Trade and the rise of ancient Greek city-states

Abstract

In this paper, I examine the role of comparative advantage in the rise of city-states. After compiling a new dataset on ancient Greece and the natural environment, I provide evidence that the spatial covariance of natural vegetation endowments amongst potential trading partners is important for explaining the development of silver coin money, battles, and city-state formation. I also provide statistical evidence against “key factors” previously emphasized. These findings are consistent with a general model of comparative advantage that I develop, which clarifies how the spatial covariance of factor endowments affects multiple development outcomes.