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Islam, Inequality and Pre-Industrial Comparative Development

Listed author(s):
  • Stelios Michalopoulos
  • Alireza Naghavi
  • Giovanni Prarolo

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.

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File URL: http://www.nber.org/papers/w21506.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 21506.

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Date of creation: Aug 2015
Publication status: published as Michalopoulos, Stelios & Naghavi, Alireza & Prarolo, Giovanni, 2016. "Islam, inequality and pre-industrial comparative development," Journal of Development Economics, Elsevier, vol. 120(C), pages 86-98.
Handle: RePEc:nbr:nberwo:21506
Note: DEV EFG POL
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