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Extractive Institutions in Colonial Africa

Citation

Tadei, Federico (2014) Extractive Institutions in Colonial Africa. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/14H1-9P52. https://resolver.caltech.edu/CaltechTHESIS:05222014-192738960

Abstract

A common explanation for African current underdevelopment is the extractive character of institutions established during the colonial period. Yet, since colonial extraction is hard to quantify and its exact mechanisms are not well understood, we still do not know precisely how colonial institutions affect economic growth today. In this project, I study this issue by focusing on the peculiar structure of trade and labor policies employed by the French colonizers.

First, I analyze how trade monopsonies and coercive labor institutions reduced African gains from trade during the colonial period. By using new data on prices to agricultural producers and labor institutions in French Africa, I show that (1) the monopsonistic character of colonial trade implied a reduction in prices to producers far below world market prices; (2) coercive labor institutions allowed the colonizers to reduce prices even further; (3) as a consequence, colonial extraction cut African gains from trade by over 60%.

Given the importance of labor institutions, I then focus on their origin by analyzing the colonial governments' incentives to choose between coerced and free labor. I argue that the choice of institutions was affected more by the properties of exported commodities, such as prices and economies of scale, than by the characteristics of colonies, such indigenous population density and ease of settlement for the colonizers.

Finally, I study the long-term effects of colonial trade monopsonies and coercive labor institutions. By combining archival data on prices in the French colonies with maps of crop suitability, I show that the extent to which prices to agricultural producers were reduced with respect to world market prices is strongly negatively correlated with current regional development, as proxied by luminosity data from satellite images. The evidence suggests that colonial extraction affected subsequent growth by reducing development in rural areas in favor of a urban elite. The differential impact in rural and urban areas can be the reason why trade monopsonies and extractive institutions persisted long after independence.

Item Type:Thesis (Dissertation (Ph.D.))
Subject Keywords:Africa, Development, Institutions, Colonization, Trade, Labor Markets
Degree Grantor:California Institute of Technology
Division:Humanities and Social Sciences
Major Option:Social Science
Thesis Availability:Public (worldwide access)
Research Advisor(s):
  • Rosenthal, Jean-Laurent
Thesis Committee:
  • Rosenthal, Jean-Laurent (chair)
  • Snowberg, Erik
  • Shum, Matthew S.
  • Hoffman, Philip T.
Defense Date:16 May 2014
Non-Caltech Author Email:federico.tadei (AT) gmail.com
Record Number:CaltechTHESIS:05222014-192738960
Persistent URL:https://resolver.caltech.edu/CaltechTHESIS:05222014-192738960
DOI:10.7907/14H1-9P52
Default Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:8384
Collection:CaltechTHESIS
Deposited By: Federico Tadei
Deposited On:06 Jun 2014 19:38
Last Modified:04 Oct 2019 00:04

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