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The Islamic Commercial Crisis: Institutional Roots of Economic Underdevelopment in the Middle East
Timur Kuran Duke University - Department of Economics September 2002 USC CLEO Research Paper No. C01-12 Abstract: In the course of the second millennium, the Middle East's commerce with Western Europe fell increasingly under European domination. Two factors played critical roles. First, the Islamic inheritance system, by raising the costs of dissolving a partnership following a partner's death, kept Middle Eastern commercial enterprises small and ephemeral. Second, certain European inheritance systems facilitated large and durable partnerships by reducing the likelihood of premature dissolution. The upshot is that European enterprises grew larger than those of the Islamic world. Moreover, while ever larger enterprises propelled further organizational transformations in Europe, persistently small enterprises inhibited economic modernization in the Middle East. The Middle East's far-reaching commercial reforms of the nineteenth century were meant to overcome the consequent crisis.
Note: Previously titled "The Islamic Commercial Crisis: Institutional Roots of the Delay in the Middle East's Economic Modernization" Working Paper SeriesDate posted: July 25, 2001 ; Last revised: December 04, 2003Suggested CitationContact Information
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