DIVIDED WE STAND, UNITED WE FALL: THE HUME-NORTH-JONES MECHANISM FOR THE RISE OF EUROPE

Cem Karayalcin ()

International Economic Review, 2008, vol. 49, issue 3, pages 973-997

Abstract: The "great divergence" between Europe and the rest of the world occurred relatively recently. What enabled Europe, with all its laggards, to dominate the previously successful Eastern economies? This article emphasizes one important mechanism, highlighting the contrast between the European states system and Eastern empires. Political competition for a mobile tax base in a states system forces rulers to provide relatively more secure property rights. By effectively limiting the "exit" options of the ruled, an empire rewards its ruler with a captive tax base that can be subjected to higher levels of expropriation. As a result, the states system encourages faster capital accumulation and growth. Copyright © 2008 the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 2008

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