Variations in Eurasia

Question 1

List how European political divisions contributed to its economic development

Answer 1

1. Political divisions allowed for competition between different regions (Fouquet and Broadberry, 2015)
2. The Glorious Revolution in England (Blaydes and Chaney, 2013)
3. The ability of European countries to colonize and exploit resources in the Americas and Asia may have contributed to their wealth. (Voigtländer and Voth, 2013)
4. o The rise of secular authority (Greif, 1993, 2000)

Question 2

List how European political divisions hindered its economic development

Answer 2

1. Inhibiting the flow of goods, people, and ideas between regions. (Fouquet and Broadberry, 2015).
2. Economic development was driven by tech, no political divisions (Landes 1998, Goldstone 2002)
3. Aided by its access to the New World’s resources (Acemoglu et al. 2002)
4. Driven by its favourable geographical and climatic conditions (Mokyr and Voth 2001)

Question 3

How did political divisions in Europe allow for more competition between different regions?

Answer 3

Fouquet and Broadberry (2015)

Each region tried to outperform the others > an example of a “race to the top” > improve their economic policies and institutions in order to attract investment and business.

Question 4

What’s the significant of localised decision-making as a result of political divisions?

Answer 4

More localized decision-making > facilitated economic development by allowing for more tailored and responsive policies.

Allow for policies that are more closely aligned with the specific needs and circumstances of a region, rather than being dictated by a central authority.

Question 4

What’s the significant of localised decision-making as a result of political divisions?

Answer 4

More localized decision-making > facilitated economic development by allowing for more tailored and responsive policies.

Allow for policies that are more closely aligned with the specific needs and circumstances of a region, rather than being dictated by a central authority.

Question 5

How did the Glorious Revolution in England contribute to economic development?

Answer 5

Blaydes and Chaney (2013)

the Glorious Revolution in England resulted in the establishment of growth-friendly, sovereign-constraining institutions, such as respect for property rights and the rule of law, which were key to the emergence of sustained economic development in Europe.

These institutions may have been more likely to emerge in a political system with multiple competing jurisdictions, rather than in a centralised system.

Question 6

How did the high mortality rate in Europe contribute to its economic growth

Answer 6

(Voigtländer and Voth 2013) > cities which had high mortality rates due to poor sanitation and urban overcrowding, may have contributed to the rise in incomes as they reflected rising per capita incomes

Maddison (2001) argues that Europe experienced rapid growth in per capita incomes after the Black Death of 1350, while Africa and Asia stagnated.

Question 6

How did the high mortality rate in Europe contribute to its economic growth

Answer 6

(Voigtländer and Voth 2013) > cities which had high mortality rates due to poor sanitation and urban overcrowding, may have contributed to the rise in incomes as they reflected rising per capita incomes

Maddison (2001) argues that Europe experienced rapid growth in per capita incomes after the Black Death of 1350, while Africa and Asia stagnated.

Question 7

How did inhibiting the flow of goods, people, and ideas between regions hinder economic development

Answer 7

Fouquet and Broadberry (2015)

A “prisoner’s dilemma” where regions are unable to fully cooperate and benefit from trade due to their political differences.

Question 8

How did political divisions lead to conflict and instability?

Answer 8

Conflict and instability, which could have had negative impacts on economic development.

This could be seen in the numerous wars that have occurred in European history, which have disrupted trade and investment and resulted in the destruction of infrastructure and economic resources.

** May have also hindered the development of common institutions and policies that could have supported economic development across the continent (i.e EU)

Question 9

(Mokyr and Voth 2001)

Answer 9

Europe’s economic development was driven by its favorable geographic and climatic conditions, which allowed for more productive agriculture and a larger population

Question 10

(North and Weingast 1989)

Answer 10

Europe’s political and economic institutions, such as property rights and the rule of law, as important factors in its economic growth

Question 11

Fouquet and Broadberry (2015)
(in favour: divisions contributed to economic development)

Answer 11

Each region tried to outperform the others > an example of a “race to the top” > improve their economic policies and institutions in order to attract investment and business.

more localized decision-making > allows for policies that are more closely aligned with the specific needs and circumstances of a region.

Question 12

(Blaydes and Chaney, 2013)

Answer 12

The Glorious Revolution in England resulted in the establishment of growth-friendly, sovereign-constraining institutions.

Respect for property rights and the rule of law helped to emerge sustained economic development in Europe.

Question 13

(Voigtländer and Voth 2013).

Answer 13

• High mortality rate cities had higher per capita incomes
• The ability of European countries to colonize and exploit resources in the Americas and Asia may have contributed to their wealth > Access to resources through colonization

Question 14

Fouquet and Broadberry (2015)
(Against: divisions hindered economic development)

Answer 14

• Created barriers to trade and hindered economic development by inhibiting the flow of goods, people, and ideas between regions.
• “Prisoner’s dilemma” where regions are unable to fully cooperate and benefit from trade due to political differences.

Question 15

Pomeranz (2000)

Answer 15

Europe’s growing ability to innovate compared to technological decline in other parts of the world was a key factor in its economic growth.

Question 16

Acemoglu et al. (2002)

Answer 16

Europe’s economic development was aided by its access to New World resources and the ability to exploit them through colonization

Question 17

Asia’s lack of development?

Answer 17

Mokyr (1990)

• Political centralisation > lack of competition between regions.
• Rights: lack of strong institutions and property rights.
• Culture: cultural and social factors that discouraged entrepreneurship and innovation.
• Resources: lack of access to natural resources and raw materials.
• Links: lack of access to global markets and trade networks.

Question 18

Define feudal institutions

Answer 18

• The feudal relationships which evolved served as the foundation for military human resources as the landed nobility of Europe emerged as a “warrior class.”
• Sultans in the Muslim world introduced mamlukism or the use of slave soldiers imported from non-Muslim lands

** long story short, the landed nobility had the power to force kings to agree on property rights, while mamlukism and local elites in the muslim world couldn’t

Question 19

How did feudal institutions contribute to economic development in Europe?

Answer 19

Blaydes and Chaney (2013)

• Forms of executive constraint that emerged under feudal institutions in Western Europe were associated with increased political stability.
• Feudal institutions contributed to political stability.
• Rulers in Western Europe remained in power longer than their counterparts in the Muslim world.

Question 20

Rubin (2011)

Answer 20

• The relationship between religious and political authorities plays a significant role in the regulation of interest and can impact economic outcomes.
• ‘Legitimacy relationship’ between religious and political authorities affects regulation of interest.
• Changes in interest laws will be greater in societies with a weaker legitimacy relationship and slower to occur in societies with a strong legitimacy relationship.

Question 21

Define the ‘Legitimacy relationship’

Answer 21

Rubin (2011)

Changes in interest laws will be greater in societies with a weaker legitimacy relationship and slower to occur in societies with a strong legitimacy relationship.

Question 22

What was the view of interest rates set in Europe?

Answer 22

• Political and religious authorities in Western Europe relaxed interest restrictions, which contributed to the growth of commerce, after the legitimacy of the Church was undermined (Greif, 2002).

Question 23

What helped the development of complex financial instruments, impersonal exchange and the corporate form

Answer 23

(Greif, 1993, 2000) The rise of secular authority and European trade networks supported further economic developments, such as complex financial instruments, impersonal exchange and the corporate form

Question 24

What was the view of interest rates set in the Islamic world?

Answer 24

- "The constraints faced in the Islamic world discouraged the development of economically beneficial institutions and personal exchange networks persisted for centuries." (Goitein, 1967) - Strong Legitimacy relationship (Rubin 2011)

Question 25

What was the view of interest rates set in the Islamic world?

Answer 25

- "The constraints faced in the Islamic world discouraged the development of economically beneficial institutions and personal exchange networks persisted for centuries." (Goitein, 1967) - Strong Legitimacy relationship (Rubin 2011)

Question 26

Define the 'gate of ijtihad'

Answer 26

The concept of the "closed gate of ijtihad" in Sunni Islam, which suggests that independent reasoning was no longer allowed in the interpretation of religious law after a certain point in history.

Question 27

Why was the 'gate of ijtihad' initially not opened?

Answer 27

(Gerber, 1999) For a long time, political authorities in the Islamic world were more dependent on religious authorities, resulting in a lack of incentive to push for change or the opening of the "gate of ijtihād"

Question 28

Was it political divisions or something else that discouraged the development of economically beneficial institutions?

Answer 28

(Goitein, 1967; Kuran, 2001) The constraints faced by the Islamic world, rather than political divisions, discouraged the development of more economically beneficial institutions and smaller, personal exchange networks persisted for centuries

Question 29

What was the "natural experiment" that occurred in the Ottoman period

Answer 29

exogenous economic and socio-political changes, including increased demographic heterogeneity and decreased external threats, decreased the ruler's need for legitimacy from religious authorities (Cosgel et al., 2009)

Question 30

What does the "natural experiment" suggest?

Answer 30

Rubin (2011) it suggests that external changes, rather than any inherent resistance to change, were responsible for the relaxation of religious restrictions on interest in the Islamic world. - However> Necessity of including some sort of ruse to ensure the legality of contracts according to Islamic law, despite the relaxation of interest restrictions. > not fully relaxed

Question 31

(Greif, 1993).

Answer 31

Political divisions > Separation of political and religious institutions allowed for the relaxation of interest restrictions and the growth of commerce, leading to economic development (Greif, 1993).

Question 32

Coulson (1969)

Answer 32

- In the early Islamic period, commerce thrived and lenders frequently used devices known as hiyal to evade the ban on interest, which were permitted and even created by religious authorities. - This suggests that the prohibition of interest was not strictly enforced in the Islamic world, leading to a more conducive environment for economic development. - The double sale, or mukhatara, was a common hiyal used in Medina as early as the 8th century, allowing for loans at interest despite the ban on riba.

Question 33

Schacht (1995)

Answer 33

Schacht argues that the prohibition of interest was a cornerstone of Islamic doctrine, with numerous injunctions against it in the Qur'an. This suggests that the prohibition of interest was strictly enforced in the Islamic world, hindering economic development. Riba, or usurious interest, was a common practice in pre-Islamic times and was specifically condemned in Islamic doctrine.

Question 34

Weiss (1978)

Answer 34

Weiss suggests that in Sunni Islam, independent reasoning, or ijtihad, was no longer an acceptable means of finding truth and jurists were only allowed to follow precedents after the founding of the four schools in the 10th century. This stifled juristic ingenuity and hindered the ability to adapt religious laws to changing circumstances, potentially hindering economic development.

Question 35

Acemoglu et al. (2002b) (Colonialism)

Answer 35

- The growth of Atlantic trade had both direct and indirect effects on Europe - Direct: Access to the Atlantic (Atlantic traders) > These countries experienced significantly faster economic growth than other countries - Indirectly: induced institutional change in Europe < strengthened merchant groups by limiting the power of monarchies > merchant groups used their increased power to advocate for changes in institutions that protected property rights.

Question 36

What were the direct effects of Europe from the rise in Atlantic trade?

Answer 36

Access to the Atlantic (Atlantic traders) > These countries experienced significantly faster economic growth than other countries - This growth was a key factor in the "First Great Divergence," or the first major sustained divergence in income per capita across different regions of the world.

Question 37

What were the indirect effects of Europe from the rise in Atlantic trade?

Answer 37

- Indirectly: induced institutional change in Europe < strengthened merchant groups by limiting the power of monarchies > merchant groups used their increased power to advocate for changes in institutions that protected property rights.

Question 38

Acemoglu et al. (2002b) (Institutions)

Answer 38

- The political institutions in place in European countries influenced their economic growth. - Countries with relatively non-absolutist initial institutions, such as Britain and the Netherlands, experienced more rapid economic growth than countries with highly absolutist systems, such as Spain and Portugal.

Question 39

3 quick points against the idea that European political divisions contributed to economic development:

Answer 39

* It is possible that other factors, such as technological innovations or natural resource endowments, also played a role in the economic growth of Western Europe during this time period. * The growth of Atlantic trade and colonialism may have had negative consequences for the economies of the regions and countries that were directly affected by this trade, such as the exploitation of labour and resources. * The differential economic growth between Atlantic traders and other regions may have contributed to economic inequality within Europe.

Question 40

How can technological advances not be argued to have been the reason for economic development of Europe?

Answer 40

(Galor 2005). In a Malthusian economy, technological advances and institutional improvements cannot lead to sustained increases in per capita output because population growth can easily outpace them.

Question 41

(Oates, 1972)

Answer 41

"fiscal federalism" > decentralization of fiscal power, such as the ability to levy taxes and spend public resources, can lead to more efficient resource allocation and higher levels of economic growth. In Europe, the fragmentation of political power and the lack of a central authority meant that individual states and city-states had a greater degree of control over their own fiscal policies, which may have contributed to the development of more efficient and effective economic systems.