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Social capital and economic performance: trust and distrust in eighteenth-century gold shipments from Brazil

Published online by Cambridge University Press:  13 December 2010

LEONOR FREIRE COSTA ,
MARIA MANUELA ROCHA  and
TANYA ARAÚJO
LEONOR FREIRE COSTA
Affiliation:
Technical University of Lisbon, School of Economics and Management (UTL-ISEG), Department of Social Sciences, (GHES), [email protected]
MARIA MANUELA ROCHA
Affiliation:
Technical University of Lisbon, School of Economics and Management (UTL-ISEG), Department of Social Sciences, (GHES), [email protected]
TANYA ARAÚJO
Affiliation:
Technical University of Lisbon, School of Economics and Management (UTL-ISEG), Department of Economics (UECE), [email protected]
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Abstract

This article discusses agency problems in a period of market boom. It takes Portuguese trade with Brazil as a case study to discuss the impact of colonial market expansion on social capital. The hypothesis is that social capital depletion prompted an uneven distribution of information and a limited access to honest individuals, who might afford a premium to certain forms of agency. Given the states' inability to provide legal sanctioning in colonial regions, this article focuses on private-order mechanisms which were effective for selecting reputable individuals. The exploration of network analysis identifies the mechanism that responds to such an adverse environment and supports the argument that business organizations which counted on the geographical mobility of agents had comparative advantages. The approach followed in this article brings new insights on informal institutional arrangements and on itinerancy in contexts of low levels of social capital.

Type
Research Article
Information
European Review of Economic History , Volume 15 , Issue 1 , April 2011 , pp. 1 - 27
Copyright
Copyright © European Historical Economics Society 2010

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