economic growth in a cross section of cities abstract we examine the relationship between urban characteristics in 1960 and urban growth between 1960 and 1990 income and population growth move together and both types of growth are 1 positively related to initial schooling 2 negatively related to initial unemployment and 3 negatively related to the initial share of employment in manufacturing racial composition and segregation are uncorrelated with urban growth across all cities but in cities with large nonwhite communities segregation is positively correlated with population growth government expenditures except for sanitation are uncorrelated with growth government debt is positively correlated with later growth

state capacity and long run economic performance we present new evidence about the long run relationship between state capacity the fiscal and administrative power of states and economic performance our database is novel and spans 11 european countries and 4 centuries from the old regime to world war i we argue that national governments undertook two political transformations over this period fiscal centralization and limited government we find a significant direct relationship between fiscal centralization and economic growth furthermore we find that an increase in the state s capacity to extract greater tax revenues was one mechanism through which both political transformations improved economic performance our analysis shows systematic evidence that state capacity is an important determinant of long run economic growth

printing and protestants an empirical test of the role of printing in the reformation the causes of the protestant reformation have long been debated this paper seeks to revive and econometrically test the theory that the spread of the reformation is linked to the spread of the printing press i test this theory by analyzing data on the spread of the press and the reformation at the city level an econometric analysis that instruments for omitted variable bias with a city s distance from mainz the birthplace of printing suggests that cities with at least one printing press by 1500 were at minimum 29 percentage points more likely to be protestant by 1600

the rise of europe atlantic trade institutional change and economic growth 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 associatedcolonialism 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

adopting a new religion the case of protestantism in 16th century germany using a dataset of territories and cities of the holy roman empire in the sixteenth century this article investigates the determinants of adoption and diffusion of protestantism as a state religion a territory s distance to wittenberg the city where martin luther taught is a major determinant of adoption this finding is consistent with a theory of strategic neighbourhood interactions introducing the reformation was a risky enterprise for territorial lords and had higher prospects of success if powerful neighbouring states committed to the new faith the actual spatial and temporal patterns of expansion of protestantism are analysed in a panel dataset

the participation dividend of taxation how citizens in congo engage more with the state when it tries to tax them this article provides evidence from a fragile state that citizens demand more of a voice in the government when it tries to tax them i examine a field experiment randomizing property tax collection across 356 neighborhoods of a large congolese city the tax campaign was the first time most citizens had been registered by the state or asked to pay formal taxes it raised property tax compliance from 0 1 in control to 11 6 in treatment it also increased political participation by about 5 percentage points 31 citizens in taxed neighborhoods were more likely to attend town hall meetings hosted by the government or submit evaluations of its performance to participate in these ways the average citizen incurred costs equal to their daily household income and treated citizens spent 43 more than control treated citizens also positively updated about the provincial government perceiving more revenue less leakage and a greater responsibility to provide public goods the results suggest that broadening the tax base has a participation dividend a key idea in historical accounts of the emergence of inclusive governance in early modern europe and a common justification for donor support of tax programs in weak states

medieval universities legal institutions and the commercial revolution we present new data documenting medieval europe s commercial revolution using information on the establishment of markets in germany we use these data to test whether medieval universities played a causal role in expanding economic activity examining the foundation of germany s first universities after 1386 following the papal schism we find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most there is no differential pre 1386 trend associated with the reduction in distance to a university and there is no break in trend in 1386 where university proximity did not change these results are robust to estimating a variety of specifications that address concerns about the endogeneity of university location universities provided training in newly rediscovered roman and canon law students with legal training served in positions that reduced the uncertainty of trade in the middle ages we argue that training in the law and the consequent development of legal and administrative institutions was an important channel linking universities and greater economic activity in medieval germany

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

the administrative foundations of self enforcing constitutions current theories of the rule of law argue that public officials respect rights if the citizens are coordinated on an equilibrium in which they collectively resist abuse constitutional rules are means to coordinate on this equilibrium in past and present states however constitutional rules often have no effect on the rule of law this paper suggests an alternative view of the origin and development of the rule of law instead of considering constitutional rules as coordination devices for citizens at large history suggests considering them as manifestations of equilibria with rulers constrained by administrators required to implement policy analysis of the administrative foundations of self enforcing constitutions may be the key to a theory and policy that would foster the rule of law in developing countries and those in transition in particular constitutional reforms might benefit from focusing on altering the equilibrium distribution of administrative capacity and power providing incentives to the administratively powerful to check predation by each other and the central authorities and to align administrators interests with social welfare

religious competition and reallocation using novel microdata we document an important unintended consequence of the protestant reformation a reallocation of resources from religious to secular purposes to understand this process we propose a conceptual framework in which the introduction of religious competition shifts political markets where religious authorities provide legitimacy to rulers in exchange for control over resources consistent with our framework religious competition changed the balance of power between secular and religious elites secular authorities acquired enormous amounts of wealth from monasteries closed during the reformation particularly in protestant regions this transfer of resources had significant consequences first it shifted the allocation of upper tail human capital graduates of protestant universities increasingly took secular especially administrative occupations protestant university students increasingly studied secular subjects especially degrees that prepared students for public sector jobs rather than church sector specific theology second it affected the sectoral composition of fixed investment particularly in protestant regions new construction shifted from religious toward secular purposes especially the building of palaces and administrative buildings which reflected the increased wealth and power of secular lords reallocation was not driven by preexisting economic or cultural differences our findings indicate that the reformation played an important causal role in the secularization of the west

bureaucratic structure and bureaucratic performance in less developed countries abstract we argue that several easily identifiable structural features constitute the key ingredients of effective state bureaucracies and should help to predict ratings of bureaucratic performance competitive salaries internal promotion and career stability and meritocratic recruitment we collect a new dataset on these features for bureaucracies of 35 less developed countries controlling for country income level of education and ethnolinguistic diversity we find that our measure of meritocratic recruitment is a statistically significant determinant of ratings supplied by two of three country risk agencies the importance of competitive salaries and internal promotion and career stability could not be clearly established

public goods institutions human capital and growth evidence from german history what are the origins and consequences of the state as a provider of public goods we study public goods provision established through new laws in german cities during the 1500s cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster legal change occurred where ideological competition introduced by the protestant reformation interacted with local politics we study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions and find support for a causal interpretation of the relationship between legal change human capital and growth

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

international factor movements commodity trade and commercial policy in a specific factor model two events in the decade of the 1970s had a major impact on world trade and factor movements the collapse of the bretton woods fixed exchange rate system and opec s success in raising petroleum prices the enormous current account surplus accruing to some of the opec members was successfully recycled by the international capital markets to among others the oil importing developing countries in addition the vastly increased tempo of investment in the capital rich labour poor opec members in west asia attracted migration of labour skilled as well as unskilled to these countries from some of the oil importing developing countries the remittances from these workers in turn eased the problem of the labourexporting countries in adjusting to the increased cost of oil imports thus both borrowing from private capital markets and export of labour became very important elements in cushioning the oil shock for a number of countries the post opec movements of labour and financial capital while dramatic are only the more recent instances of a phenomenon of much greater antiquity the seventeenth and eighteenth centuries saw vast migration of people out of europe though these movements were the result of conquests and colonization rather than movements from one sovereign state into another but the nineteenth century particularly the latter half saw migration of the latter kind from europe to countries of north and south america as well as capital investment by residents of europe in these

human capital and industrialization evidence from the age of enlightenment while human capital is a strong predictor of economic development today its importance for the industrial revolution is typically assessed as minor to resolve this puzzling contrast we differentiate average human capital worker skills from upper tail knowledge both theoretically and empirically we build a simple two sector model where worker skills raise the productivity in both agriculture and manufacturing and scientific knowledge affects the entrepreneurial ability to keep up with a rapidly advancing technological frontier the model predicts that the local presence of knowledge elites is unimportant in the pre industrial era but drives growth thereafter worker skills in contrast are not crucial for growth to measure the historical presence of knowledge elites we use city level subscriptions to the famous encyclopedie in mid 18th century france we show that subscriber density is a strong predictor of city growth after 1750 but not before the onset of french industrialization alternative measures of development confirm this pattern soldier height and industrial activity are strongly associated with subscriber density after but not before 1750 literacy on the other hand does not predict growth finally by joining data on british patents with a large french firm survey from 1837 we provide evidence for the mechanism upper tail knowledge raised the productivity in innovative industrial technology

the economic effects of the protestant reformation testing the weber hypothesis in the german lands following max weber many theories have hypothesized that protestantism should have favored economic development with its religious heterogeneity the holy roman empire presents an ideal testing ground for this hypothesis using population figures of 272 cities in the years 1300 1900 i find no effects of protestantism on economic growth the finding is precisely estimated robust to the inclusion of various controls and does not depend on data selection or small sample size denominational differences in fertility behavior and literacy are unlikely to be major confounding factors protestantism has no effect when interacted with other likely determinants of economic development instrumental variables estimates considering the potential endogeneity of religious choice are similar to the ols results

critical issues suggested by trends in food population and the environment to the year 2020 this article reviews the emerging trends in global food supply and demand up to 2020 and discusses policy challenges and obstacles to meeting this demand data were obtained from the international food policy research institutes international model for policy analysis of commodities and trade rosegrant et al the country specific data pertains to 37 countries and regions and 17 food commodities and prices in the world market cereal prices are expected to decline by about 11 by 2020 meat prices may decline by 6 after 2010 cereal prices are expected to dramatically decline cereal demand will change with changes in income and urbanization maize and coarse grains will be replaced by wheat and rice life style changes may lead to a switch from rice to wheat growth in food consumption in developed countries will slow a projected 82 of growth in global cereal consumption and almost 90 of increased global meat demand will occur in developing countries during 1993 2020 asia alone will account for 48 of increased cereal consumption and 61 of increased meat consumption 88 of food production growth will occur in developing countries through increased yields and 94 in developed countries world trade in cereals will increase from an estimated 185 million metric tons annually to 328 million during 1993 2020 food security for the poor and child malnutrition will remain unimproved yield growth is affected by agricultural research fertilizer and energy use land degradation water scarcity and bad policy water scarcity is the most limiting on yield growth malnutrition problems present multiple challenges

international factor mobility and national advantage abstract in this paper we prove rigorously v k ramaswami s proposition that in bilateral trade between two countries sharing the same technology represented by a strictly concave production function with positive marginal productivities of capital and labor the policy active country can gain more by importing monopsonistically the relatively scarce factor than by placing monopolistic restrictions on the export of the relatively abundant one we show that what matters is not the location but the constraints within which maximization takes place hence the monopsonistic results can be replicated by appropriate export arrangements the analysis is extended to consider the welfare implications to the policy passive country

should export share requirements be implemented under quota protection in this paper the authors develop a model to analyze the effects of export share requirements when a quota is in place they show that when foreign capital is located in specific economic activity zones identified with the importable sector an increase in export share requirements reduces welfare owing to the price induced higher payments to foreign capital

how the west invented fertility restriction europeans restricted their fertility long before other parts of the world did so by raising the marriage age of women and ensuring that a substantial proportion remained celibate the european marriage pattern emp reduced childbirths by up to 40 we analyze the rise of this first socio economic institution in history that limited fertility through delayed marriage our model emphasizes changes in agricultural production following the black death the production of meat wool and dairy pastoral products increased while grain production declined women had a comparative advantage producing pastoral goods they often worked as servants in husbandry where they remained unmarried long after they had left the parental household in a malthusian world this translated into lower population pressure raising average wages by up to a quarter the black death thus set into motion a virtuous circle of higher wages and fertility decline that underpinned europe s high per capita incomes we demonstrate the importance of this effect in a calibration of our model

the extent of the market and stages of agricultural specialization this paper provides empirical evidence of nonlinearity in the relationship between crop specialization in a village economy and the extent of the market size of the urban market relevant for the village the results suggest that the portfolio of crops in a village economy becomes more diversified initially as the extent of the market increases however after the market size reaches a threshold the production structure becomes specialized again this evidence on the stages of agricultural diversification is consistent with the stages of diversification identified in the recent literature for the economy as a whole and also for the manufacturing sector the evidence highlights the importance of improving farmers access to markets through investment in transport infrastructure and removal of barriers to trading

valuing the impact of trade on local blue water international trade of agricultural goods impacts local water scarcity by quantifying the effect of trade on crop production on grid cell level and combining it with cell and crop specific virtual water contents we are able to determine green and blue water consumption and savings connecting the information on trade related blue water usage to water shadow prices gives us the possibility to value the impact of international food crop trade on local blue water resources to determine the trade related value of the blue water usage we employ two models first an economic land and water use model simulating agricultural trade production and water shadow prices and second a global vegetation and agricultural model modeling the blue and green virtual water content of the traded crops our study found that globally the international trade of food crops saves blue water worth 2 4 billion us this net saving occurs despite the fact that europe exports virtual blue water in food crops worth 3 1 billion us countries in the middle east and south asia profit from trade by importing water intensive crops countries in southern europe on the other hand export water intensive agricultural goods from water scarce sites deteriorating local water scarcity

was weber wrong a human capital theory of protestant economic history max weber attributed the higher economic prosperity of protestant regions to a protestant work ethic we provide an alternative theory protestant economies prospered because instruction in reading the bible generated the human capital crucial to economic prosperity we test the theory using county level data from late nineteenth century prussia exploiting the initial concentric dispersion of the reformation to use distance to wittenberg as an instrument for protestantism we find that protestantism indeed led to higher economic prosperity but also to better education our results are consistent with protestants higher literacy accounting for most of the gap in economic prosperity

state capacity and military conflict powerful centralized states controlling a large share of national income only begin to appear in europe after 1500 we build a model that explains their emergence in response to the increasing importance of money for military success when fiscal resources are not crucial for winning wars the threat of external conflict stifles state building as finance becomes critical internally cohesive states invest in state capacity while divided states rationally drop out of the competition causing divergence we emphasize the role of the military revolution a sequence of technological innovations that transformed armed conflict using data from 374 battles we investigate empirically both the importance of money for military success and patterns of state building in early modern europe the evidence is consistent with the predictions of our model

tariffs foreign capital and national welfare with sector specific factors abstract this paper examines the effect on national welfare of an endogenously determined inflow of foreign capital in the context of a well known model with sector specific inputs both for the case of unrestricted international trade and investment and in the presence of a tariff the second best problem of the optimal tax on foreign investment for a given tariff level is also investigated by application of the concept of shadow prices for primary factors in distorted open economies the results obtained are then related to analogous propositions derived previously for the standard heckscher ohlin model

a dynamic specific factors model of international trade in a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from working periods to retirement changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and on the composition of output as they do in a static framework changes in these variables affect both total savings and the amount of savings that is diverted toward investment in capital results derived from the traditional specific factors model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital in this case the land using sector dominates factor markets more than asset markets once the roles for land and capital as assets are recognized the possibility of natural resource booms that reduce steady state welfare arises at the same time an increase in population can raise steady state welfare

social organizations violence and modern growth although social institutions permeate the world in which we live they are all but absent from our analyses of economic growth and development this paper argues the need to mitigate this omission by demonstrating the importance of social institutions for growth and development while focusing on institutions providing social safety nets social institutions and policies render individual behavior contingent on the social status or category of the parties involved as is the case for example in the relations among members of the opposite sex family members rich and poor young and old nobles and commoners and public officials and those whom they serve social institutions thus influence important outcomes such as human capital acquisition wealth distribution labor market opportunities nutritional intake and social safety nets as such social

on the choice between capital and labour mobility trade theorists since the pioneering work of kemp 1966 have considered the question of national advantage from international factor mobility by considering only one factor to be so mobile kemp analyzed elegantly the question of optimal policies in 2 x 2 x 2 model and showed that since monopoly power could exist in both the goods and factor markets in consequence of international capital mobility the optimal policy intervention would generally involve two policy instruments tariffs cum subsidies on goods and duties cum subsidies on international capital flows jones 1967 subsequently extended kemp s argument to the secondbest context by examining the optimal level of one of these instruments when the other was arbitrarily set at zero elsewhere in this issue brecher 1983 shows in an elegant and original contribution that the jones policy problem is in fact a third best rather than a second best problem as generally believed and that if only one of the tariff and capital mobility taxes cumsubsidies can be used it is generally possible to improve welfare further by admitting an altogether different domestic policy instrument namely a production or consumption tax cum subsidy as the case may be the research of bhagwati was supported by the german marshall fund grant no l 34015 the problem analyzed in the paper was posed in bhagwati 1979 and an early ingenious and neglected analysis in ramaswami 1968 was noted by bhagwati we have profited greatly from these contributions also from reading webb 1970 ramaswami 1970 and a recent paper of calvo and wellisz 1983 on this problem this result is in consonance with the results of bhagwati ramaswami and srinivasan 1969 for the case without international capital mobility but the consonance is intuitive only after the result was established for the case with international capital mobility