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Colonialism Doesn't Explain the Developing World's Problems

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There is an abundance of studies postulating that colonialism explains the character of the developing world. For instance, in their seminal paper aptly titled "The Colonial Origins of Development: An Empirical Investigation" (2000), Daron Acemoglu, Simon Johnson, and James A. Robinson advance the audacious claim that in regions where the environment was conducive to settlement, Europeans built inclusive institutions promoting property rights, innovations, and long-term development. This was unlike settler colonies in places where the climate was inhospitable to large-scale settlements, where extractive institutions were established to achieve short-term gains. Imposing rent-seeking institutions to extract resources for personal enrichment was deemed a practical alternative to maneuvering the harshness of an unwelcoming environment. Many have raised objections to this thesis on methodological grounds. But even critics assume that colonialism has immense explanatory power. Research, however, is more fruitful when scholars assess development over a longer period. Prior to colonial rule, countries already had institutions of their own, so it is appropriate to suggest that precolonial institutions are a channel through which we can understand challenges in the developing world.

Warfare has long been touted as an explanation for the emergence of the modern state. Military historian Bruce D. Porter exhorts this argument in the opening paragraph of his book War and the Rise of the State:

States make war, but war also makes states. The origins of the modern state, its rise and development, are inextricably linked with violent conflict and military power. There are few states in the world today whose existence, boundaries, and political structure did not emerge from some past cauldron of international or civil war.

Warfare may have been bloody, but it spurred institutional reforms in fiscal administration and entrepreneurship. For example, to finance a war, the state requires taxes, thus war generates demand for bureaucracies.

So, it would not be outlandish to imply that in some countries, precolonial warfare may have had an impact on development. According to Mark Dincecco, James Fenske, Anil Menon, and Shivaji Mukherjee (2020), this framework can be applied to India. The authors note that the prevalence of warfare in precolonial India fostered the rise of bureaucratic and fiscal institutions that facilitated economic development over the long term:

Districts that were more exposed to pre-colonial conflict—and hence may have developed more powerful local government institutions, and have eventually provided greater domestic security—may have been better placed to make local investments in physical capital….Our study shows that the “military competition” framework applies beyond the paradigmatic case of Western Europe. This parallel between Western Europe and India makes sense, given that two key historical factors in the European context—namely, enduring political fragmentation and interstate military competition—were also important features of the pre-colonial Indian landscape.

Former colonies have a history far deeper than colonialism, therefore studying the fascinating link between colonial and precolonial institutions might provide us with answers to the litany of problems in the developing world. Arguably, this line of research has piqued the interest of a generation of new scholars. Yet such findings are not dominating the mainstream. Frequently we read stories about the deleterious effects of colonialism on developing states, despite a plethora of new research giving primacy to precolonial institutions. For example, in an intriguing study, Luis Angeles and Aldo Elizalde eloquently argue that in Latin America indigenous communities with greater institutional capacity display higher levels of socioeconomic development:

Institutional complexity usually correlates with economic development, and it is possible that richer pre-colonial societies were able to adapt better and take advantage of the new colonial environment simply because of their wealth….As our empirical results show, Latin American pre-colonial institutions—and more precisely the degree of political complexity—are powerful predictors of present-day measures of socioeconomic development.

Interestingly, economist Fernando Arteaga also finds similar results in his research on Mexico. Arteaga posits that counties with complex indigenous communities (pueblos) demonstrate higher levels of education and income: “Counties encompassing more historical pueblos, are more developed and have less poverty….The effects are stronger in places where pre-hispanic roots are deeper[,] suggesting the institutional impact has a pre-colonial basis.” Indeed, such findings must inform our assessment of problems in the developing world. However precolonial institutions not only influence income but also conflict. There is a bevy of data objecting to the popular assertion that colonialism explains ethnic tensions in Africa.

One advocate of this position is political scientist Emilio Depetris-Chauvin. He avers that regions with a long history of statehood have a greater facility for maintaining order by deterring conflicts:

Regions with long histories of statehood, should be better equipped with mechanisms to establish and preserve order. These related institutional capabilities can be manifested, for example, in an ability to negotiate compromises, allocate scarce resources, or mitigate commitment problems; likewise, in the existence of traditional collective organizations and legal courts capable of peacefully settling differences over local disputes, or even simply in a stronger police presence.

From this statement, we can infer that areas with superior governance structures are more adept at managing change and minimizing disruption.

Tore Wig provides further evidence for this line of reasoning:

Groups with strong traditional institutions that are not in control of government are less likely to be involved in civil wars, because they have a high capacity for non-violent bargaining. I find strong support for the main expectation, namely that excluded ethnic groups with centralized traditional institutions are less involved in conflict than other excluded groups.

Evidently, the explanatory power of colonialism seems to be highly exaggerated. Therefore, we can only implore scholars to think expansively when aiming to examine the trajectories of developing countries.

Furthermore, contemporary researchers often discount the role of ideas in precolonial societies and the extent to which they may still permeate modern societies. Acemoglu et al. (2000) attribute economic deficiencies in former colonies to the creation of extractive institutions. Yet for decades scholars, particularly Africanists, have been noting that rulers in precolonial societies espoused statist ideas; Ivor Wilks, for example, describes the Asante Empire of West Africa as mercantilist. Likewise, as A.G. Hopkins notes in his description of the empire:

The purpose of economic policy was to promote the wealth of the state and its leading representatives, not to raise the standard of living of the populace. Individual enterprise was controlled where possible; ideas from the outside world were unwelcome unless they were supportive of official aims.

Hence the ideas of the ruling elite in Asante were compatible with the rent-seeking mentality of European colonizers.

Although some colonial institutions caused economic damage after independence, there was a leftward lurch in several developing countries. So, consequently, it can be posited that extractive institutions were not abolished due to their compatibility with the socialist mindset of third world leaders. Acemoglu et al. (2000) provide us with a compelling case study:

After independence, Paul Berenger and his party Mouvement Militant Mauricien, which were viewed as Communists at the time, came to power. But in contrast to other African regimes, they continued to support property rights and businesses. In fact, they significantly expanded the export processing zones, which were instrumental for the very rapid growth experience of Mauritius.

The bigger obstacle to progress in the developing world, then, was not colonial legacies, but rather the intellectual worldview of leaders.

Colonialism is the scapegoat for most dilemmas in the third world. However, careful scrutiny reveals that an intricate admixture of precolonial institutions and ideas are more useful tools for examining the hurdles encountered by postcolonial states. Improving institutional quality by adopting the right policies is a proven strategy for ameliorating conditions in the developing world. The Economist in a recent editorial revisited the importance of good governance and free markets:

In the early 1990s Burundi was almost twice as rich as Rwanda. Yet since then, incomes in Rwanda have increased more than three times (adjusted for purchasing power). Those in Burundi have fallen. One big difference between the two is governance. Although neither country is democratic, Rwanda has a functional government and low corruption.

The writer continues:

When Kenya and Tanzania gained independence in the early 1960s, they had similar economies, dependent on farming, and almost identical incomes per head. Both initially suppressed democracy to run authoritarian one-party states. But they chose very different economic models. Tanzania nationalized big companies and forced people onto collective farms in the name of “African socialism.” Kenya embraced free markets. Today Kenyans are 14 percent wealthier, adjusted for purchasing power[,] or 80 percent wealthier by market exchange rates.

Accordingly, based on the evidence presented, we must assert that the legacy of colonialism in explaining the fortunes of the developing world is exceptionally overrated. To effectively overcome obstacles in the third world, scholars must creatively search for the origins of daunting challenges in factors beyond colonialism.


Contact Lipton Matthews

Lipton Matthews is a researcher, business analyst, and contributor to Merion West, The Federalist, American Thinker, Intellectual Takeout, mises.org, and Imaginative Conservative. Visit his YouTube channel, with numerous interviews with a variety of scholars, here. He may be contacted at lo_matthews@yahoo.com or on Twitter (@matthewslipton).

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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