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Contract Enforcement, Institutions and Social Capital: The Maghribi Traders ReappraisedJeremy EdwardsUniversity of Cambridge - Faculty of Economics and Politics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Sheilagh OgilvieUniversity of Cambridge - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) March 2008 CESifo Working Paper Series No. 2254 Abstract: Economists draw important lessons for modern development from the medieval Maghribi traders who, according to Greif, enforced contracts multilaterally through a closed, private-order 'coalition'. We show that this view is untenable. The Maghribis used formal legal mechanisms and entered business associations with non-Maghribis. Not a single empirical example adduced by Greif shows that any 'coalition' actually existed. The Maghribis cannot be used to argue that the social capital of exclusive networks will facilitate exchange in developing economies. Nor do they provide any support for the cultural theories of economic development and institutional change for which they have been mobilised.
Number of Pages in PDF File: 54 Keywords: contract enforcement, reputation, legal system, social network JEL Classification: O17 working papers seriesDate posted: March 19, 2008Suggested CitationContact Information
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