Historical Lessons for Economic Development: The European Experience

Abstract

"Growth is then our great enigma. Yet we can say something about it if our focus narrows. Here the focus will be restricted considerably: it will be limited to how the state and property rights affected Western Europe's economic development between the end of the Middle Ages and the nineteenth century—the so called early modern period of state formation and preparation for economic growth. We restrict it further to rights over land and physical and financial capital. Although that leaves aside less tangible assets such as intellectual property, rights to land and capital are hardly narrow topics, and they have the virtue of having figured prominently in the new institutional economic history that Doug North helped pioneer. Thanks to that flourishing body of scholarship, we can draw some firm conclusions and at the same time offer some tantalizing suggestions for comparative research. The conclusions, interestingly, all point to the role of the state in European economic development. Indeed, what matters the most are the state's demands for military resources and the political institutions that control those resources. They were what shaped property rights and determined economic outcomes in the West."