Trade and Geography in the Economic Origins of Islam: Theory and Evidence

Michalopoulos, Stelios ; Naghavi, Alireza ; Prarolo, Giovanni (2010) Trade and Geography in the Economic Origins of Islam: Theory and Evidence. Bologna: Dipartimento di Scienze economiche DSE, p. 61. DOI 10.6092/unibo/amsacta/4541. In: Quaderni - Working Paper DSE (700). ISSN 2282-6483.
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This research examines the economic origins of Islam and uncovers two empirical regularities. First, Muslim countries, virtual countries and ethnic groups, exhibit highly unequal regional agricultural endowments. Second, Muslim adherence is systematically larger along the pre-Islamic trade routes in the Old World. The theory argues that this particular type of geography (i) determined the economic aspects of the religious doctrine upon which Islam was formed, and (ii) shaped its subsequent economic performance. It suggests that the unequal distribution of land endowments conferred differential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. In such an environment it was mutually bene.cial to institute a system of income redistribution. However, a higher propensity to save by the rich would exacerbate wealth inequality rendering redistribution unsustainable, leading to the demise of the Islamic unity. Consequently, income inequality had to remain within limits for Islam to persist. This was instituted via restrictions on physical capital accumulation. Such rules rendered the investments on public goods, through religious endowments, increasingly attractive. As a result, capital accumulation remained low and wealth inequality bounded. Geography and trade shaped the set of economically relevant religious principles of Islam affecting its economic trajectory in the preindustrial world.

Document type
Monograph (Working Paper)
Michalopoulos, Stelios
Naghavi, Alireza
Prarolo, Giovanni
Religion, Islam, Geography, Physical Capital, Human Capital, Land Inequality, Wealth Inequality, Trade
Deposit date
04 Feb 2016 11:44
Last modified
04 Feb 2016 11:44

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