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I am particularly grateful to Franco Amatori for his helpful suggestions and encouragement, to all the participants in the 2012 Economic and Social History Workshop at Bocconi University, Milan, for their stimulating criticism, and to Antonio Di Vittorio for his supervision. I also thank two anonymous referees for their constructive comments. Financial support from the University of Salerno (FARB) and Ministero dell'Università e della Ricerca (MURST) for my research project is gratefully acknowledged.
I
The Ottoman economy was based on the agricultural sector until the dissolution of the Empire following World War I. Agriculture accounted for more than half of its national income, employed more than 80 per cent of the population and represented the major source of fiscal revenues (Quataert 1994, p. 849). So as to modernize the economic structure of the Empire and reduce the development gap vis-à-vis Western countries, the Ottoman government as early as the second quarter of the nineteenth century launched a programme of reforms (Tanzimât), drawing inspiration from European institutional models. In exchange for the promise of their political and financial support to maintain the territorial integrity of the Empire, the European powers obtained assurance, with the Tanzimât, that the Ottoman institutions would become more suited to interacting with the Western economies, opening up to free trade and foreign investment.
Of the reforms in the agrarian sector, the Land Code (1858) recognised landed property rights to peasants who had hitherto cultivated the state lands as tenant farmers, thereby incentivising new investments in agriculture at least in some areas of the Empire such as Palestine.1Such investments were further stimulated by commercialisation of the agricultural sector under the influence of growing foreign demand coupled with an increase in domestic demand sustained by a growth in population due to natural causes, immigration flows and the expansion of the chief port cities (Quataert 1994, pp. 848-9).
Indeed, the growth in production and agricultural exports has been assessed as the main factor behind the positive, albeit small, average annual increase of 0.7 per cent in GDP per capita between 1870 and 1913 (compared with an average rate of 1.5 per cent across countries in Western Europe and the US) (Pamuk 2010, p....