Comparative European Institutions and the Little Divergence, 1385-1800

117 Pages Posted: 4 Dec 2019 Last revised: 9 Nov 2021

Date Written: November 2019


Why did the countries which first benefited from access to the New World -- Castile and Portugal -- decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of Atlantic trade explain Iberian divergence. In this paper, we build a new dataset which allows for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. We find no evidence that the political institutions of Iberia were worse until the English Civil War.

Keywords: Atlantic Traders, New Institutional Economics, the Little Divergence

JEL Classification: N13, N23, O10, P14, P16

Suggested Citation

Henriques, Antonio and Palma, Nuno Pedro G., Comparative European Institutions and the Little Divergence, 1385-1800 (November 2019). CEPR Discussion Paper No. DP14124, Available at SSRN:

Antonio Henriques (Contact Author)

Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto

Nuno Pedro G. Palma

University of Manchester ( email )

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

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