San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History of Baghdad

Baghdad is sited on the Tigris River at the point where Tigris and the Euphrates are closest. Although the city that became the capital of the caliphate, the far-flung Muslim empire, was founded only in 762 AD, there had been a town at that location for thousands of years. The site was a place of power being in a fertile region at the juncture of the east-west land trade routes and the north-south river trade routes of the Tigris and the Euphrates.

The city was founded by the caliph Abu Ja'far al-Mansur and given the name Madinat al-Salam (City of Peace) but the old name of Baghdad (Persian for Gift of God) survived. What al-Mansur was founding was not a metropolis. Instead he intended only to create a site for his palace, barracks for his elite soldiers and administrative offices for his empire. He laid out a circular enclosure on the west bank of the Tigris. The city subsequently spread to the east bank. As befitted the capital of an Islam-based empire there was a magnificent mosque located at the center of the circular enclosure.

The growth of Baghdad economy was fueled by the demand generated by the caliphate. First there was the demand for goods and services involved in building the structures; the opulent palace called the Golden Gate, the mosque, the barracks and the administrative offices. Then there was the market for supplying the food, clothing and luxuries the caliphate demanded and could afford. And meanwhile Baghdad grew as a result of the trade that was passing through. The caravans and the ships needed a safe resting place for their journeys and Baghdad provided that. Often cities grow up where the trade cargoes have to be transferred from one mode of transportation to another. Being at the juncture of the land and water trade routes Baghdad served that function.

The map below shows the modern city.

Only the major highways are shown above, as white lines.

The provinces of Iraq in the vicinity of Baghdad are shown below.

(To be continued.)

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