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International Trade and Institutional Change: Medieval Venice's Response to Globalization

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  • Diego Puga
  • Daniel Trefler

Abstract

International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800-1350. We show that (initially exogenous) increases in long-distance trade enriched a large group of merchants and these merchants used their new-found 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 or Great Council in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions (such as the colleganza) that facilitated large-scale mobilization of capital for risky long-distance trade. Over time, a group of extraordinarily rich merchants emerged and in the almost four decades following 1297 they used their resources to block political and economic competition. In particular, they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long-distance trade. We document this 'oligarchization' using a unique database on the names of 8,103 parliamentarians and their families' use of the colleganza. In short, long-distance trade first encouraged and then discouraged institutional dynamism and these changes operated via the impacts of trade on the distribution of wealth and power.

Suggested Citation

  • Diego Puga & Daniel Trefler, 2012. "International Trade and Institutional Change: Medieval Venice's Response to Globalization," NBER Working Papers 18288, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18288
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. “International Trade and Institutional Change: Medieval Venice’s Response to Globalization,” D. Puga & D. Trefler
      by ? in A Fine Theorem on 2014-10-09 12:27:00
    2. “International Trade and Institutional Change: Medieval Venice’s Response to Globalization,” D. Puga & D. Trefler
      by afinetheorem in A Fine Theorem on 2014-10-09 11:27:41

    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. Giacomo Magistretti & Marco Tabellini, 2018. "Economic Integration and Democracy: An Empirical Investigation," Harvard Business School Working Papers 19-003, Harvard Business School.
    8. Nunn, Nathan, 2014. "Historical Development," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 347-402 Elsevier.
    9. Maurizion Iacopetta, 2016. "Commercial revolutions, search, and development," Documents de Travail de l'OFCE 2016-08, Observatoire Francais des Conjonctures Economiques (OFCE).
    10. Karadja, Mounir & Prawitz, Erik, 2018. "Exit, Voice and Political Change: Evidence from Swedish Mass Migration to the United States," Working Paper Series 1237, Research Institute of Industrial Economics.
    11. repec:kap:jecgro:v:23:y:2018:i:1:d:10.1007_s10887-017-9152-0 is not listed on IDEAS
    12. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, Elsevier.
    13. repec:gam:jjrfmx:v:11:y:2018:i:3:p:40-:d:157742 is not listed on IDEAS
    14. Keller, Wolfgang & Shiue, Carol H, 2016. "Market Integration as a Mechanism of Growth," CEPR Discussion Papers 11627, C.E.P.R. Discussion Papers.
    15. 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.
    16. 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.
    17. Charles Angelucci & Simone Meraglia & Nico Voigtländer, 2017. "How Merchant Towns Shaped Parliaments: From the Norman Conquest of England to the Great Reform Act," NBER Working Papers 23606, National Bureau of Economic Research, Inc.
    18. 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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    JEL classification:

    • F1 - International Economics - - Trade

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