Competing Economic Theories (Routledge Studies in the History of Economics)

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Only one Sub-Saharan economy, Botswana, sustained growth over three, indeed four, decades since its independence, which was in Botswana averaged 9. Then there was coercive recruitment of labour by colonial administrations, whether to work for the State or for European private enterprise Fall ; Northrup At a time when development economists especially but not exclusively those writing in French tended to favour a leading role for the State in the search for development in mixed economies Hugon ; Killick P.

Bauer ; attacked the late colonial State for introducing statutory marketing boards and thereby laying the foundation of what he considered to be deadening State interventionism.

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With respect to tariffs, this case would apply less strongly to French colonies because of the protectionism of the French empire. It is also much less true of the final 30 years of British rule in Africa, which saw not only tariffs but also the creation of marketing boards. From the perspective of institutional change, a fundamental observation applicable to the region generally was highlighted by John Sender and Sheila Smith There are different routes to this conclusion.

Many historians are struck by the brevity of colonial rule south of the Sahara, i. Building on the familiar observation that rulers in Africa have usually found it hard to raise large revenues from domestic sources, Bayart argues that, during colonial rule and since, African elites became clients of colonial or overseas States. Thereby they forged relations which, though unequal, benefited themselves as well as the foreigners.

At that time the region was, as before, characterised generally not everywhere all the time by an abundance of cultivable land in relation to the labour available to till it Hopkins ; Austin a. For example, many of the major discoveries notably of oil in Nigeria and diamonds in Botswana were to occur only during the period of decolonisation. Moreover, the fertility of much of the land was relatively low or at least fragile, making it costly or difficult to pursue intensive cultivation, especially in the absence of animal manure.

Sleeping sickness prevented the use of large animals, whether for ploughing or transport, in the forest zones and much of the savannas. The extreme seasonality of the annual distribution of rainfall rendered much of the dry season effectively unavailable for farm work.

Introduction

The consequent low opportunity cost of dry-season labour reduced the incentive to raise labour productivity in craft production. Conversely, the characteristic choices of farming techniques were land-extensive and labour-saving; but the thinness of the soils constrained the returns on labour Austin a. All this helps to explain why the productivity of African labour was apparently higher outside Africa over several centuries, cf. The last half-century of research has progressively changed this assessment, especially for West Africa where a strong tendency towards extra-subsistence production was evident in the 16th and 17th centuries.

Given the relative scarcity of labour, and in the absence generally of significant economies of scale in production, it was rare for the reservation wage the minimum wage rate sufficient to persuade people to sell their labour rather than work for themselves to be low enough for a would-be employer to afford to pay it. Hence the labour markets of pre-colonial Africa mainly took the form of slave trading Austin , chapters 6, 8; Austin a. Political fragmentation had facilitated the Atlantic slave trade, in that larger States would have had stronger incentives and capacities for rejecting participation in it Inikori This fragmentation later facilitated the European conquest.

The land-labour ratio, the environmental constraints on intensive agriculture and also the specific qualities of particular kinds of land in various parts of the continent gave Africa at least a potential comparative advantage in land-extensive primary production.

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By the time of colonisation, especially in West Africa, the indigenous populations were increasingly taking advantage of the combination of these supply-side features and of access to expanding overseas markets. From Senegal to Cameroon thousands of tonnes of groundnuts and palm oil, and from the s rubber, were being produced for sale to European merchants Law The British doctrine was that each colony should be fiscally self-supporting. In practice the French were equally committed to covering costs.

In French West Africa too there was a major programme of public works in the s, although, as also in Ghana, within a few years expenditure had to be curtailed when export prices fell and the growth of revenue ended Hopkins , In principle this came partly from the metropolitan taxpayer.

However, in the French case Patrick Manning , has calculated that the government continued to receive more in tax from Africa than it spent in Africa. In British West Africa the new statutory export marketing boards accrued substantial surpluses by keeping a large margin between the price paid to producers and the price that the boards received for the crop on the world market.

The surpluses were kept in London, in British government bonds, as forced savings from African farmers Rimmer , , which assisted the British metropolitan economy to recover from the post-war dollar shortage. On the whole it is arguable that, in economic terms, the similarities were much greater than the differences, except when the latter arose from the composition of their respective African empires.

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French rule, like British, relied on African intermediaries, including chiefs, even though France was much more insistent on abolishing African monarchies as in Dahomey, in contrast to the British treatment of the structures and dynasties of the States of Buganda, Botswana, Lesotho and, after an abortive attempt at abolition, Ashanti. In West Africa the French made much greater use of forced labour, but that was primarily because the French territories were, from the start, relatively lacking in cash-earning and therefore wage-paying potential.

In explanation, they emphasise the importance of greater investment in education in the British colonies than the French colonies in their sample. This is a novel and important line of inquiry. The risks entailed in extreme specialisation, however, need to be set against the long-run income gain to be expected from the exploitation of comparative advantage. Conflicts of ideology, and especially the balance of power between different interest groups, worked out variously across the range of African colonies. Let us consider the contrasting cases of export agriculture in the former, notably in West Africa, and mining in the latter, most obviously in South Africa.

In West Africa in particular it was in the joint interests of the population, European merchants and the colonial administrations to further this. In Ghana British planters were initially allowed to enter to grow cocoa beans. Colonial reliance on the efforts of African small capitalists and peasants in the growing and local marketing of export crops paid off in what became Ghana and Nigeria, with more than fold increases in the real value of foreign trade between and Austin a, , benefiting British commercial interests as well as via customs duties the colonial treasury.

The efforts of W. Lever, the soap manufacturer, to win government permission, along with the necessary coercive support, to establish huge oil palm plantations in Nigeria continued from to , but they were always rebuffed in favour of continued African occupation of virtually all agricultural land. Ultimately this was because African producers literally delivered the goods Hopkins , through land-extensive methods well adapted to the factor endowment.

They rejected the advice of colonial agricultural officers when it conflicted with the requirements of efficient adaptation Austin a. They did this partly by investment in transport infrastructure, investment to which African entrepreneurs also contributed Austin Equally important, although the colonial administration never really established a system of land titling, in Ghana for example it upheld the indigenous customary right of farmers to ownership of trees they had planted, irrespective of the outcome of any later litigation about the ownership of the land the trees stood upon.

However, some generalisations are possible. In contrast, it was only in the s that the real wages of black gold-miners in South Africa began a sustained rise above their early 20th century level Lipton , These were not selected for European settlement, nor were their economies driven by strong African rural-capitalist and peasant production. They had to rely on seasonal exports of male wage labourers, and on growing the less lucrative cash crops such as cotton, the timing of whose labour requirements conflicted with those of food crops, thereby creating risks to food security Tosh A current wave of research, led by Alexander Moradi, uses height as a measure of physical welfare.

When this research is extended to poorer colonies such as southern Sudan, Tanganyika mainland Tanzania or those in the West African Sahel, it would be no surprise if welfare improvements there are found to have been smaller than in the better-endowed economies studied so far. It was particularly in selected areas of the less favourably-endowed economies that colonial governments sought to raise productivity through very large-scale, capital-intensive and authoritarian projects, notably the massive irrigation scheme of the Office du Niger in Mali and the mechanisation campaign of the East African Groundnut Project in Tanganyika.

Both were spectacular failures in their own output and productivity terms, not least because they were inefficient in relation to the prevailing factor ratios and physical environments Hogendorn and Scott ; Roberts , ; Van Beusekom A region in which labour as well as capital was scarce in relation to land, such as Sub-Saharan Africa, was not well suited to follow either route in the early 20th century. Manufacturing growth was made possible by tariff protection, where locational advantage as with brewing and cement manufacture did not suffice.

Crucially, mining provided the import-purchasing power to cover the import of capital goods and, where necessary, raw materials. It was also the direct or indirect source of much of the revenue used by governments to invest in manufacturing, whether directly or through the provision of infrastructure. The large European populations were a source of both educated workers and capital, but arguably their most important contribution to industrialisation was the political commitment to support it even at the cost of consumer prices that were often above world market levels Austen , ; Kilby ; Wood and Jordan Moving up the value chain became an ambition of substantial proportions of white voters where they controlled governments, as in South Africa after and to a large extent in Southern Rhodesia from , as well as of African voters since independence.

Southern Rhodesia followed in the s, partly in response to the challenge of the new South African customs regime Phimister This was absolutely not a case of settler independence or autonomy. As in southern Africa, however, mines provided a favourable context for import-substituting industry, providing infrastructure, import-purchasing power and part of the market. If the radical school was right about the contribution of repressive racial policies to economic growth in the early 20th century Trapido , the liberals were right about the period preceding the fall of apartheid, i.

In the rest of Sub-Saharan Africa it was much smaller. Next, on 9.

In West Africa even these low levels of manufacturing represented a very late surge, propelled by post-war developmentalism government subsidies for manufacturing in the case of Senegal and decolonisation, which led European firms to establish local factories to protect their existing markets Kilby , , ; Boone , Where there were opportunities, colonial governments were rarely interested in upsetting the status quo in which colonial markets for manufactured goods were supplied largely by monopsonistic European merchants, selling goods disproportionately produced in the European metropolitan economy concerned Brett , ; Kilby But given that, despite rising population, the factor endowments of even the larger African economies were not suited to industrialisation in , the more important question is perhaps whether colonial rule, directly or indirectly, laid foundations on which Africa might later develop the conditions for a much larger growth of manufacturing.

In the long term the most fundamental change of the colonial period was probably the start of sustained population growth, which in aggregate can be dated from the end of the influenza pandemic, although local timing varied. How far the demographic breakthrough was the result of colonial actions, such as the suppression of slave raiding, the post peace within Africa and public health measures that reduced crisis mortality, is difficult to determine Iliffe , The Sub-Saharan population is estimated to have doubled to about million between and for references see Austin a, So the demographic conditions for cheaper labour were beginning, but only beginning, to be established.

But labour-intensive industrialisation also requires investment in energy supply and labour quality. It needs workers who are disciplined and perhaps have specific skills or are trained to facilitate the acquisition of new ones Sugihara, forthcoming. School enrolment rates rose during the colonial era from low or non-existent levels and in many countries doubled or tripled between and This was especially helped by African politicians gaining control of domestic budgets during the transition to independence, such as in Nigeria where primary enrolment was raised from , to 2,, and secondary enrolment was raised from 28, to , Sender and Smith , In annual electric power output stood at 2, million kilowatts in the Belgian Congo and at 2, million kilowatts in the Central African Federation within which most of the electricity was produced in Southern Rhodesia.

In contrast, according to figures for the previous year, French West Africa produced a combined total of million kilowatts, 7 Nigeria million kilowatts and the rest of British West Africa 84 million kilowatts Kamarck , Hence, despite the popularity of industrialisation with nationalists, the newly-independent countries were not well equipped to embark on labour-intensive industrialisation in the s. Those that sought to industrialise opted for capital-intensive methods subsidising capital, protective tariffs and the factories tended to became creators of economic rents rather than of profits from competitive success Boone The colonial impact on African entrepreneurship and on the markets in which they operated again turned to a large extent on whether there were large-scale appropriations of land for the use of Europeans, be they individual settlers or corporations.

Where African producers were able to enter export markets early and on a wide scale, before European exporters really got going, their success was sufficient to tip the balance of the argument among colonial policy-makers in favour of those who thought it economically as well as politically wisest to leave agricultural production in African hands.


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As we saw in chapter 6, British West Africa was the major example of this. In South Africa, Southern Rhodesia and Kenya African farmers responded quickly to opportunities to grow additional grain to supply internal markets. African production for the market proved resilient, however, and the governments eventually accepted this and shifted to imposing controls on agricultural marketing that favoured European producers rather than trying to displace African ones.

In Kenya it was only in the mids, during the Mau Mau revolt, that the government lifted restrictions on African production of high-value cash crops Mosley Admittedly, we have seen that the colonial State in Ghana protected the property of agricultural investors, in the sense of preserving the ownership of a farmer over trees or crops that he or she had planted, irrespective of the outcome of legal disputes about the ownership of the land on which they stood.

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This policy eventually changed in Southern Rhodesia and Kenya, with selective promotion of land registration, in response to the de facto emergence of land sales and individual proprietorship cultivable land having become increasingly scarce in the areas left to Africans and with African land-owners being seen as a politically conservative force in the context of Mau Mau Mosley , ; Kanogo In West Africa, without the settler pressure on African access to land, and given the expansion of cash crops that occurred early in the colonial period and again in the s, neither the political case nor the economic case for compulsory land titling was as yet compelling Austin In this context the colonial record was one of gradual, mostly reluctant, innovation.

Sooner or often later, they legislated against slavery. But in West Africa, the region with evidently the largest slave population at the start of the 20th century, the replacement of the slave market by a wage labour market depended very much on the progress of African cash crop agriculture Austin During the inter-war decades the continued use of forced labour by colonial administrations came under sustained pressure from the International Labour Office in Geneva.

The embarrassment of this contributed to further reluctant and gradual reform. By the end of the Second World War, as Frederick Cooper has shown, British and French authorities had accepted that wage labour had become a regular occupation for Africans, rather than a seasonal sideline from farming. Indeed, Cooper went on to show that in London and Paris the long-run fiscal implications of having to give workers in Africa the same rights as workers in Europe contributed to the decisions to withdraw from tropical Africa.

For African societies the end of slavery and the rise of wage labour was arguably a condition of continued large-scale participation in international trade. By slavery was generally no longer acceptable among trading partners. The survey by Herbert S. Frankel of external capital investment in white-ruled Africa remains the only comprehensive study for the colonial period. According to Frankel, in gross and nominal terms, during such investment totalled GBP 1, million, of which This meant GBP Public investment constituted Governments, and to some extent mining and plantation companies, invested in the transport infrastructure required for the development of, mainly, the export-import trade.

In Nigeria and Ghana Africans also took a leading role in building motor roads and pioneering lorry services Heap In institutional terms the colonial period saw the eventual abolition of human pawning, with its replacement by promissory notes and, in those areas of West Africa where it was possible, by loans on the security of cocoa farms.


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The initial imposition of colonial rule and boundaries itself disrupted intra-African networks of exchange, and the increasing presence of European merchants in the interior relegated many African traders further down the chain of intermediation between shippers and farmers Goerg ; Nwabughuogu Though largely confined to the lower levels of the commercial pyramids, they benefited from the overall expansion of the economies, especially in West Africa Hopkins , At independence, new governments were faced with the familiar problems of this financial dualism, notably lack of cheap credit from the formal sector for informal enterprises.

Early post-colonial policy did not always build on this, for example in the case of Ghana, with high taxation of export agriculture and the creation of State monopolies in certain sectors Austin b. Therefore, we should ask how colonial rule affected the historic constraint on political centralisation in Africa, namely the difficulty of raising revenue. Beyond this we need to consider the size of the State and the nature of authority and legitimacy, i.

Although European empires introduced to Africa the possibility of raising loan finance at least in an impersonal, law-governed though undemocratic way , the colonial administrations were restricted in their resort to money markets by the metropolitan insistence that each colony be fiscally self-sufficient and balance its budget.

The introduction in each colony of a single currency as legal tender probably reduced net transaction costs although in some cases the demonetisation of existing currencies hurt Africans holding them.


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But the metropolitan treasuries denied their colonial subordinates the autonomy to print money Herbst , The French colonies used the French franc. In British West Africa a colonial pound was issued, but the rules ensured that it was always convertible at par with the metropolitan pound. It was only at independence that the new African governments had the option of creating national currencies, an option the former French colonies mostly declined while the former British colonies soon accepted. It was the above-mentioned discovery, during the Second World War, that the export marketing board could be a major revenue-raiser, which was the major fiscal innovation of colonial rule.