American Political Science Review

Research Article

Trade, Institutions, and Ethnic Tolerance: Evidence from South Asia


Stanford Graduate School of Business


I provide evidence that the degree to which medieval Hindus and Muslims could provide complementary, nonreplicable services and a mechanism to share the gains from exchange has resulted in a sustained legacy of ethnic tolerance in South Asian towns. Due to Muslim-specific advantages in Indian Ocean shipping, interethnic complementarities were strongest in medieval trading ports, leading to the development of institutional mechanisms that further supported interethnic exchange. Using novel town-level data spanning South Asia's medieval and colonial history, I find that medieval ports, despite being more ethnically mixed, were five times less prone to Hindu-Muslim riots between 1850 and 1950, two centuries after Europeans disrupted Muslim overseas trade dominance, and remained half as prone between 1950 and 1995. Household-level evidence suggests that these differences reflect local institutions that emerged to support interethnic medieval trade, continue to influence modern occupational choices and organizations, and substitute for State political incentives in supporting interethnic trust.


Saumitra Jha is Assistant Professor of Political Economy at the Stanford Graduate School of Business, 655 Knight Way, Stanford CA 94305 (


  I owe particular thanks to Susan Athey and Avner Greif, as well as Aprajit Mahajan, Kenneth Arrow and David Laitin. I am grateful to Prashant Bharadwaj, Asim Khwaja, Atif Mian and Steven Wilkinson for very helpful comments and generously sharing their data and for the suggestions of Ran Abramitsky, Amrita Ahuja, Roger Bolton, Feysal Devji, Claudia Goldin, Emeric Henry, Michael Kremer, Prakash Kannan, Kimuli Kasara, Anjini Kochar, Timur Kuran, Jenny Kuan, Jessica Leino, Pedro Miranda, Monika Nalepa, Rohini Pande, Matthias Schuendeln, TN Srinivasan, Yannay Spitzer, Ashutosh Varshney, Nico Vöigtlander, Gavin Wright, Joanne Yoong and seminar participants at Berkeley, Chicago, Clio, Davis, Harvard, Northwestern, Stanford, LiCEP, LSE, MIT, Princeton, NEUDC, NYU, Rochester, UBC, USC, UWO, the all-UC economic history group, and the World Bank. Sangick Jeon and Astasia Myers provided much valued research assistance.