All that glitters: Precious metals, rent seeking and the decline of Spain
AbstractI argue that Spain s long-term economic stagnation in the seventeenth century and beyond was the result of a process triggered by the windfall acquisition of precious metals from American mines, and driven by the consolidation of absolutist rule and the peculiar privilege structure of Spanish society in the sixteenth century. American treasure allowed the Spanish monarchs to command large amounts of credit and pursue an expansive imperial policy unlike that of any other Early Modern nation; when the cost of the Empire increased and mineral rents fell, the Crown increased the fiscal pressure while allowing skilled human capital to migrate into the tax-sheltered but largely unproductive nobility. I first provide evidence on the role of the silver windfall and the acquisition of nobility titles in the sixteenth century; of particular interest is a new data series of nobility lawsuits constructed from the population of cases housed at the Archive of the Royal Chancery Court in Valladolid. I then develop a unified theoretical framework that explains imperial policy as an optimal response given the existing institutions and the natural resource windfall, recreates the rent-seeking path followed by the Spanish Crown when mineral rents proved insufficient, and accounts for the long-term economic backwardness that Spain experienced in the following centuries as the result of an institutional lock-in.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal European Review of Economic History.
Volume (Year): 9 (2005)
Issue (Month): 03 (December)
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Other versions of this item:
- Mauricio Drelichman, 2004. "All that Glitters: Precious Metals, Rent Seeking and the Decline of Spain," Economic History 0404002, EconWPA.
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
- N4 - Economic History - - Government, War, Law, International Relations, and Regulation
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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University of Chicago - George G. Stigler Center for Study of Economy and State
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- Vidal-Robert, Jordi, 2013. "War and Inquisition: Repression in Early Modern Spain," CAGE Online Working Paper Series 118, Competitive Advantage in the Global Economy (CAGE).
- Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.
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