Islam, Inequality and Pre-Industrial Comparative Development

37 Pages Posted: 31 Aug 2015

See all articles by Stelios Michalopoulos

Stelios Michalopoulos

Brown University - Department of Economics; Brown University

Alireza Naghavi

University of Bologna - Department of Economics

Giovanni Prarolo

University of Bologna; University of Milan - Centro Studi Luca d'Agliano (LdA)

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Date Written: August 2015

Abstract

This study explores the interaction between trade and geography in shaping the Islamic economic doctrine. We build a model where an unequal distribution of land quality in presence of trade opportunities conferred differential gains from trade across regions, fostering predatory behavior by groups residing in the poorly endowed territories. We show that in such an environment it was mutually beneficial to institute an economic system of income redistribution featuring income transfers in return for safe passage to conduct trade. A commitment problem, however, rendered a merely static redistribution scheme unsustainable. Islam developed a set of dynamic redistributive rules that were self-enforcing, in regions where arid lands dominated the landscape. While such principles fostered the expansion of trade within the Muslim world they limited the accumulation of wealth by the commercial elite, shaping the economic trajectory of Islamic lands in the pre-industrial era.

Suggested Citation

Michalopoulos, Stelios and Naghavi, Alireza and Prarolo, Giovanni, Islam, Inequality and Pre-Industrial Comparative Development (August 2015). NBER Working Paper No. w21506, Available at SSRN: https://ssrn.com/abstract=2653517

Stelios Michalopoulos (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

HOME PAGE: http://https://sites.google.com/site/steliosecon/

Brown University ( email )

Box 1860
Providence, RI 02912
United States

Alireza Naghavi

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

HOME PAGE: http://alirezanaghavi.altervista.org/

Giovanni Prarolo

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

HOME PAGE: http://www2.dse.unibo.it/prarolo/

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via P. Amedeo 34
Milano, Mi 20122
Italy

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