Jun 15, 2011

Economic Development paper of the day

 What Lessons for Economic Development Can We Draw from the Champagne Fairs? (source):
Their early success and international importance have made the Champagne fairs a standard-bearer of the medieval Commercial Revolution, from which many scholars draw lessons about the institutional basis for impersonal exchange and long-distance trade. Historians view the Champagne fairs as central to debates about the factors influencing commercial growth in medieval Europe. Economists draw lessons from the medieval Champagne fairs for modern developing economies, some using them to urge the merits of private-order contract-enforcement and the unimportance of public legal mechanisms, while others claim that the fairs show that collective reprisals among corporative communities of businessmen can sustain impersonal exchange.
The policies of the counts of Champagne played a major role in the rise of the fairs. The counts had an interest in ensuring the success of the fairs, which brought in very significant revenues.These revenues in turn enabled the counts to consolidate their political position by rewarding allies and attracting powerful vassals.10 As a result, the counts were willing to provide various institutional mechanisms needed for the successful operation of an international fair, and were able to avoid selling privileges to special interest-groups that would have limited trade.11

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