For several millennia, national income of all the countries grew at a very modest rate allowing only a handful of elite to enjoy affluence while the majority of the population hovered around subsistence. At some point in the second millennium, western Europe was seen breaking free from this pattern with a remarkable increase in per capita income. This unprecedented rise of western Europe was characterized by colonization of the rest of the world and industrial revolution. This course is an attempt to understand what was different about Western Europe. Why did it end up ruling over most of the rest of the world, and not vice versa? Why did the Industrial Revolution happen there? Did culture and religion played any role in this growth miracle? And, more generally, how do the historical events and institutions shape the present economic performances?