Serbia emerged as a small independent nation-state in the economic periphery of nineteenth-century Europe. This article leverages uniquely abundant town-level data to examine spatial inequality in prices and wages within this late-developing economy. I first build a new dataset on prices of traded and household goods, and wages of skilled and unskilled workers for a panel of 42 urban settlements in Serbia, in the period from 1863 to 1910. I apply the welfare ratio approach to calculate real wages of day labourers and masons. Second, I find strong spatial convergence in grain prices and costs of living, but divergence in wages, both nominal and real. Lastly, I investigate the determinants of price convergence and wage divergence with panel-data models. The results suggest that falling transport costs decreased price gaps between locations, whereas rising population differences increased inter-urban wage gaps.

This article provides novel estimates of long-term income inequality in Bulgaria and Czech Lands / Czechoslovakia in the twentieth century. Relying on newly-constructed datasets and the social tables approach, we measure inequality between salient social strata. We find that Czechoslovakia was significantly more unequal than Bulgaria before 1945. Inequality converged to similarly low levels under socialism. Decomposition analysis by social classes reveals that different levels of inequality in the first half of the century were principally due to higher within social-class inequality in Czechoslovakia, owing to a more stratified industrial society; whereas a low dispersion within the dominant agricultural sector held down the within social-class component in Bulgaria. A dramatic fall in total inequality after 1945 was a result of the social revolution that encompassed the virtual disappearance of between social-class inequality and a marked reduction in within social-class inequality. Our findings point to the critical role of institutional and political factors in driving inequality in Eastern Europe throughout the twentieth century.

What determines the location of industry? Using panel data econometrics and a new dataset on interwar Yugoslavia the predictions of three theories—Heckscher-Ohlin, New Economic Geography, and Path Dependence—are quantified and compared. Results show that all three theories mattered and that New Economic Geography forces played a dominant role. The consensus view that several theories can simultaneously explain the distribution of industrial activity is thus reinforced. The main novelty is that Path Dependence can affect the location of industry in addition to Heckscher-Ohlin and New Economic Geography forces.

Based on a combination of new data on industrial employment and recent empirical findings, we explore regional industrialization of Yugoslavia in the long term. We find that the pace of industrialization was highly uneven among Yugoslav regions. Neither capitalist nor socialist modes of production were able to ensure a more egalitarian pace of industrialization. No single theory can explain regional industrialization patterns over the long term. During the interwar period, factor endowments, markets, and path dependence help explain why some regions were more industrialized than others. During the socialist period, a combination of institutional and policy-related factors drove regional industrialization patterns.

This chapter explores the broad patterns of economic integration and disintegration – between Central Eastern and South-Eastern European states and the West, as well as within the region, from the First World War to the end of the interwar period – and how these patterns were shaped by economic and political forces related to the war and its aftermath as well as by the Great Depression. It discusses the elements affecting labor mobility in the period. The period in fact featured both integration and disintegration, and the League was an important facilitator of capital flows to those nations. Trade of Central Eastern and South-Eastern European (CESEE) countries during the interwar period can be divided into periods of increasing trade, stagnation and decline, and recovery. After the First World War, an increasing number of restrictions on immigration were put in place in the United States – the dominant overseas country of destination for European emigrants.

This chapter explains the economic policies adopted by the Eastern European countries in the 1920s and the 1930s, and deals with the Soviet experience. The League’s Council repeatedly called for normalizing international trade and commissioned several studies stressing the danger of autarkic policies in the Danubian region, but without effect. Foreign indebtedness limited monetary policy options and the loss of foreign reserves left the introduction of exchange controls as the only viable option for most Central, East and South-East European (CESEE) countries if they were to keep honouring their foreign debt. The concentration of foreign exchange transactions at the central bank as part of exchange control policy meant that countries that introduced exchange controls effectively prohibited foreign payments and made the government the mediator between domestic debtors and foreign creditors. The interwar years saw important economic policy changes in Eastern Europe. The most radical shift occurred in Russia after the October Revolution of 1917.

Neutrality in the Great War was an exception, rather than the rule. Only a handful of countries remained neutral by 11 November 1918: the Netherlands, Spain, Switzerland, and three Scandinavian countries – Denmark, Norway, and Sweden – in Europe; and Argentina, Chile, and Mexico in South America (Kruizinga 2016). In this chapter, we concentrate on the six neutrals in the northern, northwestern, central, and southern parts of Europe. Compared to European belligerents, neutrals were minor but not insignificant. Neutrals accounted for around 14%, 9%, and 8.5% of total European area, population, and GDP, respectively (League of Nations 1927, Broadberry and Klein 2012). On average, neutral countries were more developed than the belligerents. Average GDP per capita of neutral countries in 1913 was higher than that of the Central Powers or the Allies (Broadberry and Harrison 2005: 7-11, Broadberry and Klein 2012). Neutrals had much to lose by entering the war. The size and level of economic development influenced their decision to remain neutral. However, this was also dependent on the political goals and strategic economic actions of the Allies and the Central Powers towards the neutrals. Being neutral did not necessarily leave much room for manoeuvre in politics or business.