Impact of Colonial Institutions on Economic Growth and Development in India: Evidence from Night-Lights Data

Priyaranjan Jha and Karan Talathi

Economic Development and Cultural Change, 2024, vol. 72, issue 4, 1653 - 1708

Abstract: We use district-level data from India to study the implications of two historical institutions, direct British rule and the heterogeneous land tenure institutions implemented by the British, on the disparity in present-day development in India. Using night-lights per capita as a proxy for district-level per capita income, we find that modern districts that were historically under direct British rule had significantly fewer night-lights per capita in 1993 relative to modern districts that were historically under indirect British rule. The large gap persists even after including correlates of development such as educational attainment, health, and physical and financial infrastructure. Looking at the growth pattern from 1993 to 2013, directly ruled districts had a lower annual growth rate compared with that of indirectly ruled districts. Much of the development gap between areas under indirect rule and areas under direct rule can be accounted for by the adverse effect of landlord-based revenue-collection systems in the directly ruled areas.

Date: 2024
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