International Trade and Institutional Change: Medieval Venice’s Response to Globalization

By Diego Puga, Daniel Trefler. 2014

151 citations recorded by the source corpus.

International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800-1350. We show that (initially exogenous) increases in long-distance trade enriched a large group of merchants and these merchants used their new-found muscle to push for constraints on the executive i.e., for the end of a de facto hereditary Doge in 1032 and for the establishment of a parliament or Great Council in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions (such as the colleganza) that facilitated large-scale mobilization of capital for risky long-distance trade. Over time, a group of extraordinarily rich merchants emerged and in the almost four decades following 1297 they used their resources to block political and economic competition. In particular, they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long-distance trade. We document this 'oligarchization' using a unique database on the names of 8,103 parliamentarians and their families' use of the colleganza. In short, long-distance trade first encouraged and then discouraged institutional dynamism and these changes operated via the impacts of trade on the distribution of wealth and power.

Subfields: Anthropology, Demography, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/30fcd0dbf5c54439aae38ca73559f0be0512d3b5

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Citations in the corpus

State history and economic development: evidence from six millennia (2017, unknown): “See also Acemoglu and Robinson (2012) for an analysis of how countries with inclusive, democratic institutions eventually tend to dominate countries with extractive, autocratic institutions.”
Separate Worlds? Explaining the current wave of regional economic polarization (2018, background): “In regional studies, this dates from the classical work on Pittsburgh and New York by Chinitz (1961), and is echoed more widely in a line of work from Mancur Olson (1965), to recent studies such as Puga and Trefler (2014) and Acemoglu et al (2007).”
Economic inequality – Is entrepreneurship the cause or the solution? A review and research agenda for emerging economies (2021, background): “However, political inequities are also self-reinforcing, as economic and political inequality are often closely entwined (Puga and Trefler, 2014; Szakonyi and Urpelainen, 2014).”
Politician Family Networks and Electoral Outcomes: Evidence from the Philippines (2017, background): “…2014).3 In particular, networks have been linked to the diffusion of information (Banerjee et al., 2013; Alatas et al., 2016; Larson and Lewis, 2017), conflict outcomes (König et al., forthcoming) and the broader mechanisms of political control (Puga and Trefler, 2014; Acemoglu et al., 2014).”