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In spite of the declining GDP…growing per capita income is feasible

In spite of the declining GDP…growing per capita income is feasible. 4.EXPLAINING RAGUSA’S RISE, PROSPERITY AND DECLINE. Location+Naval Power or Policies? a) Good Governance b) Strong Doing Business climate c) Prudent finances d) a sufficiently “fair” social policy

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In spite of the declining GDP…growing per capita income is feasible

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  1. In spite of the declining GDP…growing per capita income is feasible

  2. 4.EXPLAINING RAGUSA’S RISE, PROSPERITY AND DECLINE Location+Naval Power or Policies? a) Good Governance b) Strong Doing Business climate c) Prudent finances d) a sufficiently “fair” social policy e)minimal military , maximal diplomacy

  3. 4 a.GOOD GOVERNANCE • Not a democracy (low VO) but at time comparatively benevolent oligarchy (Grubisa ’11) • Felt need “to improve institutions [as] stability and prosperity only way to strengthen city” (Krekic ’80) • Steady increase in role of rich merchants, upward mobility (Krekic, Luetic, Vekaric ,Zlatar) • Lot of evidence on effective ROL

  4. 4b.FAVORABLE “DOING BUSINESS” CLIMATE • Stipetic (00) details early economic philosophy , market and business friendly • Diversis(1440) “ the first permanent institution …to preserve justice and order among … merchants and customers, foreigners or citizens” • The acid-test of this: Ragusa courts ruled against own citizens in favor of foreign claimants: seized assets of bankrupt Paboras, conveyed to Peruzzi Bank, etc. • Ragusan Noble Bunic embezzled Sultan´s Balkan taxes, Ragusa court seized his assets. • Bojovic( ’98 ) recount numerous similar instances

  5. WHAT DID PERUZZI DO WITH PABORA MONEY ?? • BY 1450 PERUZZI BANK OF FLORENCE WENT BANKRUPT • PERUZZIS LATER EMIGRATED TO US AND -------

  6. 4b…EARLY MARKET INSTITUTIONS • Benedikt (Benko) Kotruljevic(1440) now shown by scholars as first to develop double-entry bookkeeping– also justify interest as price of capital(early Austrian?) importance of credit to fuel trade, against usury laws if < 5-6% • Notary and contract registration rules, agencies as early as 1200 • Bankruptcy laws and procedures : avoid Debtor’s Prison solution, instead “help debtor overcome inability to pay [promote ] future doing business together” Palic (08)

  7. 4.c.PRUDENT FINANCES • History lit. virtually unanimous on financial prudence of state- debt problems rarely mentioned , minimal • Data to test this only available for 1800 (Tab. 3), in theory Arhiv has full books • Monetary stability claimed by most, apparently little debasement, low inflation , but no hard data to test • Banking : Zecca or mint a bank-like institution, minted coins, appears to have done lending to state, large “corporations” (bratovstva), held official deposits.BUT more research needed for fuller picture

  8. TABLE 3. STRUCTURE OF RAGUSA BUDGET ABOUT 1800

  9. TESTING SOME FISCAL HYPOTHESES WITH TAB.3 • BUDGET OF 1800 SURPLUS=10% REV.-this at a time long past “Golden Years” • DEBT PAYMENTS 1.7% :cf Kormer(95) for 25 mediaeval states17-36% • IN FACT NET ASSET POSITION VERY STRONG: DIVIDENDS ON DEPOSITS ABROAD 25.3% OF REV.!! ( held in “MONTI” of Italian banks and Vienna…Ragusa did not play the “Full Monti” …and won ) • HYP. ON SOCIAL FAIRNESS, LOW MILITARY, HIGH DIPLOMACY ALSO CONFIRMED … BUT ONLY FOR THE 1800 PERIOD!

  10. 4.d. A “SUFFICIENTLY” FAIR SOCIAL POLICY • NOT EQUITABLE, BUT FAIR COMPARED TO OTHER STATES • SOCIAL INFRASTRUCTURE: streets paved in 14th c., sanitation , water supplies (viz. Onofrio Fountain now for tourists!), schools, hospitals, hospices, orphanages, poor-houses • GRAIN RESERVES(RUPE): a case of good mercantilism ? • HEALTH-CARE: state-salaried physicians, hospitals, FIRST quarantine in region ,1377 • EDUCATION: Tab. 3, 6.8% high for the time.

  11. 4e. MINMAX OPTIMIZATION:Minimal Military… • HISTORIAN’S CONSENSUS:SMALL ARMY, NAVY, MIL. EXPENDITURES. Luetic(69) entire chapter “Most Modest Naval Fleet”; numbers vague, perhaps 10-20 ships cf. 100-200 merchant fleet– Venetian Period small war-time obligation=1 ship per 30 Venetian • TAB.3 FOR 1800 CONSISTENT WITH THIS. Army+Fortifications 12.2%-- though some of Admin., Police could be “defense”. • HOWEVER: COULD HAVE BEEN MUCH MORE IN EARLIEST PERIODS TO BUILD CREDIBILITY-15 MONTH Saracen siege in 866-7;Carter(72) claims Balkan Kings “discouraged from attack by the likely high costs of breaching the fortifications”. AN INTERESTING HYP. FOR RESEARCH

  12. MAIN DEFENSE EXPENDITURE? AN IMPREGNABLE RAGUSA

  13. 4e. MINMAX OPTIMIZATION:Maximal Diplomacy • LITERATURE REPLETE WITH PRAISE FOR RAGUSA/DUBROVNIK DIPLOMACY: Berkovic(09) “ in defense of independence, econ. growth [resorted] almost exclusively to diplomatic means and skills”; Carter (72) “in diplomatic affairs Dubrovnik was a past –master”; height of byzantine intrigue late 17th.c , Ragusa was city of “Le Sette Bandieri” playing off seven powerful states with treaties, tributes, constant negotiations ( see Diplomat Vucic!) • HARD DATA?up to seventy consulates; TAB 3: 11% exp. on last; huge 32% on tributes and “good relations expenses”; Fig.9 ,Customs revenues highest during regional wars!!

  14. 17th.c. DIPLOMAT VUCIC(Bona) PROGENITOR OF 21st c. LEADERS!

  15. 5. CONCLUSIONS • FINDINGS SUBJECT TO DATA QUALITY… • RAGUSA IN 14-16 c. VERY PROSPEROUS AND IMPORTANT STATE IN EASTERN MEDITERRANEAN DESPITE TINY SIZE-based on entrepot trade,first Balkans-Italy , then Levant-Europe • LOCATION WAS FAVORABLE BUT MORE IMPORTANT WERE POLICIES: Good governance, business-friendly, Rule-of-Law, enlightened social policy, prudent finances  low debt, skilled diplomacy substitutes for military expenditures

  16. 5.CONCLUSIONS …cont’d. • 17TH c. DECLINE DUE TO CAPE OF GOOD HOPE ROUTE 1500, OVERWHELMING ADVANTAGE OF NEW NAVAL POWERS: PORT. NETH. ENGL.; RISE OF W.EUROPE • HOWEVER, IMPACT NOT IMMEDIATE AS OFTEN THOUGHT: PEAK OF RAGUSA SHIPPING TONNAGE ALMOST CENTURY LATER • RAG=VENICE? LITERALLY FLEET SIZE DID REACH THIS FOR SHORT PERIOD, BUT ONLY WHEN VENICE WAS AT ITS LOWEST AFTER WARS. NEVERTHELESS WITH 1/20TH SIZE OF VEN. EVEN BEING CLOSE AND A TOUGH COMPETITOR WAS A GREAT ACHIEVEMENT

  17. Table 4 Quantitative Tests of Most Common Hypotheses about Economy of Ragusa

  18. FUTURE RESEARCH • THE LIMITED AND IMPERFECT DATA SET FROM SECONDARY SOURCES IMPLIES ABOVE CONCLUSIONS SHOULD BE CHECKED WITH PRIMARY ARCHIVAL DATA • IN ADDITION , A NUMBER OF NEW HYPOTHESES HAVE BEEN RAISED BY THE ANALYSIS (TAB.5), AND COULD BE RESEARCHED IN ARCHIVES: 2 examples: was silver period also a high-growth period albeit at lower levels of incomes? ; what happened to GDP, GDPpc, POP , in the “ decline “ centuries- did revival of shipping 1750 on raise GDPpc as POP fell ?

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