Institutions Matter-but So Does History; a Compariosn of Mediaeval Dubrovnik and Other Dalmatian Cities

Abstract: That institutions matter in determining economic performance is widely accepted, and many analysts, like Acemoglu and Robinson (2012), demonstrate this with historical case studies comparing English and Spanish colonies, or Mediaeval Venice. Havrylyshyn and Srzentic (2015) argued good institutions explained the prosperity of tiny Ragusa/Dubrovnik, which became a major rival in maritime trade to mighty Venice 20 times its size. Compiling data for the period 12th-17th c., on performance, institutions like judicial procedures and social programs, they demonstrated that Ragusa had high-quality institutions . This paper extends the analysis asking: why didn’t the larger and older city-states of Dalmatia like Split or Zadar succeed as Ragusa did? Was it because they did not have high-quality institutions ? With some new data on legal and social institutions for other Dalmatian cities, the paper that while Ragusa may have been one of the earliest to put in place good institutions, the others were not that far behind or very different. Thus institutions alone can't explain Ragusa’s greater success; they may have been a necessary condition for success but not sufficient. History suggests an alternative explanation: Venice ruled over most of Dalmatia and restricted economic and trading rights of these cities with inter alia the Ottoman empire, essentially monopolizing this for itself. As Ragusa remained largely sovereign it was able to undertake such trade and to determine its own policies on fiscal, trading, regulatory, institutional and social matters. Its superior performance relative to the others is thus to be attributed to the exogenous historical fact of Venetian Imperialism