A surreal world map illustrating the economic divergence between Europe and other continents.

Why Some Nations Grow Rich While Others Stagnate: Unveiling the Secrets of Economic Divergence

Soraya Malik in Business & Economy June 2025 • 4 min read.

"Delve into a new theory explaining the Great Divergence – why Europe surged ahead while others lagged behind – and what it means for today's global economy."

For centuries, economists have wrestled with a fundamental question: why do some nations achieve sustained economic growth while others remain trapped in stagnation? The Industrial Revolution marked a turning point, catapulting some societies into unprecedented prosperity while others were left behind. Understanding this divergence is critical for shaping policies and fostering global economic development.

One compelling explanation, known as the Pomeranzian Growth Theory, focuses on the pivotal role of land constraints. This theory posits that Europe's ability to overcome limitations in land resources – thanks to factors like coal and New World imports – fueled its economic ascent, creating a 'Great Divergence' between Europe and other regions, particularly China.

This article explores the core tenets of the Pomeranzian Growth Theory, examining its historical context, key mechanisms, and potential implications for understanding modern economic disparities. We'll dive into how this theory helps explain why some nations were able to break free from Malthusian traps while others remained confined by resource scarcity.

What is the Pomeranzian Growth Theory and Why Does It Matter?

A surreal world map illustrating the economic divergence between Europe and other continents.

The Pomeranzian Growth Theory, named after historian Kenneth Pomeranz, offers a unique perspective on the Great Divergence. It challenges traditional explanations that emphasize factors like superior European institutions or technology. Instead, Pomeranz argues that in the 18th century, regions like the Yangzi Delta in China were surprisingly similar to Europe in terms of development.

The crucial difference, according to the theory, lay in access to resources, particularly land. Pre-industrial economies were heavily reliant on land for food production, fuel, and raw materials. As populations grew, land became scarcer, leading to ecological pressures and limiting economic expansion. Europe, however, found a way to circumvent these land constraints.

Coal: Provided a substitute for wood fuel, reducing deforestation and freeing up land for other uses.
New World Imports: Access to resources like cotton, sugar, and timber from the Americas relieved pressure on European land, allowing for greater specialization and economic diversification.

By escaping the limitations of land scarcity, Europe was able to shift labor from agriculture to manufacturing, sparking the Industrial Revolution and setting off a period of sustained economic growth. Meanwhile, regions like China, lacking similar access to these resources, remained constrained by their land limitations.

The Enduring Legacy of Land Constraints: Lessons for Today's World

The Pomeranzian Growth Theory provides a valuable framework for understanding the historical roots of global economic inequality. While the specific constraints facing nations today may differ from those of the pre-industrial era, the fundamental principle remains relevant: access to resources and the ability to overcome limitations are critical for achieving sustained economic growth. As we grapple with challenges like climate change and resource scarcity, understanding the dynamics of land constraints can help us chart a path toward a more equitable and prosperous future for all.

About this Article -

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2108.0311,

Title: A Pomeranzian Growth Theory Of The Great Divergence

Subject: econ.gn q-fin.ec

Authors: Shuhei Aoki

Published: 06-08-2021

Everything You Need To Know

What is the Pomeranzian Growth Theory and what does it try to explain?

The Pomeranzian Growth Theory, named after historian Kenneth Pomeranz, seeks to explain the 'Great Divergence,' or why Europe experienced significant economic growth while other regions stagnated. It posits that Europe's unique access to resources, particularly coal and New World imports, allowed it to overcome land constraints and achieve unprecedented economic development, a path not available to other nations at the time.

How did access to coal contribute to Europe's economic growth according to the Pomeranzian Growth Theory?

According to the Pomeranzian Growth Theory, coal served as a crucial substitute for wood fuel in Europe. This substitution reduced deforestation and freed up land previously used for wood production. Consequently, this land could be reallocated to other economically productive activities, thereby contributing to Europe's overall economic expansion. This dynamic wasn't present in the same way in other regions.

What role did New World imports play in Europe's economic divergence based on the Pomeranzian Growth Theory?

The Pomeranzian Growth Theory highlights that imports from the New World, such as cotton, sugar, and timber, significantly reduced pressure on European land resources. These imports allowed Europe to specialize in other areas of production and diversify its economy, contributing to a divergence in economic paths compared to regions without access to such resources. Essentially, Europe 'outsourced' its land usage.

Beyond resource availability, what other conventional explanations for the Great Divergence does the Pomeranzian Growth Theory challenge?

The Pomeranzian Growth Theory challenges explanations for the Great Divergence that overemphasize the importance of superior European institutions or technology. It argues that regions like the Yangzi Delta in China were, in the 18th century, relatively similar to Europe in terms of development and technological advancement. The key differentiating factor, according to the theory, was Europe's ability to overcome land constraints through access to resources like coal and New World imports, an advantage not shared by other regions.

In what ways can understanding the Pomeranzian Growth Theory help us address contemporary global challenges like climate change and resource scarcity?

The Pomeranzian Growth Theory underscores the critical importance of resource access and the ability to overcome limitations for sustained economic growth. While the specific constraints of today, such as climate change and resource depletion, differ from those of the pre-industrial era, the underlying principle remains relevant. By understanding how Europe circumvented land constraints in the past, we can develop innovative strategies for addressing modern challenges, such as investing in renewable energy sources to reduce reliance on fossil fuels or promoting sustainable land management practices to enhance resource efficiency.