Road to unity? Nordic economic convergence in the long run

Figures & data

Figure 1. Coefficient of variation in real GDP per capita for the Nordic countries, Western Europe, Southern Europe, and Eastern Europe, 1822–2008 (Five-Year Moving Average). Source: GDP per capita figures from Maddison Project Database (version 2013); See: Bolt and van Zanden (2014). Nordic: Denmark, Finland, Norway and Sweden; Western Europe: Austria, Belgium, France, Germany the Netherlands, Switzerland, Britain, Ireland; Southern Europe: Portugal, Spain, Italy, Greece; Eastern Europe: Albania, Bulgaria, Hungary, Poland, Romania, Bosnia, Croatia, Macedonia, Slovenia, Montenegro, Serbia, Kosovo, Czech republic, Slovakia, Belarus, Estonia, Latvia, Lithuania, Moldova, Russia, Ukraine.

Figure 2. Nordic GDP per capita as a share of British GDP per Capita, 1822–1910, and US GDP per Capita, 1916–2008 (Five-year Moving Averages). Source: GDP per capita figures from Maddison Project Database (version 2013); See: Bolt and van Zanden (2014). The Nordic GDP per capita is weighted by population, population figures from Bolt et al. (2018).

Figure 3. Nordic adjusted silver wages (in 1850 Silver Price) as a share of London, 1730–1908 (Eleven-year Moving Averages). Source: See Appendix B1: Data sources for wages.

Table 1. Testing for GDP convergence using unit root tests.

Countries	Period	ADF	Lags	Trend	Test type	Conclusion
Denmark-UK	1820–1939	−5.70**	0	Pos***	ZA (Intercept 1919)	Catching-up
Finland-UK	1860–1939	−6.12***	0	Pos***	Perron (WWI)	Catching-up
Norway-UK	1830–1939	−4.76*	2	Pos***	ZA (Intercept 1919)	Catching-up
Sweden-UK	1820–1939	−5.56***	0	Na/Pos***	ZA (Trend 1890)	Catching-up after break
Denmark-USA	1880–2010	−6.42***	1	Na	Perron (WWII)	Conditional convergence
Finland-USA	1880–2010	−4.45***	0	Pos***	Perron (WWII)	Catching-up
Norway-USA	1880–2010	−5.69***	1	Pos***	Perron (WWII)	Catching-up
Sweden-USA	1880–2010	−4.58***	1	Pos***	Perron (WWII)	Catching-up

Note: The optimal lag was chosen by applying the Akaike Information Criterion (AIC). ***, ** and * indicates 10%, 5% and 1% levels of significance respectively. The critical values vary on the test performed. The trend can either be positive (Pos), negative (Neg) or not significant (Na, for ‘not applicable’). The year in the bracket indicates the year of the break. WWI stands for World War I and WWII stands for World War II.

Table 2. Testing for GDP convergence using unit root tests by subperiod.

Countries	Period	ADF	Lags	Trend	Dummy type	Conclusion
Denmark-UK	1820–1888	−5.09**	1	Neg***	ZA (Intercept 1849)	Falling behind
Denmark-UK	1889–1939	−4.90***	3	Pos***	Perron (WWI)	Catching-up
Norway-UK	1830–1897	−4.78	2	Na	ZA (Both 1850)	Inconclusive
Norway-UK	1898–1939	−5.06***	3	Pos***	Perron (WWI)	Catching-up
Sweden-UK	1820–1887	−6.02***	1	Neg***/Pos***	ZA (Both 1850)	Falling behind/catching-up
Sweden-UK	1888–1939	−4.69***	0	Pos***	Perron (WWI)	Catching-up
Denmark-USA	1880–1939	−5.10**	0	Na	ZA (Intercept 1930)	Conditional convergence
Denmark-USA	1940–2010	−5.38***	2	Pos***/Neg***	ZA (Trend 1963)	Catching-up/Falling behind
Finland-USA	1880–1939	−2.87	0	Na	Perron (WWI)	Inconclusive
Finland-USA	1940–2010	−5.26***	1	Pos***/Neg***	ZA (Trend 1962)	Catching-up/Falling behind
Norway-USA	1880–1940	−3.52	0	Na	ZA (Both)	Inconclusive
Norway-USA	1941–2010	−8.59***	1	Pos***	ZA (Trend 1952)	Catching-up
Sweden-USA	1880–1959	−4.70***	1	Pos***	Perron (WWII)	Catching-up
Sweden-USA	1960–2010	−3.38	2	Na	ZA (Both)	Inconclusive

Note: The optimal lag was chosen by applying the Akaike Information Criterion (AIC). ***, ** and * indicates 10%, 5% and 1% levels of significance respectively. The critical values vary on the test performed. The trend can either be positive (Pos), negative (Neg) or not significant (Na, for ‘not applicable’). The year in the bracket indicates the year of the break. WWI stands for World War I and WWII stands for World War II.

Table 3. Testing for wage convergence using unit root tests.

Comparison	Period	ADF	Lags	Trend	Dummy type	Conclusion
Denmark-London	1731–1939	−7.20***	0	Neg***/Pos***	ZA (Both 1814)	Falling behind/Catching-up
Finland-London	1731–1939	−6.46***	0	Pos**	Perron (WWI)	Catching-up
Norway-London	1751–1939	−2.90	7	Na	Perron (Nap)	Inconclusive
Sweden-London	1731–1939	−3.22	3	Na	ZA (Trend 1880)	Inconclusive

Note: The optimal lag was chosen by applying the Akaike Information Criterion (AIC). ***, ** and * indicates 10%, 5% and 1% levels of significance respectively. The critical values vary on the test performed. The trend can either be positive (Pos), negative (Neg) or not significant (Na, for ‘not applicable’). The year in the bracket indicates the year of the break. Nap stands for the Napeolonic Wars, WWI stands for World War I and WWII stands for World War II.

Table 4. Testing for wage convergence using unit root tests by subperiod.

Comparison	Period	ADF	Lags	Trend	Dummy type	Conclusion
Denmark-London	1731–1814	−4.72*	1	Neg***	ZA (Intercept 1751)	Falling behind
Denmark-London	1815–1939	−5.90***	2	Pos***	ZA (Intercept 1877)	Catching-up
Finland-London	1731–1817	−6.02***	0	Neg***	ZA (Intercept 1765)	Falling behind
Finland-London	1818–1939	−5.47**	3	Na/Pos***	ZA (Both 1917)	Catching-up after break
Norway-London	1751–1884	−3.56	7	Na	Perron (Nap)	Inconclusive
Norway-London	1885–1939	−4.96***	0	Pos***/Neg***	ZA (Trend 1911)	Catching-up/Falling behind
Sweden-London	1731–1879	−4.58*	3	Neg***	ZA (Intercept 1823)	Falling behind
Sweden-London	1880–1939	−6.10***	0	Pos***	Perron (WWI)	Catching-up

Note: The optimal lag was chosen by applying the Akaike Information Criterion (AIC). ***, ** and * indicates 10%, 5% and 1% levels of significance respectively. The critical values vary on the test performed. The trend can either be positive (Pos), negative (Neg) or not significant (Na, for ‘not applicable’). The year in the bracket indicates the year of the break. Nap stands for the Napeolonic Wars, WWI stands for World War I and WWII stands for World War II.

Table

Period	Denmark	Finland	Norway	Sweden	UK	USA
1820–2010	Mean: 6,941	Mean: 6,386	Mean: 6,575	Mean: 6,261	Mean: 7,214	Mean: 8,854
	Std.Dev.: 6,859	Std.Dev.: 6,655	Std.Dev.: 7,784	Std.Dev.: 6,781	Std.Dev.: 5821	Std.Dev.: 8,503
	Min.: 1,274	Min.: 885	Min.: 767	Min.: 888	Min.: 2064	Min.: 1,361
	Max.: 25,060	Max.: 24,694	Max.: 28,556	Max.: 25,377	Max.: 25002	Max.: 31,655
	N: 191	N: 151	N: 181	N: 191	N: 191	N: 191

Table

Period	Denmark	Finland	Norway	Sweden	London
1731–1939	Mean: 10.59	Mean: 5.47	Mean: 9.19	Mean: 10.94	Mean: 20.45
	Std. Dev.: 7.43	Std. Dev.: 2.30	Std. Dev.: 4.92	Std. Dev.: 7.95	Std. Dev.: 7.46
	Min.: 1.59	Min.: 2.17	Min.: 3.63	Min.: 3.14	Min.: 11.14
	Max.: 30.36	Max.: 11.93	Max.: 21.99	Max.: 35.21	Max.: 37.40
	N: 209	N: 209	N: 189	N: 209	N: 209

Bolt, J., & van Zanden, J. L. (2014). The Maddison project: Collaborative research on historical national accounts. The Economic History Review, 67(3), 627–651.

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Bolt, J., Inklaar, R., de Jong, H., & van Zanden, J. L. (2018). Rebasing ‘Maddison’: New incomecomparisons and the shape of long-run economic development. (GGDC Research Memorandum; Vol. GD-174). Groningen: Groningen Growth and Development Center.

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