Islam, Inequality and Pre-Industrial Comparative Development

Quaderni - Working Paper DSE N° 974

33 Pages Posted: 25 Oct 2014

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); Centre for Economic Policy Research (CEPR)

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Date Written: October 24, 2014

Abstract

This study explores the interaction between trade and geography in shaping the Islamic economic doctrine and in turn the comparative development of the Muslim world. 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 from the poorly endowed ones. We show that in such an environment it was mutually beneficial to institute an economic system of income redistribution featuring direct income transfers in return for safe passage to conduct trade. A commitment problem, however, rendered a merely static redistribution system unsustainable. Islam added a set of dynamic redistributive rules that were self-enforcing under large gains from trade and high proportions of arid land. 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 preindustrial era.

Keywords: Religion, Islam, Geography, Inequality in land quality, Wealth accumulation, Public good investment, Trade, Conflict

JEL Classification: O10, O13, O16, O17, O18, F10, Z12

Suggested Citation

Michalopoulos, Stelios and Naghavi, Alireza and Prarolo, Giovanni, Islam, Inequality and Pre-Industrial Comparative Development (October 24, 2014). Quaderni - Working Paper DSE N° 974, Available at SSRN: https://ssrn.com/abstract=2514272 or http://dx.doi.org/10.2139/ssrn.2514272

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

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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