The Institutional Roots of Europe's Rise Flashcards
Cox 2017
Political fragmentation interacted with (and encouraged) self-governing cities to facilitate growth. Key factors are institutional (representative), geog (fragmentation), politics (fragmentation and balance of power)
Mechanism: geographic (many possible trade routes) and political fragmentation meant merchants had multiple options of trade routes (ie due to the coastline) and created competition to attract them with lower taxes and fairer institutions. Route fragmentation was key, since it avoided the problem of over-taxation due to fragmentation. This was driven by parliaments able to constrain monarchs. Fragmentation was geographic and due to the circumstances after the Carolingian Empire.
Self-government was associated with higher growth rates, and parliaments even higher. Inter-city growth correlations only positive under self-government (because this is when trade flourished). When parliaments control spending, growth improves.
As a benchmark, English tariffs were around 1% due to local-level competition, while Ottomans were 5% with fixed routes. Time period is ~1200 onwards.
Glaeser and Shleifer 2002
Institutions as important - Legal Origins. Coloniser identity determining this. Arguably not the key to GB-FR differences though
Civil law (French) involves greater sovereign control and influence (emphasis on codification and state judges), and today more regulation, less secure property rights, and more corruption (and less developed financial markets). Originated since France was more violent. More likely to emerge when the sovereign is stronger, and can influence more.
Common law (English) involves juries, judicial interpretation, and precedent. The Magna Carta as coasian bargain enabled by this. Reduces ability of state to arbitrarily interfere and control legal outcomes.
Civil law is vulnerable to abuse, so tends to create worse outcomes. Common law countries outperform civil law ones today, with the determinant of colonising identity.
Acemoglu, Johnson, and Robinson 2005
Why did EU growth accelerate after Atlantic trading? Pure trading revenues cannot account for it. AJR argue that for some nations (GB, NTH, kind of FR), trade empowered merchants are resulted in institutional changes, promoting more growth. Whereas in others, rents flowed to the sovereign due to control over trade and changes did not occur; they experienced less growth (eg all spice trade flowing through the royal trading house in POR).
Emphasises the role of institutions, both as a condition and mechanism (political balance of power as another conditions). Link to political losers; in SP/POR these would-be political losers were strong, while in GB/NTH they lost relative power. Trade is key but effect is mediated
GB inst circumstances from GR, restraining Crown, making contracts enforceable. NTH circumstance from acquiring independence. Both of these were enabled by interests strengthened by trade - merchant funding the wars.
When atlantic trade is interacted with institutions (sovereign constraints), it is able to properly explain divergent growth levels. Divergence (and trade correlation) from 1700 onwards is a product of how trade in ~1500 empowered merchants and enabled such concessions. Why is there a divergence at the root? Still institutions but hard to track causes.
Voigtlander and Voth 2013
Why did EU diverge (in income pc) even by 1500 (from Africa and most of Asia)? Argues the importance of constant war (political fragmentation, religious disputes) in EU, keeping populations lower and marginal product high. Black Death sparked a loop - could tax higher levels overall and fund more wars with fewer citizens (less encroachment on subsistence).
Key mechanism was cultural circumstance (religious division), political fragmentation. This mechanism works in a malthusian world, explaining divergence even when productivity improvements would not create permanent gains (hence arguments of better HC, innovation, and even institutions fail). Also the Black Death was a key “spark” in this respect, and had effects through fertility too (malthusian): plagues in China and ME did not have effects, because they lacked fragmentation and capacity for war. Conditions + exogenous shock.
Far more war than other regions, in particular China with its political unity and low conflict levels since it was unified for 500 years in this period. Find high correlation with war rates and urbanisation/pc income. Also find that surplus incomes grew faster than gross, leaving lots (~1/3) to tax.
Cantoni and Yuchtman 2014
Human capital and universities as an important channel. But not very comparative. Needs to link to Bosker to note that universities were not so significant for the ME.
Focuses on commercial revolution in Germany. Market towns established via a grant-based system. Exogenous shock of university formation (Papal schism), with findings that having a university correlated highly with development of nearby markets. Argument that scholars developed legal systems and created institutions to facilitate this.
Argues HC as a causal factor, and their influence on institutions as the mechanism.
