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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"

Number of Pages in PDF File: 51

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Date posted: July 25, 2001  

Suggested Citation

Kuran, Timur, The Islamic Commercial Crisis: Institutional Roots of Economic Underdevelopment in the Middle East (September 2002). USC CLEO Research Paper No. C01-12. Available at SSRN: http://ssrn.com/abstract=276377 or http://dx.doi.org/10.2139/ssrn.276377

Contact Information

Timur Kuran (Contact Author)
Duke University - Department of Economics ( email )
Durham, NC 27708-0204
United States
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