Wolf on Aldcroft, _Europe's Third World: The European Periphery in the Interwar Years_

[eh.net-review at eh.net]

Published by EH.NET (June 2007)

Derek H. Aldcroft, _Europe's Third World: The European Periphery in 
the Interwar Years_. Aldershot: Ashgate, 2006. xi + 217 pp. $100 
(cloth), ISBN: 0-7546-0599-X.

Reviewed for EH.NET by Nikolaus Wolf, Centre for the Study of 
Globalisation and Regionalisation, University of Warwick.


Aldrcoft's book is a compact and very useful survey on what we know 
about the economic development of the European Periphery during the 
interwar years. In large parts it reads like an extension of Berend 
and Ranki (1982) into the 1930s and like Berend and Ranki, Aldcroft 
refuses to present an overarching scheme or some unified model for 
the European Periphery. The main virtue of the book is to synthesize 
in a highly readable way a vast literature on the puzzling 
persistence of economic backwardness outside the north-western 
European core. Moreover, the book underlines the urgent need for 
further comparative research into the economic history of the 
Europe's periphery.

The book is organised in nine chapters, covering thirteen European 
countries, namely Poland and Hungary in Central Europe, the three 
Baltic States, the Balkan countries of Albania, Bulgaria, Romania and 
Yugoslavia, and the Mediterranean countries of Turkey, Greece, Spain, 
and Portugal. There are many informative comparative tables on these 
countries, a list of references that is quite impressive (though of 
course incomplete: I missed for example the excellent 1997 book of 
Feinstein, Toniolo and Temin) given the shortness of the text, and a 
very good index. But the reader will not find any maps, except the 
one on the front cover, which is rather misleading about the 
geographical scope of the book. This absence of maps is 
understandable from a publisher's perspective, especially because the 
cartography of Europe after 1914 is rather challenging, but it is 
hard to justify from an academic point of view. Good maps on the 
ethno-linguistic patchwork, on the extreme differences in natural 
geography, or on the presence or absence of infrastructure across the 
European Periphery would have been very telling about the economics 
of this region.

The first chapter argues for an "economic rather than a geographic" 
(page 3) definition of the European Periphery, encompassing those 
countries as peripheral which at the turn of the last century still 
had at least 50 percent of their population dependent on agriculture 
and with per capita incomes of less than 50 percent of the advanced 
European nations. On these grounds the exclusion of Czechoslovakia 
from the book is straightforward, but less so the exclusion of Italy. 
Here and elsewhere in the book, Aldcroft should have touched upon the 
massive regional differences within countries that prevailed during 
the interwar years. Then of course the exclusion of southern Italy 
but also that of Slovakia from the European Periphery would have 
become even more debatable, as well as the inclusion of Upper Silesia 
or some parts of Spain into the periphery: geography matters and I 
will come back to this. The chapter continues with a description of 
several common characteristics of these peripheral countries, which 
implicitly also indicates Aldcroft's conceptual framework for 
economic backwardness as such. All countries showed a low land and 
labor productivity in agriculture, coupled with a not much higher 
productivity in industry, which is reflected in the dominance of 
primary commodities in their foreign trade. Urbanization rates were 
much below Western Europe and the development of infrastructure and 
capital in a broad sense lagged behind. A growing population was 
fragmented into a diversity of ethno-linguistic groups, which 
contributed to political instability and helped to bring about 
authoritarian regimes. Chapter two elaborates on this to describe the 
situation of Europe's periphery prior to 1914: agriculture hampered 
rather than helped economic progress, human capital formation was 
slow and institutions poor. It also touches upon the "core-periphery" 
concept of development limited by economic dependency, but Aldcroft 
is skeptical about its general applicability (pp. 19-23).

Chapter three on "Peripheral Europe in the Interwar Setting" is the 
key narrative of the book as it surveys in about thirty pages the 
interwar experience of the thirteen countries in question. Here 
Aldcroft shows his outstanding command of a vast literature to tell a 
tale of many small and often young states fighting against a series 
of disasters. After a brief description of the difficult post-war 
reconstruction he rightly points to the fragility of the economic 
upturn in the late 1920s. Manufacturing production in the periphery 
grew, but all too often nurtured by subsidies and tariff protection, 
while still too slow to induce any structural change. When the Great 
Depression hit, it made a bad situation worse, by limiting access to 
markets while (often) increasing the debt burden. Aldcroft argues 
that the policy turn towards strategies of economic nationalism in 
most parts of the European Periphery during the mid-1930s was 
essentially without alternative (page 59). He mentions the raising 
share of defense spending in public expenditure due to a climate of 
military threat and concludes that "the international background ... 
was scarcely the most auspicious of environments for latecomers to 
modern development" (page 67). It might have been rewarding to 
explore that international background a bit closer -- I missed some 
reference to the work of Eichengreen on international cooperation or 
more specifically to Ritschl on the international reparations 
problem. Instead, the following chapters (four to eight) look into 
some details of the country-specific experiences, before chapter nine 
concludes with a question mark on "development stalled?"

The country chapters give a concise and suitable introduction into 
the economic development of the periphery during these years. While 
Aldcroft acknowledges that the available data on the overall 
performance of the peripheral economies "should be treated with some 
caution" (page 172), the data show an intriguing variety in 
experience. The Baltic countries fared better than most of the 
Periphery, especially Estonia and Latvia, as did Greece or Bulgaria 
compared to the rest of the Balkans. Albania did -- for the little we 
know about it -- develop least, while Poland struggled for most of 
the period to catch-up to her pre-war level. This cross-country 
variation within the European Periphery, but also the changes over 
time that Aldcroft's survey depicts in a very compact manner, suggest 
to this reviewer a reconsideration of the "core-periphery" debate in 
a way that places geography where it belongs: at the very heart of 
economic development.

As stated earlier, Aldcroft used an "economic rather than a 
geographic" (page 3) definition of the European Periphery, but he is 
reluctant to provide the reader with a conceptual framework to make 
economic sense of it. Paradoxically, geography might deliver such an 
economic framework. Rosenstein-Rodan's landmark work of 1943 on 
economic development dealt with Eastern and South-Eastern Europe, and 
was elaborated in the work of Krugman and others on the "new" 
Economic Geography. In Krugman (1991), and in the vast literature 
that has developed in the wake of Krugman, a core-periphery pattern 
emerges from the notion that different access to markets can be 
_self-replicating_, without any recurrence to economic dependency or 
exploitation. Aldcroft's whole book can be read as a history of 
failed development due to bad access to markets for peripheral 
countries, made worse by the limits that international politics 
imposed, especially for the new stats of Eastern Europe. A suitable 
example is provided by Poland between the wars. The reunification of 
Poland inevitably reduced the size of her accessible markets in the 
early 1920s as the Polish domestic market was far too small to make 
good for the loss of access to Russia. The implied dependency on 
German markets threatened the state, and Poland tried to channel her 
trade over the Baltic Sea -- often competing with Britain -- and 
improve access to "friendly" capital. When Scandinavia entered the 
Sterling Bloc and capital inflows dried up, Poland was left with a 
possibly hopeless strategy of autarchic industrialization that 
started in 1936. Other countries seem to fit into such a picture. 
Countries that fared best in the 1930s were those with (politically 
enabled) access to significant markets: Bulgaria and Greece that 
opened up to Nazi Germany; Estonia and Latvia that became de facto 
part of the Sterling bloc. The data on many of these states are still 
very poor, but there are signs for some improvement. While we still 
lack reliable GDP estimates for Poland, Latvia, Lithuania, or 
Albania, recent work on Estonia (by Jaak Velge) or Bulgaria (by 
Ivanov and Tooze) has started to fill some of those gaps and may help 
to rewrite the history of the European Periphery some day.

For the time being, Aldcroft's book provides a highly readable and 
compact survey on what we currently know about the economic 
development of Europe's periphery during the interwar years, linking 
up with the work of Berend and Ranki (1982) for the period up to 
1914. It is a good starting point for further research into one of 
the most promising areas in European economic history.

References:

Ivan T. Berend and Gyoergy Ranki (1982), _The European Periphery and 
Industrialization, 1780-1914_, New York: Cambridge University Press.

Charles Feinstein, Gianni Toniolo, and Peter Temin (1997), _The 
European Economy between the Wars_, Oxford: Oxford University Press.

Paul Rosenstein-Rodan (1943), "Problems of Industrialization of 
Eastern and South-Eastern Europe," _Economic Journal_ 53: 202-11.

Paul Krugman (1991), "Increasing Returns and Economic Geography," 
_Journal of Political Economy_ 99: 183-99.


Nikolaus Wolf is a Senior Research fellow at the Centre for the Study 
of Globalisation and Regionalisation (CSGR), University of Warwick 
and a Research Affiliate (International Trade) at the CEPR. He works 
on European economic geography in the long run. Recent publications 
include "Estimating Financial Integration in the Middle Ages: What 
Can We Learn from a TAR-model?" _Journal of Economic History_ (2006), 
with Oliver Volckart and "Endowments vs. Market Potential: What 
Explains the Relocation of Industry after the Polish Unification in 
1918?" _Explorations in Economic History_ (2007).

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