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Islam, Inequality and Pre-Industrial Comparative Development

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  • Michalopoulos, Stelios
  • Naghavi, Alireza
  • Prarolo, Giovanni

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 & Naghavi, Alireza & Prarolo, Giovanni, 2015. "Islam, Inequality and Pre-Industrial Comparative Development," CEPR Discussion Papers 10843, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10843
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    1. Islam, trade and development
      by nawmsayn in ZeeConomics on 2014-11-30 19:02:06

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    More about this item

    Keywords

    conflict; geography; inequality and land quality; Islam; public good investment; religion; trade; wealth accumulation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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