From Baghdad to London: Lessons from one thousand years of urbanisation in Europe and the Arab world

Maarten Bosker, Eltjo Buringh, Jan Luiten van Zanden 28 June 2008



Why did the Industrial Revolution begin in northwestern Europe? At the turning of the first millennium, Europe was a backward part of the world economy with low levels of urbanisation and income. But between 1000 and 1800, Europe surged from a backwater of the world economy to its most dynamic region. Understanding this development is a major challenge for economists and economic historians.

Institutions, but which?

The prime hypothesis explaining ‘the rise of Europe’ turns on institutional development. However, which type of institutions gave rise to the ‘European growth miracle’ is a subject of quite some debate.

Douglas North, for example, stresses that socio-political institutions constraining the predatory actions of the state mattered most,1 but this view has been challenged by, amongst others, Avner Greif who maintains that it was contracting institutions that mattered most. These facilitated economic exchange – such as developed by Italian merchants and cities – and this is what made the difference.2 Daron Acemoglu and Simon Johnson, making the same distinction between ‘vertical’ socio-political institutions (property rights) and ‘horizontal’ economic institutions (contracting institutions), present evidence for the vertical institutions mattering more when it comes to long-term economic growth.3

Contributing to this debate in a recent paper, we compare the long-term development of the urban systems of Europe and the Arab world between 800 and 1800.4 On the basis of a new and very large dataset of individual cities in Europe, North Africa and the Middle East, we are able to assess the importance of various factors that drove urban expansion. Consideration of factors such as geography, religion, and institutional provides some answers to the question why, during this millennium, the urban and economic centre of gravity moved from Iraq, or more generally the Arab world, to Europe and the shores of the Atlantic in particular.


Institutions governing economic exchange

We use the number and size of cities as our measure of economic performance and focus on the existence and development of positive feedbacks between cities. In particular, we study whether and to what extent cities profit from other cities in the sense that the presence of many, large, cities in a city’s neighbourhood seemed to spur its growth. A key part of our results concerns the way that these neighbourhood effects changes over time.






Trading place: The year 1100

From 1100 onwards, Europe enjoyed an efficient urban system with positive feedbacks between cities (based much more on sea and river trade) in spite of the fact that it remained politically fragmented. In the Arab world, by contrast, the neighbourhood effects disappeared. There the break up of the Abbasid Caliphate was eventually followed by a new empire, the Ottoman Empire. To some extent, this took over the role of its predecessor – but without restoring the efficient system for economic exchange that was present during the Golden Age of Islam.

Interaction between Europe and the Arab world


Also the socio-political developments in Europe and the Arab world can help to explain the observed differences in evolution of the two urban systems.

Differences between the two urban systems


European ‘producer cities’, Arab ‘consumer cities’

The sociologist Max Weber introduced a distinction between ‘consumer cities’ and ‘producer cities’. Using this classification, Arab cities were – much more than their European counterparts – consumer cities.8

The classical consumer city is a centre of government and military protection or occupation, which supplies services – administration, protection – in return for taxes, land rent and non-market transactions. Such cities are intimately linked to the state in which they are embedded. The flowering of the state and the expansion of its territory and population tend to produce urban growth, in particular that of the capital city.

In Europe cities are instead much closer to being producer cities. The primary basis of the producer city is the production and exchange of goods and commercial services with the city’s hinterland and other cities. The links that such cities have with the state are typically much weaker since the cities have their own economic bases. It is this aspect that accounts for the fact that Arab cities suffered heavily with the breakdown of the Abbasid Empire, while European cities continued to flourish despite political turmoil.



Why did Europe overtake the Arab World in the millennium between 800 and 1800?





1 North, D.C. (1981). Structure and change in economic history. New York: Norton.

2 Greif, A. (2006). Institutions and the path to the modern economy: lessons from Medieval trade. Cambridge University Press.

3 Acemoglu, D., and S. Johnson (2005). “Unbundling institutions.” Journal of Political Economy 113, 949-995.

4 Bosker, M., E. Buringh, and J. Luiten van Zanden (2008). From Baghdad to London: The Dynamics of Urban Growth in Europe and the Arab World, 800-1800. CEPR DP 6833.

5 Timur Kuran argues that economic institutions were weaker in the Muslim world, while others argue that the European socio-political institutions were states fundamentally different – less predatory and more constrained. Kuran, T. (2003). “The Islamic commercial crisis: institutional roots of economic underdevelopment in the Middle East.” Journal of Economic History 63, 414-447.

6 See also Ronald Findlay’s and Kevin O’Rourke’s Vox column “Lessons from the history of trade and war” 10 March 2008.

7 Ades, A.F. and , E.L. Glaeser (1995). “Trade and circuses: explaining urban giants.” Quarterly Journal of Economics 110, 195-227.

8 Weber, M. (1958). The City. Translation and edited by Don Martindale and Gertrud Neuwirth. New York, The Free Press.



Topics:  Development Economic history

Tags:  Europe, institutions, economic history, urbanisation, Arab world


This article touches on what I think are the three deepest questions in all social science:

* Since 1550 or so, a scientific, commercial, and industrial revolution has occured. Why did it occur when and where it did?

* Why have some nations embraced those revolutions quickly and enthusiastically (the North Atlantic community), others enthusiastically but with considerable delay (Asian Tigers), unevenly (Latin America, India), and even not at all (sub-Saharan Africa)?

* Why did imperial China (Sung dynasty) and the Islamic caliphates get tantalizingly near to those revolutions, only to experience a sort of "failure of nerve"?

For years, my preferred tentative answers to these questions were the writings of Douglass North, and the 1986 monograph by Rosenberg and Birdzell. But I now suspect that their proposed explanations run aground on the recent experiences of China and India. While India is a common law jurisdiction, its legal system is tatty and inefficient. And Chinese growth post-Mao has taken place in what has largely been a business law vaccuum.

Maarten Bosker

Assistant Professor, Erasmus University Rotterdam

Postdoctoral researcher, Utrecht University

Professor in economic history at Utrecht University and senior researcher at the International Institute of Social History in Amsterdam