Financial History

Currently reading a Financial History of the World - 'The Ascent of Money' by Niall Ferguson. Fascinating book walks through the development of some of the major financial instruments that we know today, starting with bonds (started in Italy in 16th century) and stocks (first stock exchange was born in Amsterdam in the 17th century).
And what intrigued me was that all of the early financial innovations seem to be exclusively from Europe - it seems a little unusual that though China and India together made up almost 50% of the world economy, there seems to be little by way of these innovations that came up from these economies. (Incidentally, in 1700, the Indian economy was the largest in the world)

One interesting parallel is from the bond markets. The earliest known bonds were floated by the city governments in Italy (Venice, Genoa etc) to fund wars, which were quite common in those days. In fact, the two major drivers that seemed to have led to bonds and stocks were clearly wars (expensive and risky ventures which had to be funded) and exploration (driven purely out of an urge to conquer new lands but more prosaically, to tap into newer resources to fund wars etc).

So this leads to the next question in the Indian context - from the 15th century to the 18th century, wars were regular fixtures all across India. How did the Mughal emperors and the Rajput kings fund these ventures and why did they not go to the people to raise funds? Two possible reasons:
1. The ruling classes in India were probably deeply networked with the landed classes and directly tapped into them for funds (in the form of taxes).
2. There was practically no middle-class (with disposable surplus that could be invested) that could be tapped for funds.

At the risk of over-generalization, both India and China were primarily pastoral economies at this stage - and while Europe was experimenting with financial and technological innovations, the Indian and Chinese were slowly on their way to decline. If nothing else - goes to show how an overtly centralized system of governance is doomed to failure.