The_Rise_of_Europe_Atlantic_Trade_Instit

The_Rise_of_Europe_Atlantic_Trade_Instit - The Rise of...

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The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth By D ARON A CEMOGLU , S IMON J OHNSON , AND J AMES R OBINSON * The rise of Western Europe after 1500 is due largely to growth in countries with access to the Atlantic Ocean and with substantial trade with the New World, Africa, and Asia via the Atlantic. This trade and the associated colonialism affected Europe not only directly, but also indirectly by inducing institutional change. Where “initial” political institutions (those established before 1500) placed significant checks on the monarchy, the growth of Atlantic trade strengthened merchant groups by constraining the power of the monarchy, and helped merchants obtain changes in institutions to protect property rights. These changes were central to subsequent economic growth. ( JEL F10, N13, O10, P10) The world we live in was shaped by the rapid economic growth that took place in nineteenth- century Western Europe. The origins of this growth and the associated Industrial Revolution are generally considered to lie in the economic, political, and social development of Western Europe over the preceding centuries. In fact, between 1500 and 1800, Western Europe expe- rienced a historically unprecedented period of sustained growth, perhaps the “First Great Di- vergence” (i.e., the first major sustained diver- gence in income per capita across different regions of the world), making this area substan- tially richer than Asia and Eastern Europe. There is little agreement, however, on why this growth took place in Western Europe and why it started in the sixteenth century. This paper establishes the patterns of eco- nomic growth in Western Europe during this era, develops a hypothesis on the origins of the rise of (Western) Europe and provides historical and econometric evidence supporting some of the implications of this hypothesis. We document that the differential growth of Western Europe during the sixteenth, seven- teenth, eighteenth, and early nineteenth centu- ries is almost entirely accounted for by the growth of nations with access to the Atlantic Ocean, and of Atlantic traders. Throughout the paper, the term Atlantic trader refers to Britain, France, the Netherlands, Portugal, and Spain, the nations most directly involved in trade and colonialism in the New World and Asia. Atlan- tic trade, in turn, means trade with the New World, as well as trade with Asia via the Atlan- tic, and includes colonialism- and slavery- related activities. 1 The differential growth of Atlantic traders suggests a close link between Atlantic trade and the First Great Divergence. In fact, it appears that the rise of Europe between 1500 and 1850 is largely the rise of Atlantic * Acemoglu: Department of Economics, Massachusetts In- stitute of Technology, E52-371, Cambridge, MA 02142 (e-mail: [email protected]); Johnson: Sloan School of Manage- ment, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA 02139 (e-mail: [email protected]); Robinson: Department of Government, Harvard University, 1875 Cambridge Street, Cambridge, MA 02138 (e-mail: [email protected]). We thank Thomas Becker and
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  • Fall '11
  • Arthur
  • The Land, Atlantic Trade, ATLANTIC TRADERS

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