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The Impact of the Slave Trade on African Economies

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DOI: 10.11126/stanford/9780804771856.003.0004

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 The Impact of the Slave Trade on African Economies

Warren Whatley and Rob Gillezeau∗

May 23, 2009

Contact Information
Warren Whatley, Department of Economics, University of Michigan, 611 Tappan Street, Ann Arbor, MI, 48104
([email protected])
Rob Gillezeau, Department of Economics, University of Michigan, 611 Tappan Street, Ann Arbor, MI, 48104
([email protected])

Abstract
This paper has three parts. The first part presents econometric evidence showing that increases in the international demand
for enslaved Africans induced a reallocation of resources in Africa towards slave production and away from other economic
pursuits. In the second part, we use this evidence to help specify a theoretical model of conflict and cooperation in Africa
before and after the slave trade. Our goal is to reveal the conditions under which the slave trade not only reallocated
resources, but also produced several externalities thought to impede long-term development in Africa. These include
constraints on the growth of African states, increases in ethnic and social stratification, and a sustained culture of violence. In
the third part of the paper, we test the predictions of this model against the history of the Asante Empire (present-day
Ghana). We find that the model explains Asantes origins and expansion well, including the Asante Alliance, the causes and
timing of territorial expansion, and the “southern problem.”

1 Introduction

What was the impact of the transatlantic slave trade on African economies and societies? Traditional answers
to this question have tended to focus on depopulation. Studies by Manning (1990), and McEvedy and Jones
(1978) conclude that the slave trade slowed population growth in Africa and may have even reduced the
aggregate population between 1700 and 1850. But the causal impact of population growth on development
is difficult to assess. Instead, in this paper we focus on the impact of slave production, and the associated
externalities, on the development process broadly conceived. Orlando Patterson (1982) calls the production
of slaves the production of “social death.” It is a violent process where a person is brought to the brink of
∗ We want to thank seminar participants at Michigan, Stanford, Utah, Vermont and UC-Irvine; and participants at the 2008
conferences of the Economic History Association, the African Studies Association, the All-UC Conference in Economic History,
The American Economics Association, and the NBER summer workshop on the Development of the American Economy

1
death, spared and then ritualistically put to social death, left to owe the remainder of his life to another
person. One would think that centuries of producing social death would leave a mark on social outcomes and
institutions, some with lasting consequences for development. First of all, slave raiding disrupts production
and social life in general. Where slave raiding is frequent, ethnic boundaries and the ability to distinguish
insider from outsider might proliferate as people struggle to manage the risk of being caught. Similarly, an
increase in the profitability of slave raiding might induce elites to raid for slaves rather than build powerful
states, further exacerbating the destabilizing effects of slave production.

How widespread was slave production in Africa? It is impossible to know with any degree of confidence,
but we venture a guess. Between the 16th and 19th centuries more than 13 million slaves were produced in
Africa and transported across the Atlantic. 77 percent of these slaves (10.1 million) were produced along the
West and West Central coasts of Africa during the 150 years between 1701 and 1850.1 In 1700, the estimated
population in this region of Africa was 28 million people (McEvedy and Jones, 1978, pp. 241-249). If the
average life span was 30 years, then the 10.1 million slaves were produced over five lifetimes. That yields 2.6
million slaves produced per lifetime, or 9.3 percent of the total population. If we take into account collateral
damage then the probability of being a victim of slave production increases further. Slave producers killed
and injured others to capture their slaves. Captives died during the long trek to the coast, in the holding
pens along the coast, and during the Middle Passage. And many captives remained in Africa. The physical
and social deaths needed to produce 13 million slave exports could have easily reached twice that number.2
We believe it is appropriate to characterize this situation as a “reign of terror.”

What impact did this production of social death have on Africa? We are surprised there is not a
larger economic literature on this topic.3 Was the violence continuous and wide-spread, or was it sporadic
and confined? Did slave production encourage state growth, or did it impede it? Did it increase social
stratification and social conflict, or did it encourage defensive co-operation and coalition-building? Was the
impact on Africa temporary and fleeting or did it persist for a long period of time? Finally, does seeing this
period as a reign of terror help us understand the path of development in Africa since then? These are the
questions that we begin to address in this paper.

We have no illusions of answering these complex questions in their entirety. Rather, we have two modest
but important goals in mind. First, we wish to contribute to the empirical evidence that suggests that the
1 All slave trade quantities are calculated from the Transatlantic Slave Trade Database at www.slavevoyages.org.
2 The experiences and observations of Olauda Equiano are instructive. Equiano was born and raised in Igboland behind
the Bight of Biafra (southeast Nigeria). He was captured sometime in the 1760s, later became a leading figure in the British
abolition movement and wrote the narrative of his life. In it, he recounts two attempts to capture him. The second attempt
was successful. He also remembers frequent battles in the common fields where neighboring villages would fight and capture
each other on a regular basis (Equiano, 1995, pp. 37-48).
3 An important but overlooked article is David Eltis (1990). Eltis uses heights of Yoruba captives as a measure of Yoruba

welfare and finds that “for every increase in slave departures (exports) of 1,000, mean heights of the birth cohort declined by
more than one fifth of a centimeter (p. 519).”

2
slave trade actually altered the path of development of African economies. Nathan Nunn (2008) is the only
study that we are aware of that addresses this question empirically. We contribute to this line of research by
conducting a direct test, one that does not rely on the assumption that African ethno-linguistic classifications
are exogenous and unchanging. We ask: Did changes in the level of demand for enslaved Africans alter the
allocation of African resources, broadly conceived, away from competing uses and towards the capture and
trade of people? If the international demand for enslaved Africans did not influence resource allocation
within Africa then it is hard to imagine the international slave trade altering African paths of development.
We find, however, that the international slave trade did alter resource allocation in Africa. As the foreign
demand for enslaved Africans increased, Africans responded by capturing and exporting more people. We
call this a situation of effective demand, in the sense that the international demand for enslaved Africans
effectively altered the direction of economic activity in Africa.

By focusing on effective demand we do not mean to argue that “external” events caused African un-
derdevelopment.4 Nor do we mean to deny that “internal” African dynamics were part of the story.5 We
take demand as exogenous because Africans slave producers were price takers and we want to assess their
responses to changes in price. The relative strength of supply (internal) and demand (external) in determin-
ing the nature and extent of the African response is an empirical question. In fact, as we shall see in this
paper, the necessary condition for external demand to have an impact on Africa is that the supply curve be
positively sloped. In other words, in order for external factors to have had an impact on African economies,
Africans must have responded to the external stimulus. This is what Patrick Manning (1983) refers to as
“Africa engaged.”

The second goal of the paper is to trace out the impact of effective demand on the structure of African
economies and societies. When the international demand for enslaved African rises it essentially increases
the value of people in trade relative to their value in production. The very first resource reallocation is the
devotion of more resources towards uprooting people. In other words, there is an increase in the economic
returns to slave raiding. We develop a simple model of cooperation and conflict between nations and villages
in order to trace out the impact of effective demand on several institutions thought to influence economic
development. The model reveals the conditions under which the slave trade reduced the size of states,
increased social and ethnic stratification and created a reign of terror. The model can also roughly trace
out the impact of changing slave prices and capture technology on these features of African economies and
societies. One should think of these as externalities of slave production.
4 For examples of the external school see, Walter Rodney (1972), Basil Davidson (1961, 1968), William Darity (1982) and
Nathan Nunn (2007, 2008).
5 For examples of the internal school see John Thornton (1998), Klein (2007) and Engerman and Genovese (1975).

3
2 The Slave Trade and African Development

A discussion of the impact of the slave trade on Africa must begin with Walter Rodney’s book, How Europe
Underdeveloped Africa (1972). Rodney argues that the slave trade fundamentally altered African economies.
First, the slave trade discouraged state-building and encouraged slave raiding. It encouraged the capture
of slaves for sale and discouraged the capture of land and the cultivation of a citizenry for the purposes of
taxation. Quoting Rodney, “...there have been times in history when social groups have grown stronger by
raiding their neighbors for women, cattle, and goods, because they then use the “booty” from the raids for
the benefits of their own community. Slaving in Africa did not even have that redeeming value. Captives
were shipped outside instead of being utilized within any given African community for creating wealth from
nature (page 100).” And, “[i]f the prisoners were to develop into a true serf class, then those prisoners would
have had to be guaranteed the right to remain fixed on the soil and protected from sale (page 118).”

There is some empirical support for Rodney’s underdevelopment thesis. Looking at the relationship
between GDP per capita today and participation in the slave trade centuries ago, Nunn (2008) finds that
the slave trade had a negative long-term effect on economic performance. He also presents preliminary
evidence which suggests that the legacy of the slave trade operated through increased ethnic diversity and
underdeveloped political structures. Studies of contemporary Africa tend to support the view that ethnic
diversity and underdeveloped states have contributed to Africa’s poor economic performance in the post
World War II period. Easterly and Levine (1997) argue that a quarter of the difference between the post-
WWII growth experiences of African and Asian economies can be explained by the greater ethnic diversity
in Africa. Perhaps centuries of slave raiding increased the cultural value of being able to quickly and easily
distinguish friend from foe. Bates (2008) argues that the predatory nature of the post-colonial state in Africa
created political and military challenges to its authority. When the challenges intensified, ethnic stratification
also intensified to the point where “things fell apart.” Again, it is not difficult to imagine centuries of slave
raiding producing predatory political cultures and ethnic stratification. What might at first seem “natural”
or exogenous about African ethnicity and political culture may actually be endogenous when viewed within
the context of centuries of slave raiding.

There are alternative views. David Eltis (1991) argues that the slave trade was a small share of Africa’s
economic activity and, therefore, could not have caused major social or economic disruptions. This is an
empirical question on which there has been little serious quantitative research. In addition, the negative
externalities of slave production could have swamped the private costs, a point we return to later in this
paper.

John Fage (1969) argues that the slave trade encouraged the consolidation of political states and favored
economic development in the long-run. Again, this is an empirical question. Our model predicts unambigu-
ously that rising slave prices reduce the incentive to build states. By implication, we argue that the states

4
that emerged in 18th century Africa would have been larger in the absence of the slave trade. Our model
also predicts the conditions under which a “Fage” effect might appear.6

John Thornton (1998) argues that the production of slaves was primarily a byproduct of internal African
struggles – an outcome of Africa‘s indigenous economic and political evolution rather than a product of an
exogenous shock like effective demand.7 This, too, is an empirical question that we address in this paper.
Philip Curtin (1975) sits on the fence and calls for an empirical test to distinguish between what he calls
a “political warfare” model of slave supply versus an “economic” model of slave supply. In this paper we
perform precisely this test.

3 A Test For Effective Demand

Did changing international demand for enslaved Africans increase the production of social death in Africa?
The answer depends on the elasticity of the slave supply function. Curtin (1975) calls this a test for the
economic model of slave supply, as distinct from the political warfare model of slave supply. The political
warfare model implies that most African slaves were by-products of indigenous political struggles that were
unrelated to the international demand for enslaved Africans. According to this view, one should think of
enslaved Africans as captives of wars who were exported rather than killed. They are sometimes called
“joint-products of war” or “stolen goods,” but always thought of as the products of activities unrelated to
the American demand for slave labor.

The political warfare model is depicted in Figure 1 by the perfectly inelastic supply curve. Supply is
insensitive to price and is determined by indigenous political struggles. The level of international demand
does not influence the quantity of slaves produced. It merely allocates the politically-generated supply of
slaves among the competing European ships docked off-shore at any point in time. This is the supply process
often pronounced by African Kings. Ose Bonsu, King of Asante proclaimed: “I can not make war to catch
slaves in the Bush, like a thief. My ancestors never did so. But if I fight a king, and kill him when he is
insolent, then certainly I must have his gold, and his slaves, and the people are mine too (DuPuis, 1824, p.
163).” We do not believe that Ose Bonsu was unique in his belief that capturing slaves was only a secondary
goal of warfare.

On the other hand, if African producers of slaves responded to economic incentives then increases in
demand should increase the number of slaves appearing on the coast for export. This is Curtin‘s economic
model and is depicted in Figure 1 by the positively sloped supply function. When wars and raids were carried
6 In our model, the Fage effect comes through when the people have the power to make the elites protect them, or when
the elite operate to maximize the welfare of their people rather than their own welfare, or when the cost of forming alliances is
small.
7 Also see Klein (2007) and Engerman and Genovese (1975).

5
out with an eye to sell captives, private costs could be substantial. These include the lives and resources lost
during incursions and the cost of transporting captives to the coast (food, guards, shackles, tolls, taxes, etc).
Over time, capture and marketing activities became specialized regionally, with coastal states emerging to
extract rents of location as the trade passed through to the coast (Evans and Richardson, 1995). Khan (2002,
p. 56) collects estimates of these costs and finds that coastal prices exceeded interior prices by as much as
400%. The economic conception of the African supply process emphasizes these economic considerations.

The data for our test come from the British transatlantic slave trade and are described in detail in the
Appendix. The British trade was primarily an 18th century trade and occurred at the height of the slave
trade. Select demand-side covariates are reported in Figure 2. We take sugar production on British American
8
colonies to be correlated with the British demand for African slaves. The increases in the demand for
slaves outstripped supply after 1750 and drove up slave prices on the coast of Africa. In 1750, the real price
was a little more than five pounds sterling. By the end of the century, it was in excess of twenty-five pounds
sterling. Any price effect on African economies should have intensified in the latter half of the 18th century.

To secure labor for American plantations, European ships set sail for the coast of Africa laden with
manufactured goods, textiles, iron, tobacco, rum, firearms and other goods. These goods were carefully
chosen to meet the preferences of African consumers, whose preferences were known to vary by location.
These goods were sometimes exchanged for products like ivory, palm oil and gold, but by the 18th century
the main cargo was slaves. Most British slave ships secured their slave cargoes in one or two ports, after
which they set sail for the New World where the slaves were sold at auctions. From there the voyage carried
plantation staples like tobacco, sugar, and cotton to Europe where the books were cleared and the process
begun anew. This triangular trade took approximately one year to complete.

Below is the supply and demand system of equations that the British data allow us to estimate. The
data are annual data for the British trade covering the years between 1699 and 1807. All slave transactions
take place on the coast of Africa. SlaveQ is the annual quantity of enslaved Africans boarding British
ships. SlaveP is the average annual real slave price paid by British slave merchants on the coast of Africa.
Gunpowder is the pounds of British gunpowder imported into Africa per year. EXP is the real value of the
annual British exports that are exchanged for slaves on the coast of Africa. SugarQ is the annual quantity
of sugar produced in the British colonies. SugarP is the average annual price of sugar in Amsterdam or
London. Supply shifters are gunpowder imports into Africa and the passage of time. Demand shifters are
net British exports to Africa, sugar prices in Europe, sugar quantities produced in British America, wars
8 The use of slaves on sugar plantations goes as far back as Venetian and Genoese sugar colonies on Mediterranean possessions
like Cyprus, Crete and Egypt. There, the slave force consisted primarily of enslaved Berbers from North Africa. In the hands
of the Portuguese, the sugar plantation expanded into the Atlantic Ocean, first to Madeira, then down the coast of Africa,
and from there across the Atlantic to Brazil. By 1650 the Dutch had successfully transplanted the technology from Brazil to
Barbados, and from there it spread throughout the Caribbean, with Jamaica and Haiti becoming the largest producers of the
18th century. See Deere (1950).

6
(the Napoleonic, American Revolutionary and Seven-Years wars) and the passage of time.

SlaveQt = β1 SlavePt + β2 Gunpowdert + β3 T ime + µSt (1)

SlaveQt = φ1 SlavePt + φ2 Exp + φ3 SugarQt + φ4 SugarPt + φ5 W ar + φ6 T ime + µDt (2)

We test for a positive slope to the supply curve. To do this we estimate the reduced form quantity
equation to see if year-to-year increases in demand-side covariates are correlated with year-to-year increases
in slave exports.9 First, we express slave price as a function of slave exports and the exogenous covariates.
We then equate supply and demand prices to get equilibrium quantities:

D(SlaveQ∗ , Exp, SugarQ, SugarP, W ar, t) = S(SlaveQ∗ , Gunpowder, t). (3)

We then solve for the equilibrium level of slave exports as a function of exogenous covariates:

SlaveQ∗ = H(Exp, SugarQ, SugarP, W ar, Gunpowder, t). (4)

If the supply function is perfectly inelastic, as the political warfare model predicts, then year-to-year shift
10
in demand-side covariates should not produce year-to-year changes in equilibrium quantities. To test for
this we totally differentiate Q∗ ,

∂H
dQ∗ = Σi dxi (5)
∂xi

and estimate the function

dQ∗ = αi (dExp) + α2 (dSugarQ) + α3 (dSugarP ) + α4 (dW ar) +  (6)

where dx denotes the year-to-year changes in variable x.

Table 2 reports regression results of year-to-year changes in equilibrium quantities on year-to-year changes
in the exogenous covariates. The top panel reports results for the linear specification. The bottom panel
reports results for variables measured in natural logs. They show that the equilibrium quantities of slaves
9 We thank Gary Richardson for suggesting this approach.
10 Refer to Figure 1.

7
captured and exported by Africans responded to short run fluctuations in the British demand for enslaved
Africans. In other words, the short-run supply curve has a positive slope. For example, British wars reduced
the level of British demand for slaves and depressed equilibrium prices on the coast of Africa. Africans
responded by capturing and selling fewer slaves. Similarly, increases in the level of British exports to Africa
increased the British demand for slaves and drove up equilibrium slave prices. African slavers responded by
capturing and selling more slaves to the British. The average short-run elasticity of supply with respect to
British exports to Africa is .43. According to the point estimate, a doubling of British exports to Africa
increased the number of slaves showing up on the coast by 43 percent. We therefore conclude that the level
of international demand for enslaved Africans had a large and significant impact of the allocation of resources
towards slave production in Africa.

4 The Guns-For-Slaves Debate

These regression results also contain support for the guns-for-slaves hypothesis. Gunpowder is used in the
production of slaves. More gunpowder increased capture capacity and the supply of African slaves, which
depressed the equilibrium slave price. British slavers responded by purchasing more slaves from Africans.
According to the regression coefficients, a doubling of gunpowder exports to Africa increased by 12.8 percent
the number of slaves captured and exported.

Since the primary effect of effective demand is an increase in desired violence and raiding, one should not
be surprised that firearms occupy a special place in the transatlantic slave trade. The early Portuguese were
quick to display the power of their weaponry and Africans quickly realized the value of the new technology.
Sales were sporadic in the early years because the Portuguese were subject to prohibitions against the sale
of guns to non-Christians. When Protestant nations came to dominate the trade, the amount of guns sold
increased dramatically. Inikori (1977) estimates that more than 20 million British guns were imported into
Africa between 1750 and 1807.

The correlation between the growth of guns and the growth of slave exports is undeniable. The guns-
for-slaves controversy revolves around causality and the social processes at the local level. Northrup (2002,
pages 90-102) provides a comprehensive critical overview of the evidence. His reading of the literature leads
him to conclude that the correlation exists, even at the local level, but that the evidence does not support
the claim that Africans sold slaves to purchase guns. We offer an alternative interpretation, one that places
the debate within the context of effective demand.

A famous study by Kea (1977) examines the import of firearms and the rise of the Asante nation along the
Gold Coast of Africa in the late 17th and early 18th centuries. Kea shows that firearms imports revolutionized
military strategy along the Gold Coast precisely when slave exports increased, but Kea is hesitant to support

8
a guns-for-slaves cycle because militarization was underway before the acceleration in firearms imports.

In the Bight of Biafra among the Aro trader group, Northrup (2002) finds firearms imports to be correlated
with slave exports, but hesitates to support a guns-for-slaves cycle because state warfare was not the major
source of slaves coming out of this region. Rather, “most slaves were victims of kidnapping... Coastal traders
and rulers formed gun-toting entourages and sometimes engaged in raids, but there is no record of wars of
state expansion or of military slave raiding as on the Gold and Slave Coasts, Senegambia and Angola (96).”

In Angola, Joseph Miller (1988) argues that firearms empowered Africans to expand their assault against
their neighbors, but he hesitates to endorse a guns-for-slaves cycle because guns did not dominate military
actions. Even in the case of Dahomey, where there is direct evidence that a massive export of slaves paid for
the guns that permitted Dahomey to expand, Northrup (2002, p. 94) is unwilling to accept a guns-for-slaves
cycle because this is not how rulers saw it.

True, guns did not create the slave trade. The effective demand for slaves is the primary motivation
for slave capture, not guns. The introduction of guns, however, did result in an increase in the equilibrium
level of desired aggression. Guns “lubricate” the trade (Miller, 1988). They shift the slave supply function
by introducing a new technology to wealthy and organized societies that can extend their advantage over
weaker societies. Placing guns within the context of effective demand can also help explain why guns seem
to arrive after militarization has begun. Effective demand increases the incentive to militarize. Guns are
but one way among many to accomplish this (Hawthorn, 2003).

5 The Impact of Effective Demand: A Model of War and Raiding

In this section, we develop a simple model showing how effective demand may impact the structure of African
societies. The model is simple, but generates powerful results and insights. The players are the rulers of
nations and villages who interact over an infinite time horizon in sequential play. We make this assumption
because the slave trade lasted for centuries. Nations have the ability to attack villages to either conquer
them or raid for slaves, but nations are unable to attack other nations. We define war as aggression for the
purpose of acquiring people and territory (state-building). We define raiding as aggression for the purpose
of acquiring people only (for the slave trade). Nations may decide to go to war, to raid or to do nothing.
Villages may form defensive alliances against aggressive nations or offensive alliances, but there is a penalty
for doing so. It reflects either the loss of independence or the cost of cooperating with outsiders. If a
defensive alliance is formed the villages may not be attacked by a nation. If an offensive alliance is formed
the alliance-villages may raid non-alliance villages. Villages may also choose to do nothing.

We assume that villages and nations are absolutist in the sense that the community leaders (elders, chiefs
or kings) have the absolute authority to make decision for the people when it comes to war or raiding,

9
and that this authority derives from the elite’s claim to land, be it legitimized by oral history, lineage or
religion.11 The assumption of absolutism has several important implications. First, decisions are made to
maximize the elites’ utility, not the people’s utility. These are not democracies. Second, if the land of a
village is captured in a war then the victor claims his right to the land by deposing of the elite. In other
words, the chief is beheaded. Raiding is for slave bodies but war is for elite heads.

Finally, we assume diminishing returns to war and constant return to slave raiding, but the results hold
so long as the returns to raiding decline slower than the returns to war. This is a reasonable assumption
because the territory accumulated in war must be protected from outside aggressors. It must be policed and
administered internally. Taxes must be collected. Communications networks and roads must be built and
maintained. Rebellions in the outer provinces must be put down. The marginal cost of maintaining state
territory obviously increases with the size of the territory.12

Raiding, on the other hand, is hit-and-run. There is no need to deploy an occupying force or construct
infrastructure. Diminishing returns may set in as populations migrate to avoid raiders, or as victims adopt
other defensive strategies.13 However, it is unlikely that traveling 50 miles inland to raid for slaves will add
more to the cost of acquiring surplus than does defending, integrating and administering a political outpost
that is 50 miles further inland.

The complete assumptions for the model are listed in the Appendix. In the following three subsections
we present the predictions generated by the model under different scenarios in the presence and absence
of effective demand for slaves. The first scenario is the simplest and includes a single nation and a single
village. In scenario two, we extend the first scenario to a single nation and many villages with a high alliance
formation penalty. The third scenario includes a single nation and several villages with a low alliance
formation penalty.

5.1 Scenario One: One Nation and One Village

In our first scenario, we consider the most basic possible situation in which the presence of effective demand
influences the behavior of an African state. In this scenario, there is a single nation and a single village
which share a common border. We define the nation’s labor force as Ln and the village’s labor force as
11 Again, the best description is offered by Equiano: “When a trader wants slaves, he applies to a chief for them, and tempts
him with his wares. It is not extraordinary, if on this occasion he yields to the temptation with a little firmness, and accepts the
price of his fellow creatures’ liberty, with as little reluctance as the enlightened merchant. Accordingly he falls on his neighbor,
and a desperate battle ensues (Equiano, 1999, p. 40).”
12 See Wilks (1975), chapters 1-4 for a discussion of the enormous effort to build and maintain the Great Roads of Asante,

and the administrative and communication cost of ruling the Asante empire.
13 See the collection of articles in Diouf (2003) for examples of defensive strategies including: relocating in swamps, abandoning

villages, changing crops, changing architecture, building walls around cities and organizing local militia and defensive alliances
among villages.

10
L1 . We also define the nation’s labor productivity as bn and the village’s labor productivity as b1 . We have
defined the ruler’s utility function to be logarithmic in produced goods (where the value of produced goods
in each region is labor productivity times the regional labor force) minus a fixed cost if aggressive action
is undertaken (X is the cost of war, which is greater than S, the cost of slave raiding) plus an additional
term paLi if slaves are captured, which is revenue from slaves captured. Thus, the lifetime utility function
if a nation does nothing in all periods, raids in all periods, or goes to war in the first period (and then does
nothing) is as follows:

log(bn Ln )
U (N othing) = (7)
1−δ
log(bn Ln ) − R + paL1
U (Raiding) = (8)
1−δ
log(bn Ln + b1 L1 )
U (Conquest) = −X (9)
1−δ

In the absence of effective demand, which we represent as a slave price equal to zero (p = 0)14 there exist
two possible outcomes in equilibrium: the nation may either conquer the village in the first period or choose
to take no aggressive action and simply produce goods. The nation will never choose to conquer the village
after the first period because it faces the same payoff decision in each period. To determine whether the
nation will choose to conquer the village or simply produce, we compare the lifetime utility derived by the
rulers of the nation in the two situations (conquering the village versus producing). The nation will choose
to conquer the village if the lifetime utility obtained by conquest is greater than that obtained through
production:

U (Conquest) ≥ U (P roduction)
log(bn Ln + b1 L1 ) log(bn Ln )
−X ≥ . (10)
1−δ 1−δ

Thus, the nation will conquer the village if the one-time cost of conquest, which we define as X, is less
than the discounted lifetime utility added through conquest (meaning that there is a net benefit to war):

log(bn Ln + b1 L1 ) log(Ln )
X≤ − . (11)
1−δ 1−δ

As long as there is a net benefit to war, the nation will choose to conquer the village in the first period.
This results in an increase in the size of the nation, as it incorporates the village. If the inequality does not
14 Or, in other words, there is no external market for slaves. Thus, it may be appropriate to think of this model as before and
after the beginning of the international slave trade. Instead of a starting slave price of zero, the results are identical if, in the
absence of effective demand, paL1 < R and in its presence paL1 > R

11
hold (meaning that there is not a net benefit to war), the nation will do nothing and a peaceful equilibrium
will be maintained.

If we introduce effective demand into the above scenario the equilibrium may be altered if there is a net
benefit to slave raiding (paL1 ≥ R), meaning that the return to raiding is greater than the costs. If we
start from a peaceful equilibrium any positive net benefit to slave raiding will generate a new slave raiding
equilibrium. What does this change relative to the situation in the absence of effective demand? First, it
results in increased slave capture and the associated culture of terror. Second, it results in a permanent
reallocation of labor from production to slave raiding.

If we start from the conquest equilibrium, effective demand will alter the equilibrium if the lifetime utility
for the ruler is greater under slave raiding than under conquest, meaning that:

U (Raiding) ≥ U (Conquest)
log(bn Ln ) − R + paL1 log(bn Ln + b1 L1 )
≥ − X. (12)
1−δ 1−δ

If this inequality holds, the equilibrium will be altered such that the nation will choose to raid the village
in each period.

Thus, for a sufficiently large value of paL1 (the return to slave raiding) or sufficiently small values of R
(the cost of slave raiding) the war equilibrium will be disrupted and replaced with a raiding equilibrium.
This situation is displayed in Figure 1 by the positively sloped supply curve. What are the consequences?
In addition to the effects previously noted in the perturbation of the peaceful equilibrium (labor reallocation
and more slaves captured) there are implications for ethnicity and state size. The village and the nation
both survive in equilibrium with the nation being smaller than it was in the absence of effective demand.
Since the village persists, this may be viewed as an increase in ethnic diversity in the long run.

5.2 Scenario Two: One Nation and Many Villages

The second scenario generalizes the first scenario to a situation with a large number of villages and a single
nation. We assume that there are a total of N villages and a single nation. To keep the scenario simple,
we assume that the penalty to forming an alliance (amongst the villages) is large enough to deter alliance
formation. Additionally, we assume that the size of the labor force for both villages and the nation is equal
to L and that regional labor productivity is equal to b. As in the first scenario, we assume that, in the
absence of effective demand, the price for slaves is zero. The utility functions for the nation and villages are
characterized as they were previously.

In the absence of effective demand, the nation will choose to conquer at least one village if the ruler’s

12
lifetime utility associated with the conquest of a village is greater than his utility when no villages are
conquered. The nation, however, may conquer more than a single village, although we assume that it is
only able to conquer one village each period. The nation will continue conquering villages until the marginal
lifetime benefit of conquering another village is less than the one-time penalty associated with war (X). We
may use this condition to define the total number of villages conquered (n) in equilibrium. The nation will
conquer villages as long as the marginal benefit of conquest is greater than the marginal cost. The nation
will continue conquering villages as long as the below inequality holds, where X is the marginal cost of
conquering one more villages and the right term is the marginal benefit of conquering 1 more village (the
benefit of conquering n villages - the benefit of conquering n − 1 villages) :

log(nbL) log((n − 1)bL)

X≤ − (13)
1−δ 1−δ

Thus, the nation conquers n villages where n is the largest value such that the above inequality holds.
Under optimizing behavior, the nation achieves a size of nL while the number of independent villages in
equilibrium is reduced to N − n.

If we introduce effective demand into the scenario the equilibrium condition will be altered. Assuming
that N is a very large number (meaning that it is implausible for the nation to conquer all villages), the
marginal condition now includes the opportunity cost of not raiding for the period in which the final village
is conquered (meaning that had the nation chosen to not go to war it would have had the option to raid
for slaves). Thus, the nation will now conquer villages as long as the marginal cost of war is less than the
marginal benefit (this inequality closely mirrors the previous inequality):

log(nbL) log((n − 1)bL)

X − R + paL ≤ − (14)
1−δ 1−δ

As before, the above condition determines the number of villages that are conquered in equilibrium, n.
If there is a net benefit to raiding it is necessarily the case that the size of the nation will be smaller than
in the absence of effective demand: the left hand term is greater than it was before the slave trade arrived.
This is depicted in Figure 3 for the general case of an increase in the marginal net economic return to slave
raiding. The effects are similar to those presented in the first scenario. As the economic return to slave
raiging increases, nations will generally be smaller in equilibrium and greater ethnic diversity will persist.
Again, there is a permanent reallocation of labor rather than a temporary one, as war occurred over a finite
number of periods while raiding occurs indefinitely. Furthermore, if we imagine a continuum of nations
playing this game, an increase in the price of slaves will produce more raiding. Thus, this simple model can
generate an positively sloping supply curve like the one depicted in Figure 1.

As an extension, we may imagine this scenario with the villages and the nation located spatially along a

13
line that runs from the African coast towards the interior. We may then contrast cases in which the nation
is located (at the start of the game) either adjacent to the coast or deep within the interior. When a nation
that is located along the coast conquers villages, it will be expanding towards the interior. When an interior
nation conquers villages it pushes towards the coast. This scenario is interesting if we assume that prices
vary by village according to their proximity to the coast. Net slave prices are higher the closer a village is
to the coast because transport costs to the coast are smaller. For example, if in equilibrium the nation raids
a village near to the coast the return is higher than if it raids a village deep in the interior. For a nation in
the interior, this pricing situation translates into a lower opportunity cost of war for any value of n (where
n is the number of villages conquered) relative to a nation on the coast. Additionally, the nation in the
interior has an incentive to push towards the coast as it will a result in a higher slave price when it decides
to halt conquest and begin slave raiding. The coastal nation has the exact opposite incentives. Thus, the
introduction of a price gradient discourages expansion for coastal nations and encourages expansion towards
the coast for interior nations.

5.3 Scenario Three: One Nation and Three Villages with the Possibility of
Alliances

In our third and final scenario, we suppose that we are in a situation with a single nation and three villages
arranged along a line with the nation at one end. We again assume that the nation and all villages have
the same population L and regional labor productivity b. Unlike scenario two, we assume that the penalty
for alliance formation is not so large that it necessarily rules out alliance. Thus, we will need to examine
villages’ alliance decisions.

We start by assuming that, in the absence of effective demand, the parameters of the model are such
that the nation will conquer all three villages. In other words, the utility increase from conquering the third
village must be greater than the conquest penalty. Thus, all three villages are conquered if the marginal
benefit of conquest is greater than the marginal cost:

log(4bL) log(3bL)
X≤ − (15)
1−δ 1−δ

As long as this inequality holds, the nation will conquer all three villages. However, it is possible that
the villages may choose to voluntarily form an alliance. In order to determine whether this occurs, we must
compare the utility of the village rulers if they are conquered with their utility if they form a defensive
alliance. If no villages form an alliance and they are all conquered, the rulers of the villages will have utility
as follows, where village 1 is the village next to the nation, village 2 is next on the line, followed by village 3:

14
 U1 = 0 (16)

U2 = log(bL) (17)

U3 = log(bL) + δlog(bL) = (1 + δ)log(bL) (18)

Since the nation is only able to conquer a single village in each period, the third village is in the “best”
situation of the three. The only possibility for alliance formation is a joining of villages two and three, as
we assume that the nation gets to play first in the sequential game. Since village three has a higher utility
if no alliance is formed, the binding constraint for alliance formation falls on village three.

Village three will voluntarily enter into an alliance with village two if the utility from the alliance is
greater than remaining independent and being conquered. Thus, villages two and three form an alliance if
the discounted continuous utility stream provided by survival is greater than the utility from independence
and being conquered:
log(bL) − 
≥ (1 + δ)Log(bL) (19)
1−δ

If the alliance penalty is greater than δ 2 log(bL) village three will not enter into an alliance with village
two, resulting in an equilibrium in which the nation conquers all three villages.

If we assume that the alliance penalty is indeed large enough to prevent alliance formation the introduction
of effective demand will alter the equilibrium outcome in a particular manner. With a positive slave price,
the nation only desires to conquer all three villages if the persistent value of conquering the first and the
second villages is greater than the opportunity cost (not raiding for slaves in each period) of war and the
value to conquering the third village is greater than the value of raiding the third village for all remaining
periods. This reduces to the second scenario in which there is less conquest, greater ethnic diversity, a
permanent reallocation of labor, and more slaves produced.

If the penalty for alliance formation is sufficiently low, villages two and three may choose to form an
alliance in the presence of effective demand. If we assume that the parameters of the model are such that the
nation conquers village one (in the event that villages two and three ally) then villages two and three will
form an alliance if the utility to allying for village three is greater than remaining independent (but being
raided forever). This may be expressed as the following inequality:

log(bL) − S log(bL) − 
≤ (20)
1−δ 1−δ

Thus, it is apparent that our equilibrium condition for alliance formation is different than it was in the
absence of effective demand. If we imagine a certain distribution over values of S, it is now more likely

15
that village three will not make an offer of alliance to village two. This is a result of our assumption of
an absolutist state governed in the sole interests of the nation’s (or village’s) ruler. The logic is that the
ruling elite in village three will maintain their status while their village is raided, but would lose that status
(and perhaps their lives) if conquered. Thus, in this scenario, the introduction of effective demand decreases
state size, as village three is not conquered and results in a long term reallocation of labor from productive
purposes towards raiding. Ethnic diversity is also greater and persists.15

All three scenarios suggest several stylized facts. Effective demand (or an increase in slave prices) should
produce smaller states with more slave raiding, greater ethnic diversity and more alliances for the purpose
of raiding. Effective demand (or price increases) should also result in fewer defensive alliances and decreased
production. Increases in the productivity of labor should increase state building (and as such, decrease
16
raiding and ethnic diversity).
15 Finally, in a permutation of scenario three, we may consider another possible equilibrium in which villages two and three
form an alliance (and the nation does not conquer village one) in order to raid the remaining village. This occurs if the value
of conquest (of village one) for the nation is less than the value of raiding that village forever:

log(bL) + paL − R log(2bL)

≥ −X (21)
1−δ 1−δ
The necessary constraint on villages 2 and 3 to form an alliance is altered such that they will only form an alliance if the
benefit to allying (and then subsequently raiding village 1) is greater than remaining independent:

log(L) −  − R + paL log(L)

≥ (22)
1−δ 1−δ
Additionally, it must be the case that they do not wish to conquer village one. They do not conquer village one if the utiltiy
provided by raiding village one forever is greater than conquering the village and then doing nothing for all future periods:

log(L) −  − R + paL log(1.5L) − 

≥ −X (23)
1−δ 1−δ
If these inequalities hold we have an equilibrium in which the nation raids village one, and villages two and three form an
alliance which in turn raids village one. This outcome is more likely to occur for larger values of p and, as such, helps generate an
upward sloping supply curve. In addition, it generates greater ethnic diversity and smaller states. Again, there is a significant
reallocation of labor from productive purposes.
16 A priori, the impact of guns and other capture technologies in this model is ambiguous. If nations are strong enough to

control access to guns then guns reduce the cost of war and raiding. The result is more aggression, but we cannot predict more
or less raiding. It is an empirical question, but the strong prior is that state and raiders have the resources, credit and contacts
with Europeans to get all the guns they need to stay ahead of villagers. To the extent that guns and weapons reach the villages
then they will be used for defensive purposes, increasing the cost of raiding and war, and producing fewer captives. Asante, for
example, prohibited to sale of firearms to the northern provinces for fear that they would be used against them (Wilks, 1975,
p. 20). In the Bight of Biafra (southeast Nigeria), everyone had access to weapons and a kind of “arms race” ensued. The Aro
traders, who organized the slave trade in this region, also organized the gun trade. They carried guns at all times. Villagers
had access to all kinds of weapons. In Equiano’s village: “We have fire-arms, bows and arrows, broad two-edge swords and
javelins. We have shields also which cover a man from head to foot. All are taught to use these weapons; even our women are
warriorsOur whole district is a kind of militia (1995, p. 40).” Oriji (2003) reports for the late nineteenth century that “the
alertness of the Ngwa (in this region) and the weapons they used in defending their communities are affirmed by Major A.

16
5.4 Historical Interpretation: The Case of Asante

We have presented evidence in this paper that increases in the international demand for enslaved Africans
induced a reallocation of resources in Africa towards slave production and away from other economic pursuits.
Our simple models reveal the conditions under which increases in the international demand for enslaved
Africans constrained the growth of states, increased ethnic and social stratification and produced a reign
of terror. In the spirit of future research, we wish to take a first pass at using this model to interpret the
political and economic developments along the Gold Coast of West Africa during the 18th century, the height
of the slave trade. We believe our model helps explain the origins and evolution of the Asante Empire.

Asante was a large militarized and bureaucratic state that emerged behind the Gold Coast of Africa
(present-day Ghana) at the beginning of the 18th century. Eventually, all roads led to Kumasi, the capital
city located about 200 miles inland and encircled by an efficient farming sector that supported the military
and bureaucratic classes that resided in the capital city. The Asante were so powerful that they were able
to defend successfully against British invasion for more than 100 years. They were the largest and most
powerful state in West Africa.17

Our model predicts that the slave trade discouraged state building. How, then, could Asante have grown
and developed into such an impressive state during the height of the slave trade? Ivor Wilks refers to this as
the enigma of Asante: “The importance of Asante is most apparent from its sheer geographic extent. At the
height of its power in the early nineteenth century, Asante’s empire extended not only over all of present
day Ghana with the exception of the far northwest, but also over large parts of what is now Ivory Coast and
smaller parts of what is now Togo (1996, p. 27).” What were the incentives to conquer so much territory in
the era of the slave trade?

Part of the answer has to do with the common Akan ancestry of the Asante. In our model, this would
reduce the penalty for alliance, making alliance formation more likely. And Asante did emerge out of an
alliance of chieftaincies brought together to defeat Denkyira, the dominant power of the region in the late
17th and early 18th centuries. According to Wilks, “Asante was not, then, a creation of an Asante tribe,There
was no Asante tribe. Asante was a creation of the Kumasis, Dwabens, Nsutas, and so forth, all of whom
became Asantes under the new dispensation (p. 28).” In our model,  was low enough to allow the formation
of the Asante alliance for the purpose of conquest and slaving. Our model also predicts the timing of the
Asante alliance. It predicts that such an alliance was more likely to be successful if it was attempted before
the rise in slave prices that began in the mid-18th century.
Leonard, an adventurous British military officer who had penetrated the Ngwa region by the late 19th century: Although the
people [Ngwa] who en route turned out in thousands to look at us appeared to be very friendly and peacefully disposed, not a
man apparently moved a step without carrying a naked sword in one hand and a rifle at full lock in the other. Even the boys,
some of them not higher than an ordinary man’s knee walked out armed with bows and pointed arrows (pp. 128-9).”
17 Ivor Wilks (1975; 1993) is the leading authority on Asante history and we rely heavily on his work.

17
 But what explains the geographic expanse of Asante? We believe the key factor can be seen in Figure
4 which depicts the military campaigns that produced territorial Asante during the first half of the 18th
century. These campaigns are placed on top of a late 19th century geological map of gold fields in the region.
The answer to the question is obvious: Asante was interested in territorial expansion because there was gold
in the land. All of the early military campaigns followed the gold. The northern expansions beyond the gold
fields resulted not in annexation of territory but in tributaries, where elites retained semi-autonomy if they
made annual tribute payment, most often in captives.18

Common heritage may explain the alliance, and gold may explain the impulse to conquer land, but our
model also predicts that Asante, while large, would have been larger in the absence of the slave trade. Our
model predicts that increases in the price of slaves should forestall political expansion and encourage slave
raiding. This appears to be precisely what happened in the case of Asante. According to Wilks (1975, p. 18),
“the campaign which destroyed the independent power of Asante‘s neighbors to the north, south, east and
west occurred for the most part in the half-century 1700-1750.” We believe that Asanta expansion halted
after 1750 because the price of slaves started a sharp upward trend such that by the end of the 18th century
the price had increased by 500%.

Finally, our model predicts that Asante, an inland nation, would expand towards the coast to raid for
slaves in the villages along the coast, but that the coastal nations would not expand inland but would
instead focus on defend their territories. This is because low transportation costs near the coast effectively
increase the net revenue from slave production along the coast. In Asante history this is called the “southern
problem,” where peace was elusive and where rebellion and re-conquest were the recurrent pattern (Wilks,
1975, p. 26-28). In the 1750s, for example, Dutch and English merchants interested in attaining peaceful
trade to the coast tried to initiate a peace treaty between Asante and the coastal nations of Wassa, Twifo,
Denkyira and Akyem. The negotiations fell apart. The Asante conquered the coastal city of Accra from the
Akyem, but the Akyem continued to revolt (p. 28). Wilks argues that the case of Akyem was not unique. He
argues that the southern coastal nations were able to resist Asante aggression because the gold they possessed
gave them the resources they needed to resist and because the forest offered them military cover against
Asante forces (p. 28). Our model predicts that the rising price of slaves after 1750 provided an incentive for
the coastal nations to resist Asante and for Asante to attempt to conquer them. The border between Asante
and the coastal states became a “catchment zone” where no state conquered territory, but everyone raided
for slaves. The coastal states rebelled, but their posture was always defensive, never offensive. Why? They
had gold like the Asante and so had the resources to stage an attack. They also had a better position in the
trade with Europeans by virtue of their coastal location. Our model predicts their defensive posture: the
marginal return to slave raiding declines faster when expanding inland that it does when expanding towards
the coast. Asante wanted to get to the coast and the coastal nations wanted to defend the coast. This was
18 In eastern Gonga, the tribute was 1,000 slaves annually. The same arrangement was achieved with Dagomba and Gyaman
(Wilks, 1975, pp. 20-23).

18
the pattern along the entire Guinea Coast from the Gold Coast (Ghana) to the Bight of Biafra (southeast
Nigeria).19

6 Conclusion

In this paper we have argued that the slave trade had a large and significant impact on African economies
and societies. We have taken a decidedly balanced approach to this question because we wish to take the
debate beyond the “external” versus “internal” dichotomy. Rather, we confirm that the supply of slaves
was not exogenous to the price and that African economies likely underwent significant transformation in
response to growing foreign demand for slaves. We have established this empirical fact in the paper. Now
that this fact has been established, the next step is to understand the sources of African responsiveness and
how African development was impacted. In our simple model, we have suggested some potential responses
to changing demand. Both the model and our empirical results suggest that there was a reallocation of labor
from agricultural and industrial work towards the slave trade.20 Second order effects, however, may have
been even more important. We show the conditions under which the African response discouraged political
development and encouraged violence, social hierarchy, and ethnic diversity. In addition, the evidence in
favor of a guns-for-slaves cycle indicates that there may have been a prisoners’ dilemma style arms race
among small African states that would help explain regional trends in the African response to the slave
trade (Gemery and Hogendorn, 1974; Inikori, 2003). As we mentioned at the outset, when placed within
the context of the slave trade, many features of today’s Africa once thought to be exogenous or “African” in
nature (like political culture and ethnic diversity) turn out to be more endogenous than previously thought.
We can think of no better reason why the era of the slave trade deserves its place in the periodization of
African history. Pre-colonial, colonial and post-colonial is just too colonial.

19 The term “catchment zone” is often used in studies of the slave trade, as are the term “stateless” and “decentralized”
societies. These are often characterized as areas without a centralized political power strong enough to protect the people
against slave raiders. See Gemery and Hogendorn (1974) and Klein (2001) for efforts to generalize these concepts. We do not
want to argue that all such zones were buffers between interior and coastal states, but many of them were. They were sources
of captives between Asante and the coastal states along the Gold Coast; between Dahomey and the coastal states along the
Slave Coast (Lovejoy, 1983, chapters 6 and 7); and between the Aro network and the coastal trading towns in the Bight of
Biafra (Oriji, 2003; Lovejoy and Richardson, 2003). The relentless conflict in this area just behind the coast interrupted the
trade to and from the coast, and was the subject of frequent comments by Europeans.
20 Similar results are found in Darity (1982) and Nunn (2007).

19
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23
Appendix - Figures

Table 1

Table 2

24
Figure 1: Political Warfare Hypothesis vs Rational Economic Hypothesis

Figure 2: Time Series of Demand-side Covariates

25
 Figure 3: The Impact of Effective Demand

Figure 4: The Formation of Asante. Sources: Dumett (1998). P. 30 and Wilks (1975). P. 39.

26
Appendix - Data

Below, we discuss how we construct the variables used in this paper.

SlaveQ. The quantity variable is the annual number of enslaved Africans leaving Africa on British ships.
These are constructed from the Revised Transatlantic Slave Trade Database. The year assigned to each
ship is the year the ship left Britain, not Africa. This allows us to match slave purchases found in the
Transatlantic Slave Trade Database with the British net export used to purchase them, as recorded in the
Anglo-African Trade Statistics.

Gunpowder. The annual real values for British gunpowder exported to Africa are also taken from the
Anglo-African Trade Statistics compiled by Johnson (1991). The series does not track other weapons
nearly as well, probably because of the broad range of knives, swords and firearms in the trade. Johnson
speculates that they are hidden in the series for iron products, but this is just a guess. The gunpowder
series is homogeneous and continuous. Like the other commodities in the series, gunpowder is valued at
1699 prices. We translate the gunpowder series into physical pounds of gunpowder by dividing through by
the 1699 price for gunpowder. Inikori (1977) reports annual data on the quantity of gunpowder exported
from Britain to Africa between 1750 and 1807. Dividing the real value of Gunpowder found in the
Anglo-African data by the pounds of Gunpowder reported by Inikori yields a price of .03375 pounds
sterling per pound of gunpowder for every year between 1750 and 1807. We take this to be the 1699 price
of gunpowder used in the British Customs Office. The Anglo-African gunpowder series is then divided by
.03375 to get the quantity of gunpowder (measured in physical pounds) exported from England to Africa
for the years between 1699 and 1807. The estimated coefficient on Gunpowder can now be read as the
number of enslaved Africans exported per pound of gunpowder imported.

SugarQ. The scale of sugar production is measured by annual British sugar imports, and is taken from the
British trade statistics reported in Schumpeter (1960) and Deerr (1950). The scale of sugar production is a
proxy for replacement demand – demand for newly enslaved Africans to replace losses in the stocks of
slaves on British sugar plantations.

SugarP. These are the annual retail prices paid for sugar in London and Amsterdam, taken from Deerr
(1950, pp. 530, 531). They are converted to real prices using the deflators for London.

WARS. To control for the affect of European wars on the effective demand for African captives, we
construct dummy variables for the Seven Years War (1756-63), the American Revolution (1775-83) and the
Napoleonic Wars (1792-1815). I also construct a dummy variable to capture the affects of British access to
the Asiento (the Spanish slave trade). Between 1713 and 1733, Britain had a monopoly on the Spanish
slave trade. After 1789, the Asiento was thrown open to all takers.

Table 1 reports sample means for these time series.

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Appendix - Model

1. The game has an infinite number of periods and is played sequentially

2. Each nation and village is located on an ordered line

3. A nation may choose to do nothing, to raid a neighbouring village, or conquer a neighbouring village.
A village may choose to do nothing or form an alliance with another village.

4. The actual player is the king or chieftain of the nation or village. Payoffs reflect the utility stream of
the king or chieftain.

5. The pre-existing nation always moves first, followed by the villages. If we assume that the nation is
located on the far left of the ordered line then play proceeds from left to right along the line

6. The discount rate is equal to δ

7. Each nation and village has a labor force equal to Li , which also defines the size of the nation

8. Each nation and village has a level of labor productivity equal to bi

9. The labor force may be used in production, raiding, or warfare. This reallocation is modeled
abstractly through the cost of raiding or war

10. Raiding results in a cost of R, which encompasses reallocated labor and military losses

11. Warfare requires X, which encompasses reallocated labor and military losses

12. Raiding results in a one period payoff equal to paLi where p is the price of slaves and a is the fraction
of the village’s population enslaved.

13. If a village is conquered utility stream of its chieftain is 0 for all future periods

14. The chieftan of a raided nation is subject to a one period utility penalty equal to S

15. Conquest results in the conquered nations labor force being added to the conquerors

16. If two villages choose to ally each chieftain will maintain a separate payoff stream and split any
rewards from conquest or raiding

17. Raiding, conquest, and alliance formation may only occur between neighboring villages or nations

18. A nation is able to raid a village, but is unable to raid other nations

19. Two villages may choose to join together and form an alliance with each taking a penalty equal to 

20. An alliance between two villages is equivalent to them forming a nation. Once allied, these villages
may conquer or raid villages. Additionally, they may not be conquered by a nation.

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 The above framework is not ideal for presenting a single all-encompassing description for the effect of the
introduction of the slave trade. Rather, we present three scenarios based upon different initial conditions
and explore the impact of the introduction of the slave trade.

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