Land revenue, inequality and development in colonial India (1880-1910)

Abstract

[eng] The determinants of economic development have been largely studied in social sciences. Researchers have mostly pointed at geographic (Roy, 2014; Sachs and Warner, 2001) and institutional factors (Acemoglu et al., 2001; Acemoglu et al., 2002; Banerjee and Iyer, 2005; Dell, 2010; North, 1991; Nunn, 2008) as the main determinants of development. The basic argument for institutions affecting development is that institutions that provide secure property rights can incentivise investment in physical and human capital, leading to greater levels of income per capita (North, 1991).

While the determinants of development have been extensively addressed, less is known on the factors affecting how the benefits of development are distributed. Engerman and Sokoloff (2000) argue that institutions might explain the persistence of differences in inequality originated during the pre-colonial or colonial periods up to today. However, the link between institutions and inequality has not been empirically tested for colonial times except in some recent works (Galli and Rönnböack, 2020). Moreover, when addressing the impact of colonial institutions on development, the role of local agency has been under-researched (Austin, 2008; Bayly, 2008). In fact, recent studies have emphasized the importance of local agency in the ad- ministration and development of most colonies (Chaudhary, 2009; Frankema, 2010; Grafe and Irigoin, 2012; Hong and Paik, 2018; Van Zanden, 2010). Nonetheless, the link between local agency, colonial institutions and development remains puzzling.

In a nutshell, this dissertation provides evidence on the impact of colonial institutions on development and the distribution of its benefits during the colonial period. Evidence on the latter adds to the limited empirical confirmation on the link between colonial institutions and inequality during the colonial period while discussing significant within-country differences driven by variation on the colonial institutions. This regional comparison for colonial India differs from the usual cross-country approach on most studies on the influence of institutions on development -e.g., Acemoglu et al. (2001)-. Particularly, this allows to present empirical evidence on how colonial institutions explain inequality in colonial India, presenting the first regional comparative estimates of income inequality for the largest economic sector in the colony: agriculture. These estimates also allow to check if correlations between inequality and institutional or economic factors observed at the national level hold for sub-national comparisons. Additionally, studying how colonial institutions affected inequality during the colonial period provides vital insights to understand how the differences introduced by these institutions could have persisted.