| Abstract: |
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 beneficial 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. |