From the LSE blogs – Industrial strategy: some lessons from the past

Industrial strategy is back on the government’s agenda, with a promise to produce a ‘match fit’ economy that ‘works for everyone’ and is able to thrive after Brexit. As yet, however, there is little sign of the promised broadly-based and coherent industrial strategy emerging. In crafting it, explains Hugh Pemberton, its architects may profitably look…

via Industrial strategy: some lessons from the past — British Politics and Policy at LSE

From VOX – free ebook download – The Long Economic and Political Shadow of History, Volume 1

Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces a new eBook in three volumes which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run…

via New eBook: The Long Economic and Political Shadow of History — VoxEU.org: Recent Articles

Political Institutions Shaping Economic Outcomes: Land Tenures in Colonial Sind 1843-1920

by Tehreem Husain

Interactions of political and economic institutions and their ramifications on development outcomes have been recognised by academics and policymakers alike. This blog analyzes the principal-agent relation between the British coloniser and local landlords and peasants in British Sind during 1843-1920. It argues that changes in political institutions during the period affected economic institutions, which through path dependence persists today.

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Research in the area of comparative institutions and economic development points to the fact that political institutions once in place, persist and shape the political-economic interactions between different groups and agents. Moreover, past institutional frameworks also have a degree of influence on the direction that institutional change takes place (Acemoglu and Robinson, 2008). This has been the case in British Sind (part of Bombay Presidency till 1935) as well. Sind’s primarily agrarian societal structure was based in powerful landlords who held large tracts of land with peasants having little or negligible ownership rights. The institution of land tenures – a term which encompasses rights of land occupancy, land revenue collection and land ownership – did not only impact agricultural productivity and welfare outcomes during the period under study but can still be felt today.

Acemoglu, Johnson and Robinson’s seminal paper on institutions (2005) has highlighted the instrumental role that land tenures and property rights play in determining social outcomes and trajectory of economic growth of a group, region or a nation. This is applicable to British Sind too. During 1843-1920 system and laws regarding land revenue and tenures were taking roots in the region. Overall, three different forms of land tenure systems were introduced in India; landlord-based system (zamindari), an individual cultivator based system (ryotwari), and a village-based system (mahalwari). Selection of a system was mainly defined by the actual or prospective land revenue from an area. The importance of choosing a specific land tenure system and hence extraction of land revenue from a region can be gauged from the fact that by the mid-nineteenth century land revenue contributed more than 50 percent and even seventy years later by 1920 more than 40 percent to the total revenue of British India.

In ensuring smooth collection of land revenue, the governance structure adopted by the British aligned itself to the indigenous societal structure using the local landlords as ‘intermediaries’, usually those who had ‘traditional’ or ‘customary’ authority. The colonial state maintained de jure ‘direct rule’ over the territory however in reality coercion was enforced by intermediate local political elites who operated outside the bureaucratic-rational apparatus of the state (Naseemullah and Staniland, 2014). The local landlord was made powerful firstly by granting them revenue-free lands which were heritable, and secondly, by giving them powers to collect revenue. This was done in exchange of curtailing any political and social resistance against the British. On the other hand, unlike in other parts of India where agricultural tenants had occupancy rights (Swamy, 2011), tenants in Sind would till the land and meet conditions that the landlords may impose on them from time to time without any land-ownership (Hughes, 1876).

Granting local landlords rent free lands and special privileges of land revenue collection fortified the extant hierarchical societal structure and was broadly aimed at establishing and perpetuating British rule through the institution of land tenures. Land revenue and administration records exhibit that 19.5% of land amongst large tracts of land (500 acres or more) had rent-free status in Sind-the highest in the entire Bombay Presidency. Moreover, legislative acts were also passed during this period to ensure that the power and influence the landlords wielded was not undermined.

Interestingly, upon Sind’s annexation to the empire in 1843, the British desired to deal directly with the cultivator and implemented the ryotwari system of land tenures. However, they soon realized the local landlords were wielding enormous authority over the peasants living with little or no land rights. Hence ryotwari system converged closely to a zamindari system; though official records continued to recognize it as the former. Consequently, the utilitarian nature of ryotwari system was destroyed by trading rights of the peasants for achieving political gains.

The approach of granting rent free lands and closely following the zamindari system of land tenures was at odds with the colonial power’s fiscal target of improving public finances from this area for the larger aim of achieving political expediency. The fact that a significant portion (87 percent) of revenue was alienated in Sind relative to rest of Bombay Presidency is evidence of this claim. Moreover, it also impacted agricultural productivity. This can be ascertained from the fact that alienated land had the lowest yield. Colonial records also give evidence to the claim that revenue per acre from alienated land was quite low in Sind and was falling. More importantly, incidence of revenue in non-alienated land was highest in Sind. This shows that the incidence of revenue was primarily on tenants and on small landlords. As much as the analysis of historical land tenure systems in Sind gives insight on how economic institutions were influenced and shaped it also serves as a social premise on Sindi society which to this day has largely been unchanged relative to what it was more than 150 years ago.

Furthermore, comparison of land revenue and administration records from Sind to rest of the Bombay Presidency suggests that the land grants to the landlords in Sind were very pronounced relative to other districts in the Presidency. Overall, analysis of land revenue and administration records from 1843-1920 highlight three aspects of economic history of Bombay Presidency in British India.

First, it argues that the, like in other parts of the colony, British colonizers exploited agency relation to govern Sind and used local landlords as their agents. The interesting part is that they built principle-agent relation by first confiscating the whole area and then making grants of large tracts of heritable rent­-free land to the old rulers and landlords. These land grants were the highest in Sind compared to rest of the Bombay Presidency and reinforced the existing social order through land tenure system. Primary purpose of this approach was to ensure smooth governance in the province.

Second, using land tenures as an instrument to achieve political expediency, they implemented ryotwari land tenure system on paper which, however, in spirit, was more like the zamindari system. This has implications for earlier work on historical land tenures in India (for instance Banerjee, 1985) wherein official records on land tenures have been considered as the practiced one. This needs to be tested for other parts of British India. This impacted agricultural productivity and revenue outcomes.

Third, although land granted as jagirs, inam etc. was done elsewhere in the Bombay Presidency (of which Sind was a part till 1935), this article argues that this was carried out in the harshest form in Sind where the tenant had no occupancy rights unlike elsewhere in the Bombay Presidency. The impact of this was reflected in low agricultural yields from alienated land in Sind relative to the same category elsewhere in the Bombay Presidency. Moreover, these effects are still being felt today and these institutions have permeated through time and shown path dependence. Researchers using data from the latest agricultural census of Pakistan 2010 have shown that inequality in terms of land ownership has increased through time in Sind.

From Bradley A. Hansen’s Blog – Economic History in 2016

We are now fully in 2017 – Bradley A. Hansen, Professor of Economics and American Studies at University of Mary Washington, helps us revise what happened and what was published in the discipline.

by Bradley A. Hansen
Originally published on 30 December 2016

Measuring Long Run Economic Performance
One of the most significant developments in economic history over the last several decades has been the work to improve our estimates of long run economic performance. Responding to challenges presented by Pomeranz’s Great Divergence and obvious weaknesses in Madison’s estimates, a number of economic historians have worked to develop better estimates of economic performance in Europe and Asia over the very long run. Economic historians continue these efforts but also recognize the limitations of what they have done and, possibly, what they can do.

Stephen Broadberry has done much of this work…

Full Article HERE