POLITICAL ECONOMY: Institutional Development, Capital Accumulation, and the Emergence of Civilizations; Professor Jamus Jerome Lim (ESSEC Business School)

Abstract

We examine the hypothesis that institutional development, in the form of property rights, played a key role in facilitating agricultural capital accumulation, which in turn promoted the emergence of early civilizations. We develop a simple model that rationalizes how differential forms of property rights regimes endogenously emerge from geographical differences, which eventually gives rise to civilizational formation. We subject our arguments to the data in two ways. First, we corroborate our main propositions using data on property rights, agricultural capital and needs, and civilizational development from more than 400 historical polities. Second, we adopt a falsification approach that examines textual, artifactual, and archeological evidence from Neolithic settlements in riverine environments along ancient trade routes between 4500 and 1600 BCE, to identify the causal effect of property rights. We find that neither geography nor trade—two other key fundamental determinants of growth—are likely to have been sufficient to ensure civilizational formation, and that these early civilizations exhibited institutional regimes that offered either formal or notional respect for property rights.