The Expansion of Trade and the Transformation of Agriculture in Pre-industrial Europe*

The expansion of trade in pre-industrial Europe led to a transformation of agriculture. It induced specialization to exploit comparative advantage as well as a restructuring of the process of production, with manorial agriculture giving way to an agriculture of family farms. Technological progress was not itself a driving force, but rather a consequence of this transformation. Merchants and urban investors played a central role in the transformation of agriculture. They purchased land and restructured it into family farms. They pioneered new forms of land tenure. They were active in developing new agricultural land. And it was their efforts in lowering trading costs that made possible the expansion of trade that was the cause of it all. JEL Categories: F14, N53, N13, N23, N53, O13, O31, O52, Q15, Q16, Q17, R00 *This paper is a draft chapter of The Origins of Western Economic Success: Commerce, Finance, and Government in Pre-Industrial Europe. Copies of this and other draft chapters may be downloaded from http://www.dartmouth.edu/~mkohn/ **I am very grateful to Yoav Kislev and to Jack Powelson for comments on an earlier version.