -hich -e have
e:plored (y e:aminin) -a)e differentials in 'n)land and
Italy;
4. althou)h this relationship cannot (e tested statistically+ it
can (e tested theoretically and fits -ell into a classical
and neoclassical frame-or,.
<he precedin) reconstruction+ ho-ever+ rests on various assumptions
-hich a microeconomic historical approach could clarify+
%4 2s noticed (y '. 2ntony 1ri)ley+ <he )reat commerce of every civili=ed society8
ur(an )ro-th in early modern 'urope+ in8 Id.+ Poverty+ pro)ress+ and population+
Cam(rid)e %&&?+ %3*"*#.
25
especially from a short"run perspective. Some of these assumptions
are8
1. la(our from the countryside is free to move+ althou)h -e
,no- that institutions can interfere -ith+ and hinder+ this
movement. En the other hand+ institutions play an important
role in the to-ns themselves and can favour or
hinder contendin) economic forces;
%. for different occupations re7uirin) the same s,ill+ forces
of demand and supply tend to e7ualise -a)es+ (oth
-ithin the to-ns and (et-een to-n and country. ery little
research has (een devoted to the su(@ect and it
-ould (e interestin) to ,no- the dynamics of -a)es in
different ur(an @o(s;
4. prices have (een considered a(le to record soon the
economic forces at play+ (ut -e ,no- that+ at least in
the short run+ this is not so and mar,et imperfections
play a ma@or role;
?. over the lon) period -hich interests us transaction costs
chan)e+ and this chan)e may influence the -or,in) of
to-n"countryside relationships;
6. a decline in local demand for industrial products can result
in de"ur(anisation+ (ut forei)n demand can replace
the decline in domestic demand and then support a risin)
ur(anisation. 1e have to analyse in depth the composition
of ur(an demand and its fle:i(ility;
3. proto"industry has often (een seen as playin) a role
from the 1!th century on-ards. 1e still ,no- very little
a(out its importance and development (et-een 14&&
and 13&&+ althou)h its influence on the economy has
(een stressed.%?
<he effect of political authorities and social forces on the economy+
-ell entrenched in micro and institutional research+ has to (e inte)rated
into the macro approach. 1hile the macro perspective allo-s
us to sin)le out si)nificant chan)es+ the micro approach can help us
spell out in )reater detail the dissimilarities amon) different economic
systems and their special features.