The short answer is yes but probably only if they are powerful enough.
Explaining the development of Europe from an economic backwater in the tenth century to the cradle of the modern market economy by the nineteenth century has a long and impressive pedigree, going back to the founders of social science. It has recently been the focus of countless articles and blog posts (see here, here and here). One of the most consistently highlighted factors is political institutions or more specifically parliamentary constraints that limit predation by rulers, protect property rights, and reduce transaction costs. However, a recent study by Abramson and Boix (2019)challenges this view and argues that both economic growth and parliamentary constraints are endogenous to initial differences in climatic and biogeographic endowments. Favorable endowments allowed some areas to sustain large urban populations that were conducive to technical innovation and able to check rulers.
There are several reasons why this ‘chicken and egg problem’ has been so difficult to solve. One is the extreme heterogeneity of European parliaments. They differed in their prerogatives and meeting frequency, and there was a lot of variation in the strength of individual parliaments over time. Contrast, for instance, the famously powerful English parliament with the infrequent and relatively short-lived French Estate General. Another problem is endogeneity: while data on soil quality and historic climate helps us identify exogenous variation in economic endowments, similarly exogenous measures of parliamentary strength are lacking.
In a recently published article in the American Journal of Political Science, I explore whether parliaments did in fact cause growth. To address the first point raised above, I examine the impact of a particular institution: the parliament of the Duchy of Württemberg. According to eighteenth-century English Whig statesman James Fox, it was the only European state with a constitution worthy of its name, save of course for Britain itself. If there is no impact of parliamentary constraints in Württemberg, it is thus unlikely that there should be an effect of weaker parliaments elsewhere. The Duchy is located within the contemporary German state of Baden-Württemberg (see below).
Parliamentary constraints and economic development in Württemberg
Analyzing the Duchy of Württemberg also allows me to address the second issue. The Duchy’s borders remained relatively stable during the period when its parliament was active (circa 1495-1796). I thus compare the development of Duchy and non-Duchy towns adjacent to the border before and after the parliamentary period. As shown below, before the introduction of parliament, towns in Württemberg were comparable to the size to the towns controlled by neighboring polities. This changed, however, during the centuries when Württemberg dukes were constrained by town representatives in parliament. By 1852, towns within the Duchy were around 24% larger. I also find that this difference has persisted. Areas within the former Duchy have higher population density and income levels today.
Was this difference a reflection of parliamentary power? Or was it a result of other factors that were peculiar to the Duchy of Württemberg? To get at this, I collected information on the political institutions of the 84 polities that governed the 293 towns adjacent to the Duchy. If parliament was the key difference between Württemberg and its surroundings, I would expect similar economic development in adjacent towns that also experienced constrained rule and worse development in adjacent towns under more autocratic rule. This is what I find. Town size and the number of markets in each town after the parliamentary period track the variation in political institutions.
When do parliaments cause growth?
The parliament in the Duchy of Württemberg did stimulate economic growth. However, it is unlikely that all medieval and early modern European parliaments contributed equally to economic activity. As with modern democracies, certain institutional features may matter more for growth than others. We are therefore left with the question when parliaments do in fact matter for economic development.
Additional findings from the article may shed light on this issue. First, towns directly represented in parliament saw more growth. This suggests that having few or geographically concentrated representatives could limit the economy-enhancing properties of parliament. Second, growth was concentrated in towns that formed the basis of the local administration and the delivery of public services. Thus, parliaments that are unconnected to state-building efforts may not foster growth. Third, I find that Württemberg attracted additional migrants who were known for their achievements in business, medicine, or government. This indicates that the rules governing citizenship for potential migrants may influence the impact of parliaments. It also dovetails with Dincecco and Wang’s (2018) recent argument that the political geography (fragmentation and good exit options) must be factored in to understand Europe’s representative institutions.
Finally, the type of representatives in parliament could influence its effect. The lack of rural representatives in Württemberg may explain why there was no difference in the survival rate of rural villages when compared to its surroundings. This is in line with work on political institutions in cities, which finds that the composition of representatives determines whether the institution influences growth.
There thus seems to be room for institutions in the story of Europe’s economic trajectory and its later transition to the modern economy. Exactly how much room and which institutional features are at this point largely unresolved. Nonetheless, I hope that my new work has improved our understanding of when parliaments matter for growth.