The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth
The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth By DARON ACEMOGLU,SIMON JOHNSON, AND JAMES ROBINSON* 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 There is little agreement, however, on why this economic growth that took place in nineteenth- growth took place in Western Europe and why century Western Europe. The origins of this it started in the sixteenth century. growth and the associated Industrial Revolution This paper establishes the patterns of eco- are generally considered to lie in the economic, nomic growth in Western Europe during this political, and social development of Western era, develops a hypothesis on the origins of the Europe over the preceding centuries. In fact, rise of (Western) Europe and provides historical between 1500 and 1800, Western Europe expe- and econometric evidence supporting some of rienced a historically unprecedented period of the implications of this hypothesis. sustained growth, perhaps the “First Great Di- We document that the differential growth of vergence” (i.e., the first major sustained diver- Western Europe during the sixteenth, seven- gence in income per capita across different teenth, eighteenth, and early nineteenth centu- regions of the world), making this area substan- ries is almost entirely accounted for by the tially richer than Asia and Eastern Europe.
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