Current Research
Maintaining peace across ethnic lines: new lessons from the past
This research project so far includes two studies, one theoretical and one empirical, that explore lessons from medieval Indian Ocean trade for supporting ethnic tolerance in contemporary settings. A short policy-oriented overview has been published in the EPSJ.
A theory of ethnic tolerance (coming soon) develops a general model of inter-ethnic trade and violence in environments where there are "local" and "non-local" ethnic groups. The paper focuses on finding strategies that support peaceful co-existence over time: no one prefers to leave or to engage in violence with a member of a different ethnic group.The model suggests that three conditions are necessary to support peaceful coexistence between these groups over time: complementarities between groups, a high cost to replicate or expropriate the source of another group's complementarity, and a mechanism to share the gains from inter-group exchange.
The article then shows how these conditions were satisfied among Hindus and Muslim traders from the rise of Islam to European ascendance in the 17th century. Due to Muslim-specific advantages in Indian Ocean shipping, incentives to trade across ethnic lines were strongest in medieval ports, leading to the development of institutions to support inter-religious exchange.The paper characterises the institutions that emerged to bolster religious tolerance in these towns during the medieval period and that continued to support religious tolerance two centuries after the decline of Muslim dominance in overseas trade (see below). Finally, the paper draws lessons from the theory and India's institutional legacy to understand why ethnic tolerance fails and how tolerance may be fostered in contemporary settings.
Trade, institutions, and religious tolerance: evidence from India tests whether the institutions of religious tolerance that emerged to support inter-ethnic exchange in medieval Indian ports have had a lasting effect on contemporary religious tolerance in India. Using new town-level data spanning India's medieval and colonial history, this paper finds that medieval trading ports were 25% less likely to experience a religious riot between 1850-1950, two centuries after Europeans eliminated Muslim advantages in trade. Medieval trading ports continued to exhibit fewer and less widespread religious violence during the Gujarat riots in 2002. The paper shows that these differences are not the result of variation in geography, political histories, wealth, religious composition, of trade outside the medieval period or of the endogeneity of medieval port selection, and interprets these differences as being transmitted via the persistence of institutions that emerged to support inter-religious medieval trade.
Financial innovations and constituencies for political reform
Much blame for under-development can be attributed to a failure to align the incentives of disparate interest groups in favour of political reform and beneficial public policies. This research project evaluates the effectiveness of financial innovations-- particularly shareholding and the expansion of secondary markets---in aligning incentives across disparate social and ethnic groups and creating constituencies that favour ethnic tolerance, political reform and broad public goods provision. This project already includes one empirical paper (below) using historical evidence from 17th century England. The project will ultimately include at least two further empirical papers, one using contemporary evidence from South-east Asia, one using experimental evidence from India, and one theoretical paper.
Shareholding, coalition formation and political development: evidence from 17th century England analyses the incentives to support political reform in 17th century England and documents the role of a financial innovation-- shares in joint stock companies-- in aligning the interests of a broad coalition in favour of representative government and public goods provision.
The paper exploits new data on individual members of the Long Parliament to show that shareholding in hitherto unprofitable overseas companies acted as a robust determinant of support for political reforms, particularly by non-merchants. These results are not driven by other factors mooted to explain England's political development, including domestic property ownership, religion, regional differences, or by shareholder selection. Instead, the paper suggests that the introduction of shares permitted a broad spectrum of non-merchants to benefit from the expansion of overseas trade. This aligned the incentives of a new coalition in favour of acquiring the executive's overseas rights and implementing public investments that proved crucial for economic growth.