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International trade and institutional change: Medieval Venice's response to globalization

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  • Puga, Diego
  • Trefler, Daniel

Abstract

International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800-1600. Early on, the growth of longdistance trade enriched a broad group of merchants who used their newfound economic muscle to push for constraints on the executive i.e., for the end of a de facto hereditary Doge in 1032 and for the establishment of a parliament in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions that facilitated longdistance trade e.g., the colleganza. However, starting in 1297, a small group of particularly wealthy merchants blocked political and economic competition: they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of longdistance trade. Over the next two centuries this led to a fundamental societal shift away from political openness, economic competition and social mobility and towards political closure, extreme inequality and social stratification. We document this ‘oligarchization’ using a unique database on the names of 8,178 parliamentarians and their families’ use of the colleganza in the periods immediately before and after 1297. We then link these families to 6,971 marriages during 1400–1599 in order to document the use of marriage alliances to monopolize the galley trade and the consequent rise of extreme inequality, with those who were powerful before 1297 emerging as the undisputed winners.

Suggested Citation

  • Puga, Diego & Trefler, Daniel, 2012. "International trade and institutional change: Medieval Venice's response to globalization," CEPR Discussion Papers 9076, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9076
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    Citations

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    Cited by:

    1. Maurizio Iacopetta, 2016. "Commercial Revolutions, Search, and Development," 2016 Meeting Papers 1394, Society for Economic Dynamics.
    2. Marianna Belloc & Francesco Drago & Roberto Galbiati, 2017. "Law, Human Capital and the Emergence of Free City-States in Medieval Italy," CESifo Working Paper Series 6719, CESifo Group Munich.
    3. T. Terry Cheung & Theodore Palivos & Ping Wang & Yin-Chi Wang & Chong K. Yip, 2017. "Dynamic Trade, Endogenous Institutions and the Colonization of Hong Kong: A Staged Development Framework," NBER Working Papers 23937, National Bureau of Economic Research, Inc.
    4. Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016. "Institutions and export dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 2-20.
    5. Madsen, Jakob B. & Raschky, Paul A. & Skali, Ahmed, 2015. "Does democracy drive income in the world, 1500–2000?," European Economic Review, Elsevier, vol. 78(C), pages 175-195.
    6. Michiel Gerritse, 2015. "Does trade cause long-run development? Theory and evidence from countries behind the Suez channel," ERSA conference papers ersa15p1100, European Regional Science Association.
    7. Nunn, Nathan, 2014. "Historical Development," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 347-402 Elsevier.
    8. Maurizion Iacopetta, 2016. "Commercial revolutions, search, and development," Documents de Travail de l'OFCE 2016-08, Observatoire Francais des Conjonctures Economiques (OFCE).
    9. repec:kap:jecgro:v:23:y:2018:i:1:d:10.1007_s10887-017-9152-0 is not listed on IDEAS
    10. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, Elsevier.
    11. Keller, Wolfgang & Shiue, Carol H, 2016. "Market Integration as a Mechanism of Growth," CEPR Discussion Papers 11627, C.E.P.R. Discussion Papers.
    12. Comino, Stefano & Galasso, Alberto & Graziano, Clara, 2017. "The Diffusion of New Institutions: Evidence from Renaissance Venice's Patent System," CEPR Discussion Papers 12102, C.E.P.R. Discussion Papers.
    13. Oana Borcan & Ola Olsson & Louis Putterman, 2018. "State history and economic development: evidence from six millennia," Journal of Economic Growth, Springer, vol. 23(1), pages 1-40, March.
    14. Charles Angelucci & Simone Meraglia & Nico Voigtländer, 2017. "The Medieval Roots of Inclusive Institutions: From the Norman Conquest of England to the Great Reform Act," NBER Working Papers 23606, National Bureau of Economic Research, Inc.
    15. Nathan Nunn & Daniel Trefler, 2006. "Putting the Lid on Lobbying: Tariff Structure and Long-Term Growth when Protection is for Sale," NBER Working Papers 12164, National Bureau of Economic Research, Inc.

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    Keywords

    institutions; international trade; medieval Venice;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • F10 - International Economics - - Trade - - - General
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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