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Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised

Jeremy Edwards
University of Cambridge - Faculty of Economics and Politics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Sheilagh Ogilvie
University 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.

Keywords: contract enforcement, reputation, legal system, social network

JEL Classifications: O17

Working Paper Series

Date posted: March 19, 2008 ; Last revised: March 19, 2008

Suggested Citation

Edwards, Jeremy and Ogilvie, Sheilagh, Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised (March 2008). CESifo Working Paper Series No. 2254. Available at SSRN: http://ssrn.com/abstract=1107801

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Contact Information

Jeremy Edwards (Contact Author) University of Cambridge - Faculty of Economics and Politics ( email ) Austin Robinson Building Sidgwick Avenue Cambridge CB3 9DD United Kingdom ++44 1223 335232 (Phone) ++44 1223 335475 (Fax)
CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Poschinger Str. 5 DE-81679 Munich Germany HOME PAGE: http://www.CESifo.de
Sheilagh Ogilvie University of Cambridge - Faculty of Economics ( email ) Austin Robinson Building Sidgwick Avenue Cambridge CB3 9DD United Kingdom 44-1223-335200 (Phone) 44-1223-335475 (Fax) HOME PAGE: http://www.econ.cam.ac.uk/faculty/ogilvie/index.htm
CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Poschinger Str. 5 DE-81679 Munich Germany