Given difficult to access pre-colonial forms of surplus extraction, African colonial governments faced severe constraints to raise revenue for incipient colonial state formation. This paper compares the ways in which the British and the French dealt with this challenge in a quantitative framework. We exploit colonial government budget accounts to construct PPP-adjusted comparisons of per capita government revenue by source. A comparison of fiscal capacity building shows that pragmatic responses to varying local economic, political and demographic conditions can easily be mistaken for specific metropolitan blueprints of colonial governance and that under comparable local circumstances the French and British operated in remarkably similar ways.
JEL Code: N2
Economic History
→Financial Markets and Institutions
Recent studies on African economic history have emphasized the structural impediments to African growth, such as adverse geographical conditions and extractive colonial institutions. The evidence is mainly drawn from cross-country regressions on late 20th century income levels, assuming persistent effects of historical causes over time. But to which extent has African poverty been a persistent phenomenon? Our study sheds light on this question by providing new evidence on long-term African growth-trajectories. We show that slave trade regressions are not robust for pre-1970s GDP per capita levels, or for pre-1973 and post-1995 growth rates. We calculate urban unskilled real wages of African workers in nine British African countries 1880-1965, adopting Allen’s (2009) subsistence basket methodology. We find that real wages were above subsistence level, rose significantly over time and were, in major parts of British Africa, considerably higher than real wages in Asian cities up to, at least the 1930s. We explain the intra-African variation in real wage levels by varying colonial institutions concerning land alienation, taxation and immigration.
This paper offers time-series of urban unskilled labor wages and commodity prices in eight British African colonies (1880-1940) and shows that real wages were above subsistence level and rising, especially during the interwar years. Real wages in West Africa and Mauritius were even considerably higher than in some major Asian cities. Our results cast doubt on studies emphasizing the existence of ‘structural impediments’ to African economic growth. We also document an East-West divergence within Africa and argue this was caused by variations in colonial land and labor market institutions, challenging the view that African colonial institutions were exclusively extractive.
How profitable were foreign investments in plantation agriculture in the Netherlands Indies during the late colonial era? We use a new dataset of monthly quoted stock prices and dividends of international companies at the Brussels stock exchange to estimate the returns to investment in tropical agriculture (1919–1938). We adopt the Dimson–March–Staunton method to compute real geometric annual average rates of return and assess our estimates in an international comparative perspective. We find that returns to colonial FDI in the Netherlands Indies during 1919–1928 were impressive (14.3 %), being almost 3 percentage points higher than the world average. In the following decade 1929–1938 fortunes reversed, with a rate of return of -2.8 % compared to a world average of 2.2 %. Over the entire period the returns to colonial FDI (5.4 % in 1919–1938) were about a factor 2.5 higher than returns to investment in the Dutch domestic economy (2.1 % in 1920–1939). We argue that these returns should be interpreted in a colonial context of systematic labour repression, but that they may also partly reflect a higher risk-premium of investments in colonial commodities.