Working Paper: CEPR ID: DP16067
Authors: Leticia Abad; Nuno Palma
Abstract: The quest for precious metals and trade routes during the early modern period fundamentally changed the world. What was the global impact of the large deposits of silver and gold which existed in the Americas? In this chapter, we take a global view. We find that in Europe, England and the Netherlands benefited the most. By contrast, the colonizers par excellence, Spain and Portugal, were unable to profit from their colonial expansion. In Latin America, the exploitation of precious mineral resources enabled the geographic expansion of the empire and shaped labor institutions, the fiscal apparatus, and economic activity. The direct impact on other parts of the world was negligible; but the long-term political consequences of European presence shaped the world as we know it today.
Keywords: global history; early modern period; Spanish Empire; European Little Divergence; counterfactual history
JEL Codes: N50; O43; Q33; F54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| influx of silver coins (N11) | lower transaction costs (D23) |
| influx of silver coins (N11) | increase fiscal capacity (E62) |
| influx of silver coins (N11) | stimulate economic growth (O49) |
| influx of silver (N11) | long-term negative consequences for Spain and Portugal (N93) |
| resource curse (Q33) | institutional decay (O17) |
| Dutch disease (Q33) | economic stagnation (P27) |
| inflation from silver influx (E31) | rent-seeking behavior (D72) |
| silver trade (E42) | demand for African slaves (N97) |
| mining operations (L72) | coercive labor systems (J47) |
| influx of silver (N11) | decline of Spanish economy (N16) |
| Spanish government squandering resources (H56) | loss of competitiveness in other industries (L19) |