Trade, conflict, institutional reform and economic growth: The long 18th century expansion of world trade and the Iberian-American frontier

The basic theorems of international trade lead economists to expect trade and autarky to result in income expansion and contraction. Likewise, world trade fluctuations may be expected to lead to fluctuations in domestic income. These theorems assume, however, that trade expansion and contraction leave the assumed domestic institutional framework unaffected. However, recent contributions to the political economy literature suggest that changing trade exposure may lead to political cleavages. One would therefore expect to see secular changes in world trade to conceivably result in domestic institutional change. The eighteenth century expansion of world trade and inter imperial conflicts, I will argue here, did in fact lead to institutional changes in both the British and Spanish empires in North and South America, respectively. Here I will consider the changes in the Spanish colonial administration known as the Bourbonic Reforms and whether they appear to have had any domestic effects in a distant, isolated province on the margins of the Spanish empire in South America.