Seminar by Roberto Bonfatti



Seminar by Roberto Bonfatti, University of Padova

Title: "Trade disruption, industrialisation, and the setting sun of British colonial rule in India"

Abstract: Colonial trade policies encouraged trade between the colonial power and the colonies, resulting in a pattern of specialisation whereby the colonies exported mainly primary products. Did this specialisation prevent industrial growth in the colonies, and did it help the colonial powers to keep the colonies under control? We address these questions empirically in the context of colonial India, by studying the impact of the temporary collapse in trade due to World War I on Indian industrialisation and anti-imperial feelings. We exploit cross-district variation in exposure to the trade shock, stemming from initial (1911) differences in industry specialisation. We find that districts more exposed to the trade shock experienced substantially faster industrial growth during and in the immediate aftermath of the growth, placing them on a higher level of industrialisation which was still visible in 2011. This supports the existence of the kind of learning externalities postulated by the infant industry argument. The impact of the trade shock was entirely due to an increase in the number of Indian-born (as opposed to British-born) administrative staff and workers, and in the number of Indian-owned (as opposed to British-owned) firms. We also find that, in districts more exposed to the trade shock, members of the Indian National Congress (INC) expressed stronger anti-empire feelings by 1922. Moreover, these districts were more likely to vote for the INC in the landmark election of 1937. These results suggest that colonial trade may have played an important role in preventing colonial industrialisation, and in embedding foreign rule.