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Category Archives: regional imbalance

Impact of the British Colonial Rule

02 Saturday Apr 2011

Posted by paragwaknis in economic history, growth, regional imbalance

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British colonial rule, Lakshmi Iyer

There is a lot of debate on what exactly was the impact of the British colonial rule on the Indian economy. Usually, the literature can be broadly divided into two camps. One camp is of the opinion that the British colonial rule not only affected India but also Britain, albeit in a positive way in case of the later. The other camp is on the opposite spectrum associating the failure of the Indian economy during the British period to causes like rainfall shortages and famines.

Yet another way of looking at the impact of the colonial rule is tie it to the current outcomes of different regions or countries. Lakshmi Iyer’s recent article belongs to this category. It “compares economic outcomes across areas in India that were under direct British rule with areas that were under indirect colonial rule.” She finds that areas that experienced direct rule have significantly lower levels of access to schools, health centers, and roads in the post colonial period.

 

Iyer Lakshmi, Direct versus Indirect Colonial Rule in India: Long-Term Consequences, The Review of Economics and Statistics, 92(4), November 2010, 693-713.

A Tale of Two States

17 Wednesday Dec 2008

Posted by paragwaknis in regional imbalance

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Abstract

In this paper Lahiri and Yi study the decline of West Bengal relative to Maharashtra, historically two of the most important states of India. In 1960, West Bengal’s per capita income exceeded that of Maharashtra, the third richest state at the time. By 1993, it had fallen to just 69 percent of Maharashtra’s per capita income. They employ a “wedge” methodology based on the first order conditions of a multi-sector neoclassical growth model to ascertain the output and factor market sources of the divergent economic performances.

Their diagnostic analysis reveals that a large part of West Bengal’s development woes can be attributed to: (a) low sectoral productivity, especially in manufacturing and services; and (b) sectoral misallocation in labor markets between the manufacturing sector and the other sectors of the economy. They also present evidence on the labor market, the manufacturing sector, and public infrastructure that suggest a systematic worsening of the business environment in West Bengal during this period.

Lahiri A and K Yi (2008), ” A Tale of Two States: Maharashtra and West Bengal“, Federal Reserve Bank of Philadelphia, April.

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