The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth

Abstract

This paper documents that the Rise of (Western) Europe between 1500 and 1850 is largely accounted for by the growth of European nations with access to the Atlantic, and especially by those nations that engaged in colonialism and long distance oceanic trade. Moreover, Atlantic ports grew much faster than other West European cities, including Mediterranean ports.Atlantic trade and colonialism affected Europe both directly, and indirectly by inducing institutional changes. In particular, the growth of New World, African, and Asian trade after 1500 strengthened new segments of the commercial bourgeoisie, and enabled these groups to demand, obtain, and sustain changes in institutions to protect their property rights.Furthermore, the most significant institutional changes and consequently the most substantial economic gains occurred in nations where existing institutions placed some checks on the monarchy and particularly limited its control of overseas trading activities, thus enabling new merchants in these countries to benefit from Atlantic trade. Therefore, the Rise of Europe was largely the result of capitalist development driven by the interaction of late medieval institutions and the economic opportunities offered by "Atlantic trade."

Contract Enforcement: A Political Economy Model of Legal Development

“…The influence of Atlantic trade on institutional change across Europe (Acemoglu et al 2005) is also consistent with the main results in this article. The opening of the sea routes to the New World, Africa, and Asia and colonial expansion can be regarded as an exogenous increase in outside trading opportunities e in the model.…”

Military conflict and the rise of urban Europe

“…De Long and Shleifer (1993), Acemoglu et al (2005), and van Zanden et al (2012) link representative government, which they argue protected private property rights, with greater urbanization. However, Stasavage (2014) argues that, due to their oligarchic structures, self-governing cities had negative long-run consequences for urbanization.…”

Does medieval trade still matter? Historical trade centers, agglomeration and contemporary economic development

“…However, most of the existing literature focuses on the impact of 19th century trade on market integration or the "Great Divergence" (e.g., Mountford 2008 or O'Rourke andWilliamson 2002), or on the impact of contemporary, Post-World War II trade activities on recent economic growth and development performance across countries (Dollar andKraay 2003, Frankel andRomer 1999). There is only one study (Acemoglu et al 2005) considering the effect of cross country trade in earlier periods, in which the authors investigate the impact of long-distance overseas trade for institutional developments and the pre-industrial development process across European countries.…”