Colonialism and Growth

Colonialism and Growth Robert E. Lucas, Jr. April 2003 · Historically Speaking29 During the forty year period 1950-1990 world population grew atan annual rate ofjust under 2%, and total production of goods and services grew at 4%. This means diatproduction perperson grew atmore than 2%, implying diat income per person more than doubled over theseyears. These figures refer to the entire world, rich and poor alike. I have not left out die communist countries or Africa or anyone else. Nodiingremotelylike this has ever been seen before.1 The remarkable economic growth in die post-colonial period has been a mix of continued steadygrowdi ofthe already-rich countries , growth athigher, catch-up rates by some odiers, and continued stagnation or worse by some of the preindustrial societies that have been left behind. These differences have attracted a lot ofattention from economists . Detailed worldwide data sets have been created, and patterns have been sought that might reveal why some societies have thrived in this new economic environment while others have continued to stagnate. Niall Ferguson's essay provides a compact, accurate, and useful account ofwhat diese studies ofgrowdi rate differences have found. He concludes that the evidence from this period overwhelmingly confirms the economic benefits ofclassical liberal values : free trade, free markets, and stable , limited government. A large majorityofeconomists specializingin the study ofeconomic growthwould concur in this opinion. It would have seemed a natural developmentofdus openingdieme if die rest of Ferguson's essay had focused on die British role in developing and exemplifying these liberal values, but instead he uses it to build a case for a reassessment ofBritish imperialism. Thus the paper is organized as an attempt to relate the evidence on comparative economic performance in the postcolonial period to contributions ofdie British Empire during the colonial period itself. I find diis an odd way to diink of die British contribution: in common with many British thinkers from Adam Smith onward, I think ofimperialism as almost an opposite ofliberalism —a system based on paternalism and coercion rather than on autonomy and free exchange. In anyevent, I do notfind die economics ofFerguson's defense ofimperialism convincing. The conclusion ofthe essay, "diat British rule was on balance conducive to economic growth," suggests a direct argumentthat the economic growdi ofdie successful societies in the post-colonial years can be viewed as a continuation ofdieir economic performance under die British Empire. There are also two indirectarguments. One is that die free trade I UK, USA, Canada, Australia, New Zealand IIJapan IIIFrance, Germany, Netherlands, Scandinavia IVRest of Western Europe, Latin America Eastern Europe, Soviet Union V Asia (except Japan), Africa Figure I—GDP per capita,five regions 1990 population in millions 354 124 184 986 3590 environment that has been so conducive to economic growdi in die postwaryears can be viewed as a resumption, still only partial, of the British-influenced commercial environment ofthe late 19th century, which lasted until 1914. This is the "Anglobalization" of die tide. The second is diat British institutions transferred to the colonies under the empire have fostered economic success after independence. These two arguments are complicated and harder to judge; I will discuss diem below as well. I like die graphics in Ferguson's essay, and offerin return one ofmyown.2 Figure 1 plots die course ofper capita incomes in five parts of the world since 1750. There are only so many curves that can be put on one graph, and since Iwanted to include everyone in die world, I tried to group similar societies together. Groups I, HI, and IVare countries largely populated and ruled by Europeans, wherever located, ordered from most to least successful economically. Group ? isJapan— not a group at all, I know, butJapan's role in thehistory ofdie Industrial Revolution is so singularthatI could notbringmyselfto average itinwith anyone else. These four curves summarize die historyofmost ofdie successful societies ofdie modern world, and some ofdie failures. The final curve includes all of Africa and Asia (except for Japan): today, more than two-thirds of the world's population. British India and Africa are here, along with die subjects ofFrench, Dutch, German, Portuguese , Spanish, and American imperialism. So is China, with its ambiguous role in the colonial age...