The Islamic Commercial Crisis: Institutional Roots of Economic Underdevelopment in the Middle East

Journal of Economic History, Vol. 63, No. 2, June 2003

Posted: 17 Oct 2002

See all articles by Timur Kuran

Timur Kuran

Duke University - Department of Economics

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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"

Suggested Citation

Kuran, Timur, The Islamic Commercial Crisis: Institutional Roots of Economic Underdevelopment in the Middle East. Journal of Economic History, Vol. 63, No. 2, June 2003. Available at SSRN: https://ssrn.com/abstract=338322

Timur Kuran (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

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