GDP and Growth History Revisions

This blog is based on the author’s article which was published on early view on The Economic History Society and is available at this link: https://onlinelibrary.wiley.com/doi/epdf/10.1111/ehr.13085

by Ola Grytten (NHH Norwegian School of Management)

GDP has been central to research in economic development. New historical national accounts for Norway provide additional information on economic growth and development because they are more comprehensive  than existing data.  The new series indicate the need for revisions to Norwegian growth history.  Specifically, higher growth rates were achieved during the last decades of the nineteenth century and significantly lower growth rates occurred between  1918 and 1930.  The new data confirm that Norwegian ‘take off’ emerged during the 1890s.

There are four fundamental differences between the new and old series.  First, the new data  encompass a longer time period.  Second, it includes significantly more industries. Thirdly, the new series are calculated according to a different base series. Finally, the new series represent 17 main series and 78 sub-series, compared to just seven for the old series.

I use a double deflation technique (deflating both the input and output series). This  methodology  is applied to primary and secondary industries.  For most of the service industries,  single deflation is applied (deflating value-added only).  The aggregated GDP series in fixed prices are reported in Figure 1. This new series confirms existing trends in Norwegian development and reveals considerable economic growth in the nineteenth and twentieth centuries.

However, we observe some significant differences. The new series indicates significantly higher growth at the end of the 19^th century, and lower growth between  1918 and 1930. The new series also reflect upheavals and crises better than the old.[1]  For example, in the new series, 1857 was the last year primary industries were the largest sector – some 15 years earlier than reported in the old series.[2]

Scholars disagree when Norway became industrialised.[3]  According to the new series manufacturing experienced its first growth-spurt around 1850.  However, the most prominent burst of activity emerged in the 1890s, with the introduction of hydroelectricity. Comparing the new series with those of Denmark and Sweden, improves the relative performance of Norway  in the second half of nineteenth  century (Figure 2).

New and improved GDP series for Norway covering the period 1816-2019, suggest that views on historical growth and development need revision.  In contrast to previous views, economic growth was significantly higher during the last decades of the nineteenth century but correspondingly lower between 1918 and 1930.   This new evidence also suggests that Norway’s performance during the second half of the nineteenth century was relatively better than that of Denmark and Sweden, and that Norway’s ‘take-off’ started in the 1890s.

To contact the author:  

Ola.Grytten@nhh.no

References:

Bjerke, J., Trends in Norwegian Economy, 1865-1960, (Oslo, 1966).

Grytten, O. H. ‘Revising growth history: new estimates of GDP for Norway, 1816–2019’ The Economic History Review, (2021), pp. 1-22.

Klovland, J. T., ‘A reassessment of the United Kingdom business cycle chronology, in T. J. O. Dick, ed, Business cycles since 1820: New international perspectives from historical evidence, (Cheltenham, 1998), pp. 49-90.

Klovland, J. T., ‘Monetary policy and business cycles in the interwar years: the Scandinavian experience’, European Review of Economic History, 2, 3 (1998), pp.  309-344. DOI: 10.1017/S1361491698000148

Venneslan, C., ‘Electrification and industrialization: An assessment of the industrial breakthrough in Norway’, Scandinavian Economic History Review, 57, 2 (2009), pp. 124-155. DOI: 10.1080/03585520902799638

Notes:

[1] Klovland, ‘A reassessment of the United Kingdom business cycle chronology’, pp. 49-90, Klovland, ‘Monetary policy and business cycles’, pp. 309-44.

[2] Bjerke, Trends in the Norwegian economy, p. 55.

[3] Venneslan, ‘Electrification and industrialisation’, pp. 124-55.