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Swedish GDP 1620–1800: stagnation or growth?

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Abstract

This paper reconstructs an annual volume series of GDP and GDP per capita for Sweden within present borders 1620–1800, extending the annual series that exist from 1800 onwards. Annual fluctuations of GDP are estimated from the annual fluctuations of harvests, which in the nineteenth century were strongly correlated with each other. Long-term trends are determined based on estimates of the values added of various activities for a few benchmark years. The paper shows that the long-term trend of GDP per capita increased modestly during the studied period, a different development from real wages that fell substantially. Henceforth, available data on real wages are at best a quite weak indicator of the development of GDP per capita. If Sweden is representative of Western Europe, the new data indicate a somewhat slower growth than assumed by Maddison. The increase in GDP per capita occurred in the seventeenth century and came entirely from non-agricultural activities, especially mining, public services, trade and transports. The lack of dynamism in the aggregate economy is explained by the dominance of agriculture. Per capita agricultural production displayed a stagnating tendency. Nevertheless, the expansion of the population in the eighteenth century was largely made possible by the increased use of iron tools in agriculture. Without technological progress, the strong population growth would probably have led to decreased per capita production.

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Notes

  1. According to an Augmented Dickey–Fuller test, the null hypothesis of a unit root for the series can be rejected at p < 0.0001 for all the variables except for the logarithmic change in GDP per capita. For the latter variable, the null hypothesis can be rejected at p = 0.0103.

  2. Leijonhufvud (2001, p. 72) presents the so-called Crown tithe. The tithe was supposedly one-tenth of the harvest. After Reformation, two-thirds of the tithe went to the Crown, while one-third was retained by the local church.

  3. For food industries, Krantz (2003) argues that a larger consumption of beer in the sixteenth century implies that the per capita production of food industries in 1571 was at a much higher level than in the early nineteenth century. However, the GDP series he uses from 1800 excludes home industries, such as baking at home. Since the present study includes home industries, it estimates the value added of food industries at a much higher level in the early nineteenth century than Krantz does. If we assume that the value added per unit of grain was roughly the same for baking and beer production, shifts in the consumption patterns of grains should not affect the value added of food industries. The ratio of the price of beer to the price of grain did not change much during the studies period (Jörberg 1972; Andersson Palm et al. 1991). For food industry, the estimated elasticity was at about the same level in the period 1840–1900 (0.76) as in 1800–1840 (0.74), which shows that, in the agrarian society, it was quite robust. Only from the late nineteenth century, with the advent of industrial society, did the elasticity decline substantially. Up to the 1850s, milling and baking, which were the industries most affected by the preceding year’s harvest, stood for more than 60 % of the total output of the food industries.

  4. Since the number of workers of manufacturers declined between the mid-eighteenth century and early nineteenth century, while the population increased, the per capita production of manufacturers declined significantly (Heckscher 1949: vol. 2.2, pp. 38*–39*). This, however, does not take into account home industries, which probably advanced during the period. For example, there is no evidence that per capita consumption of textile and leather products decreased.

  5. http://libris.kb.se.

  6. Agriculture and food industries are assumed to constitute a joint activity, whose margin of error is estimated as the weighted average of the margin of error for the two (i.e. their margins of error are assumed to be perfectly correlated with each other).

  7. Although Maddison puts annual Swedish per capita growth to 0.07 % in 1600–1820, this is conditional on the earlier estimate by the present author (Edvinsson 2005) that Maddison uses, which puts Swedish GDP per capita in 1820 significantly below the average in Western Europe.

  8. For example, the correlation between the logarithmic changes in volume GDP per capita and in real wage of unskilled worker in Stockholm was +0.64 for the period 1621–1850. The main reason for such a strong correlation was that nominal wages tended to be sticky, while the price of grain (which in turn was negatively correlated with harvests) fluctuated sharply. The correlation between the nominal logarithmic changes of the two variables was only +0.26 showing that nominal wages were not as responsive to fluctuations in nominal GDP per capita as real wages were to volume GDP per capita. In comparison, the correlation between the logarithmic changes in volume GDP per capita and in real wage of industrial worker was only +0.1 for the period 1861–2010.

  9. Based on Jörberg 1972, supplemented by data from Stockholm and Gothenburg (Andersson Palm et al. 1991).

  10. Their method was originally developed by Allen (2001b, p. 13), based on positing a demand curve for agricultural products. Consumer theory requires that own price, income and cross-price elasticities of demand add up to zero. A problem with Allen’s method is that it requires the knowledge of these elasticities, which could change over time. This method is criticised by Maddison (2007, p. 316–319).

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Acknowledgments

Firstly, I want to thank the three anonymous reviewers for helping me to improve this paper. For comments and suggestions on my research concerning pre-industrial economic growth I especially thank Bo Franzén, Dan Johansson, Tor Jacobson, Angus Maddison, Janken Myrdal, Lennart Schön, Johan Söderberg and Daniel Waldenström. A more detailed account of the sources and methods used will be presented in a forthcoming chapter of a book published by the Swedish Riksbank. The research has also been financed by Torsten and Ragnar Söderberg Foundation and The Swedish Research Council.

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  1. Department of Economic History, Stockholm University, Stockholm, Sweden

    Rodney Benjamin Edvinsson

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Edvinsson, R.B. Swedish GDP 1620–1800: stagnation or growth?. Cliometrica 7, 37–60 (2013). https://doi.org/10.1007/s11698-012-0082-y

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