The Mediterranean Response to Globalization before 1950

Published by EH.NET (August 2001)

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Sevket Pamuk and Jeffrey G. Williamson, editors, The Mediterranean Response to Globalization before 1950. London and New York: Routledge, 2000. xvi + 430 pp. $115 (cloth), ISBN 0-415-22425-X.

Reviewed for EH.NET by James Simpson, Universidad Carlos III de Madrid.

The title of the book is slightly misleading as the majority of the thirteen papers consider just the half-century prior to the First World War. The main agenda is to explain why economic backwardness in the Mediterranean persisted, and why the gap with the European leaders increased during this “first great globalization boom.”

The first problem is to show relative levels of development. Jaime Reis, after questioning the usefulness of existing real wages series for establishing cross-country comparisons, calculates new estimates of GDP for 1850 and concludes that there was “not a single ‘poor’ periphery” in Europe, but rather there existed a wide range of income levels among both Mediterranean and Scandinavian countries. Jeffrey Williamson, using real wages from a wide sample of Mediterranean countries also finds major differences, with northern Italian workers earning about four times more than Egyptian workers in the late nineteenth century. Williamson also notes that “there is absolutely no evidence of labor market integration in the Mediterranean, and plenty of evidence of segmentation” between 1820 and 1870. Although changes in real wages varied among Mediterranean countries in the half-century prior to the First World War, there was no consistent catch-up or fallback against the industrial nations. The global challenge produced different responses, the subject treated in most of the remaining essays.

The Mediterranean has been a great trading region for centuries, and some of the best papers in this book are devoted to trade. Gelina Harlaftis and Vassilis Kardasis contribute an interesting piece on international shipping in the eastern Mediterranean, which shows that shipping costs for bulk products such as cereals, coal and cotton fell almost as quickly as they did in the North Atlantic trade in the half century prior to 1914. Trade boomed, and provided rich opportunities for shipowners, especially Greek merchants. Falling transport costs and growing urban markets in the industrial economies also provided Mediterranean farmers with new and growing markets for their produce. Yet the response was often disappointing. Jose Morilla-Critz, Alan Olmstead and Paul Rhode show convincingly one of the reasons why this was so. In their paper on raisins and prunes, they show how California as a “late comer” was able first to imitate traditional European production techniques, and then develop better quality fruit, more efficient production processes and better selling techniques. What at the outset had appeared as promising niche markets for Mediterranean farmers had, by the early twentieth century, been largely captured by the Californians.

The theme of product quality and competition in the international food market is also pursued, again highly successfully, by Ramon Ramon-Munoz in his study of olive oil. This author argues that specialization took place in Mediterranean countries according to factor endowments. The labor-intensive nature of olive production implied that it was increasingly carried out in low wage regions (Tunisia, Algeria, Greece), whereas the capital-intensive nature of refining and building brand names were activities found in France and northern Italy.

Three interesting papers underline the importance of market integration for agricultural specialization in the Eastern Mediterranean. Ahmed Akarli shows that in Ottoman Macedonia the decline in international cereal prices after 1870 encouraged producers to switch into other cash crops, such as tobacco, silk, opium or cotton, although by the early twentieth century limits had already appeared to this sort of specialization. Tarik Yousef shows that local commodity markets for farm produce were fully integrated in Egypt during the interwar period. Finally, Jacob Metzer shows how exports of citrus fruit, which by the early 1930s accounted for 77 percent of all mercantile exports, contributed to the rapid growth in per capita incomes in Mandatory Palestine.

What of industry? Unfortunately there is no paper for the 1870-1914 period, or any indication of either industrial growth, or the relative importance of manufacturing exports. There are perhaps four major arguments usually advanced for why industrial growth in the Mediterranean was limited before 1914. First, coal deposits were few and of a poor quality, making the region heavily dependent on imported British coal. Second, domestic demand was limited because of low incomes. Third, international trade was small because producers’ costs were high, not just because of the need to import coal, but also because of the impact of domestic tariffs that inflated the costs of everything, from raw materials to workers’ food. Finally, growth suffered because of the low levels of human capital. In their growth model to explain the Mediterranean’s backwardness in comparison to the UK, James Foreman-Peck and Pedro Lains find that tariffs, coal production and human capital were indeed all important. Both tariffs and illiteracy appear to have increased in importance between 1870 and 1910, but growing imports compensated for the lack of domestic coal. Only in Italy were tariffs relatively unimportant, a point Giovanni Federico and Antonio Tena (1998, 1999) have also argued, and which is the subject of the chapter by Federico and Kevin O’Rourke. These authors, using a computable general equilibrium model, not only show that tariffs had a minimal impact on GDP, but that the relative importance of the agricultural and industrial sectors would have been little different in 1911 in their absence. Only within each sector would an important reallocation of resources have taken place if there had been free trade.

With respect to human capital, Joan Ramon Roses argues that the skill levels of the workforce determined technical choice in the cotton industry between 1830 and 1860. Looking at technology, product quality and skills in four different international centers, he finds that Catalan cotton workers were more skilled than those of New England or Piedmont, but less so than those in Lancashire. This implies that the available levels of human capital were not necessarily an obstacle in establishing a competitive textile industry at this period, at least for Catalonia.

Labor markets play an important role in the integration of the international economy in this period, and this was another area where the Mediterranean response was weak. For Spain, a country where most emigrants originated from the Atlantic coastal regions, Blanca Sanchez-Alonso argues that emigration was income constrained. As a heavily rural economy, the increase in tariffs after 1891 should, by raising incomes, have encouraged emigration. However the 30 percent depreciation of the peseta between 1895 and 1905 raised emigration costs even more, and reduced by an estimated 600,000 the number of migrants who would have left if the exchange rate had remained stable. Sanchez-Alonso argues that without this currency depreciation, numbers would have been similar to those of Italy.

The economic environment of the interwar period was very different from that of the pre-1914 period and virtually all countries faced considerable difficulties, especially after 1929. The Turkish government, as Sevket Pamuk shows here, responded with a series of protectionist measures encouraging import-substitution industrialization. Unfortunately, and here Turkey was not alone, the relative success of these polices in the 1930s encouraged their continuation in the post Second World War period, when they quickly became an obstacle to growth. One major exception in this period was Mandatory Palestine, where Metzer shows that per capita income increased by about five percent per year between 1922 and 1947, despite population increasing by almost four percent per year.

It is easy to point out the “gaps” in a book that examines a geographical area as large as the Mediterranean, but this would be unfair. Most of the region’s economic historians write highly specialized local or, at best, national studies, rather than follow in the footsteps of Fernand Braudel. However the majority of the authors in this book, no doubt in some cases responding to enthusiastic prodding by the editors, have attempted to present their work in a regional or international context. Although the papers are highly varied, the overall quality is high. The book is important for those interested in Mediterranean history before the First World War.

James Simpson is lecturer in Economic History at the Universidad Carlos III in Madrid. He is author of Spanish Agriculture: The Long Siesta, 1765-1965 (Cambridge University Press, 1995) and, with Juan Carmona, Latifundistas, colonos y jornaleros. Organizacion rural y el desarrollo agraio en Espana, 1850-1936 (Biblioteca Nueva, in print). He is currently working on a book on wine production and consumption in the nineteenth century.

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