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Taxation, Coercion, Trade and Development in a Frontier Economy: Early and Mid Colonial Paraguay

Published online by Cambridge University Press:  01 May 1997

MARIO PASTORE
Affiliation:
Institute of Latin American Studies, University of London

Abstract

This article explores the effects of changing exposure to world trade and relative factor abundance on the institutional and economic development of a paradigmatic Spanish-American frontier colony, Paraguay. The problem is conceptualized within a neoinstitutionalist staples model in which – during the long sixteenth-century trade expansion – the colonial state delegated the provision of defence onto individuals who financed it by restricting indigenous labour mobility and extracting the resulting monopsony rents. Despite the encomienda's stated intentions, its inefficient incentive system actually contributed to the decline in indigenous population and provincial security shortcomings. As trade contracted and defence needs rose during the seventeenth-century crisis the crown commuted the labour services of Jesuit mission Indians for contributions to defence and payments in kind and money. The mestizo peasantry remained free, but was increasingly burdened with military obligations as well.

Type
Research Article
Copyright
1997 Cambridge University Press

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Footnotes

I have presented several previous versions of this paper at different scholarly gatherings, most recently at the Latin American Studies Colloquium Series, Cornell University, Ithaca, NY. For their comments and suggestions on previous drafts I thank Robert Higgs, Tom Davis, Stanley Engerman, Evsey Domar, Branislava Susnik, Luis Galeano, Luis Campos, Jerry Cooney, Douglass North, John Nye, Elyce Rotella, Eni Mesquita and two anonymous referees. Remaining deficiencies are mea culpa.