The Atlantic slave trade and economic development in Europe

This podcast was recorded as a video, you can watch the full interview on our YouTube channel.

In this episode of VoxDevTalks, Ellora Derenoncourt discusses how profits and economic linkages from slavery contributed to European and especially British development between the 16th and 19th centuries. Drawing on newly assembled data and modern econometric tools, she revisits the long-running debate sparked by Eric Williams, whose hypothesis that slavery financed the Industrial Revolution remains highly contested – but also highly influential.

How the Atlantic slave trade worked as an economic enterprise

Elora begins by explaining how the Atlantic slave trade actually worked as an economic enterprise. Far from being a loose, private activity, it was a form of long-distance, high-risk trade that depended heavily on state support:

“First of all, the Atlantic slave trade was a form of long distance, high risk trade. So in order to actually get merchants involved and for them to actually make a profit, the primary form that it took at the time that it occurred was through contracts, monopoly contracts issued by crowns throughout Europe.” Ellora Derenoncourt

Monopoly licences issued by European crowns gave selected merchants:

• Access to broader financing networks.
• Legal privileges and “sub-sovereign powers” to enforce their monopoly by military means.
• Protection from rival traders.

As Ellora Derenoncourt puts it:

“this heavy involvement of the crown and the state is what enabled the trade to develop. It was very hard for private merchants on their own to embark on something of this nature.” Ellora Derenoncourt

The trade ran from early coastal voyages in the 15th century, with the slave trade 'in earnest' beginning in the 16th century and lasting into the 1860s. Measuring how much money it made is extremely difficult, given patchy archival records and missing company accounts, but historians and economists have attempted estimates using what survives. Ellora notes that scholars have put forward figures such as the slave trade bringing “over 1.6 million pounds into Britain each year” in the mid-1800s, and profit rates once thought to be as high as 33%. Recent work has revised those returns down to more like 8–10% – still highly profitable, but more modest than in the earlier narrative.

The debate on slavery’s role in the Industrial Revolution

The debate Ellora is entering has been shaped for decades by Eric Williams, the Trinidadian historian whose 1944 book Capitalism and Slavery made a bold claim: that the profits from slavery and the slave trade financed Britain’s Industrial Revolution.

“In this really important work of his, he argued that the profits from slavery and the slave trade are what financed and powered the British industrial revolution, and it was a highly controversial thesis, both then and today.” Ellora Derenoncourt

Working with the limited national aggregates available at the time – trade values, GDP and other broad statistics – Williams used what we would now call a time-series argument: as the value of slave trading rose, so did British output and industrialisation. Combined with high estimated rates of return on slave voyages, he argued that this created a pool of capital large enough to finance industrial investments.

Critics have challenged several parts of this argument, including:

• Whether profits really were as high as claimed.
• Whether the share of the economy involved in slavery was large enough to fund industrialisation.

Ellora also stresses that there is a broader way to interpret Williams: not just as a claim about a single pot of profit, but as a thesis about a whole web of linkages – shipping, insurance, finance, and access to cheap raw materials from the Americas – that bound Atlantic slavery to European development.

New data: Slave voyages, ports, and urbanisation

As an economist trained in modern empirical methods, Ellora approaches the question differently. Rather than comparing two time series (slave trade values and GDP), she wants to exploit variation: did places more exposed to the slave trade grow faster than places less exposed?

“The kind of question that we ask is really about counterfactuals. It's about, you know, if there was less of a slave trade or no slave trade at all, how would European economies have developed?” Ellora Derenoncourt

The key breakthrough came from an immense historian-built database of transatlantic slaving voyages. It records, voyage by voyage, where ships departed from (including latitude and longitude), where they went on the African coast, and where they landed in the Americas. Coverage is around 80% of the transatlantic slave trade.

Ellora links this voyage-level information to sub-national measures of economic prosperity in Europe. For the period from roughly the 1600s to the 1800s, reliable income data at the city or regional level do not exist. Instead, she follows economic historians in using urbanisation – the size and growth of cities – as a proxy for economic development.

“I decided to connect that with sub national measures of economic prosperity… we do have information and measures of urbanisation, and there are several papers in the economic history literature looking at economic development over the same timeframe that use this as an indicator of economic prosperity.” Ellora Derenoncourt

This allows her to ask, at the level of individual ports and cities, whether greater involvement in the slave trade is associated with faster urban growth.

Identifying impacts of the slave trade

A central concern in this type of work is causality. Perhaps already-prosperous cities were simply more likely to become slave trading centres. To tackle this, Ellora asks:

“Within a city, how do changes in the number of slaving voyages that have left from that city correlate with changes in the city size for that area?” Ellora Derenoncourt

By doing this, she examines whether increases in slave voyages are associated with faster urban growth, after controlling for city-specific characteristics and common time trends.

Another major alternative explanation is that what really matters is overseas trade in general, not slave trading specifically. Perhaps ports involved in the slave trade were simply big trading centres already benefiting from commerce in other goods.

To probe this, Ellora turns to the port books in the UK National Archives at Kew, which record trade at the port level over several centuries. The books are handwritten, fragile, and numerous – “there were 20,000 of them, so a summer wasn't really going to cut it”.

Instead of reading each book, she uses the archives’ detailed cataloguing, which includes the number of folios (pages) per book. From her sampling in the reading room, she could see that thicker books tended to coincide with years of more trade. She then scraped this meta-data to create a port-level measure of trade volumes, including a separate series for overseas (rather than domestic) trade.

This allows her to control directly for the intensity of overall overseas trade and isolate the additional effect of slave trading.

What the evidence shows: Slave trading and urban growth

So what does the analysis find? Elora’s results show a robust positive association between the intensity of slave trading and urban growth in European ports.

One of her key estimates is that “a 10% increase in slaving voyages leads to a 1.1% increase in city populations.” This suggests that, at least contemporaneously, participation in the slave trade was associated with faster development for the European cities involved.

To sharpen the analysis further, she focuses on the “outports” of Britain – ports outside London that gained access to the slave trade in the early 1700s, when the Royal African Company lost its monopoly and private merchants were allowed to enter. These smaller ports had other trading options, and she can measure their general overseas trade using the port-book data.

Even within this group, she finds that ports that dedicated a larger share of their overseas trade to slaving voyages saw faster urban growth than those that did not. Crucially, this relationship remains even after accounting for overall overseas trade volumes.

The picture that emerges is that:

• Slave trading brought tangible economic benefits to the European cities that engaged in it.
• These benefits can be measured in terms of urbanisation and development during the 17th–19th centuries.
• The pattern is consistent with the idea that slavery and the Atlantic economy were integral to European growth, especially in Britain.

Revisiting the Williams Hypothesis and Its Modern Implications

How does this bear on the Williams hypothesis? Elora is cautious about making sweeping, final claims, but her findings sit comfortably with a broader reading of Williams’ argument:

“Certainly what I found is entirely consistent with the Williams hypothesis. So I think this is one step in that direction.” Ellora Derenoncourt

Her work aligns with a wider revival of quantitative research on slavery and capitalism. She cites recent studies showing, for example, that slave wealth helped relax financial constraints for investment in modern technology during the British Industrial Revolution, and that US slaveholders were able to use enslaved people as collateral, thereby gaining greater access to credit.

These new findings strengthen the empirical case that slavery and the slave trade were deeply entangled with the development of European and American economic institutions, including finance and industry.

One reason this remains such a contentious topic is its relevance to discussions of reparations and historical justice. As Tim notes, the argument that nations that grew rich on slavery should compensate those impoverished by it is often grounded, explicitly or implicitly, in claims like Williams’. Ellora believes her research contributes to this debate:

“Certainly not resolve it, but I think certainly keeps it alive. And again, it's one step in the kind of information we'd want to have to then progress to making some calculations and estimates of the monetary value of this investment or engagement in the slave trade for these economies today.” Ellora Derenoncourt

A new empirical foundation for an old question

In closing, Ellora describes her paper as an “input into what I hope will be a new literature” on the economic legacy of Atlantic slavery. By combining a detailed voyages database, inventive use of port-book catalogues, and modern econometric strategies, she moves the debate beyond broad national aggregates and simple correlations.

The main takeaway is sobering but important: the Atlantic slave trade was not just a moral catastrophe and a source of enduring harm in Africa and the Americas; it also played a measurable role in the economic rise of parts of Europe.