4 ms·

I think that's more rather the difference in economies with kingdoms traditionally extracting taxes from their fiefdoms and Venice being able to broadly trade.

• namlem 4y ago
  It's bidirectional and difference in governance absolutely produces differences in economies. After all, the economy is based on incentives, so when incentives change, so do economies. In Why Nations Fail there was a great example of how certain sub-Saharan African peoples didn't use plows for agriculture. The Europeans assumed it was because they were unsophisticated but actually it was because their king taxed them in such a way as to leave them with the same amount of grain regardless of how much they produced. They had zero incentive to be productive and therefore had no use for plows. As soon as the tax system changed, they began to use plows. Likewise, in highly corrupt systems, there is no reason to start a business, since the incentive monopolists will not permit it to compete anyway. That's why Ukraine, a country with relatively high levels of infrastructure and education, is so poor.