The Long-term Impact of Colonial Rule: Evidence from India

[Guest guest]

indicjournalists, "gargsam" <gargsam>

wrote:

 

 

This research paper by Prof. Lakshmi Iyer, Harvard Business School,

Boston MA October 2004 examines the long term impact of colonialism,

quite apart from the excessive rent-seekling extraction by the

british.

 

Here is the conclusion:

 

In this paper, I compare long-run outcomes of areas in India which

were under direct British colonial rule with areas which were ruled

indirectly, using an exogenous source of variation to control for

selection of states into the British empire. The instrumental

variable

results indicate that the British selectively annexed areas based on

agricultural potential, and that British-ruled areas lag behind in

the availability of public goods in the post-Independence period.

 

These differences are narrowing revenue was the biggest source of

revenue, both for British India and for the native states. See

Banerjee and Iyer (2003) for evidence that historical land revenue

systems caused persistent differences in outcomes within British

India.

 

The regression needs to be interpreted with caution since we do not

have data on the systems pursued in all native states. Also the

adoption of a particular institution by a native ruler might be

correlated with other dimensions of policy.

 

District-level government expenditure data are not publicly available

to the best of my knowledge.

 

over time, and so probably reflect differences from the colonial

period. Given that the results cannot be wholly attributed to

excessive extraction by the British or to differences in specific

institutions, they are probably due to differences in the incentives

faced by the administrators in the two types of areas.

 

The policy implications of the results differ depending on the

motives

we ascribe to native rulers. For instance, if it is the case that

native rulers were able to pursue better policies because

of their superior local knowledge or because they felt a greater

commitment to the progress of their area, policies aimed at

increasing

decentralization or grass-roots democracy (like the village-level

Panchayati Raj system in India) would be expected to result in better

public goods provision.

 

If native rulers had a longer horizon than administrators in British

areas (because they did not have any term limits or could bequeath

the

state to their descendants), then the policy implications call for

developing long-term relationships between policy-makers or

administrators and the people.

 

Alternatively, if the fear of being deposed was the major reason for

better performance, the policy implication would be to provide for

better monitoring and greater punishments for policy-makers and

administrators. It is interesting that we observe significant

differences for as long as forty years after the end of colonial

rule,

which may be due to the continued prominence of former princes in

political life. This implies that the effect of a history of

colonialism can last for a very long time, though it may eventually

disappear.

 

http://mauricio.econ.ubc.ca/pdfs/iyer.pdf

--- End forwarded message ---