Institutions and Lagging Development: The Case of the Don Army Region

The Russian Don Army Region is characterized by a favorable geographical location, relatively soft climate, and plenty of fertile land. It could have become one of the centers of development for agrarian and trade entrepreneurship in the Russian Empire. However, the region strongly fell short of its neighbors in the nineteenth and the beginning of the twentieth centuries. We show that despite the abundance of capital and labor, as well as beneficial climate and topography, the archaic and inefficient institutional structure of the region's economy — i.e., its militaristic governance and the Don Cossacks' military service duty — substantially hindered its economic development.