East India Companies and Long-Term Economic Change in India

Type Working Paper
Title East India Companies and Long-Term Economic Change in India
Author(s)
Publication (Day/Month/Year)
URL https://ncgg.princeton.edu/IPES/2014/papers/F1130_rm3.pdf
Abstract
In evaluating the impact of colonialism on long-term political economy outcomes, scholars have focused on political institutions developed during colonial rule. I argue, in contrast, that the beginnings of long-term economic transformation pre-dated the colonial era, and were not driven by formal institutional changes. Centuries prior to the period of military annexation, European trading companies drew local economies into networks of long-distance maritime trade, transforming geographical and social patterns of economic organization. I use original archival data to study the impact of trading hubs built in India by the various European East India Companies before colonization. My analysis reveals a systematic and robust relationship between pre-colonial commercial developments and modern indicators of economic transformation, even after addressing a plethora of selection concerns. Overall, my evidence indicates that the precolonial commercial era was more significant than the colonial era in redirecting India’s long-term development trajectories.

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