How does colonial origin matter for economic performance in Sub-Saharan Africa?

Julius A. Agbor

Introduction

Over the past decades, a substantial volume of literature has dwelt on the subject of colonization and economic performance of former colonies.1 Economists became interested in colonial legacies in their search for the reasons why some countries have grown relatively slower than others. Notably, recent cross-country empirical evidence suggests that the identity of the colonizing power (or colonial origin) might help explain the observed growth differential amongst former colonies around the world.2 In particular, it is claimed that, on average, former British colonies have grown faster than former French colonies, although much controversy still surrounds the probable mechanisms of transmission of any such colonial legacy.

For instance, using a sample of 49 former colonies around the world during I960—2003, Klerman et al. (2008) found that differences in educational policies are the main reason why former British colonies have grown faster than former French colonies. In addition, they showed that colonial origin does not matter after geographical factors are controlled for, which lends support to the initial endowments hypothesis3 that differences in the initial conditions of precolonization, rather than in colonial policy (legal, educational, or other), are the best explanation for different growth rates amongst former colonies. However, these results, as the authors themselves admit, are inconclusive due to their high sensitivity to regional considerations and to the choice of sample.4

Like Klerman et al. (2008), Rostowski and Stacescu (2006, 2008) find that colonial origin matters more than legal origin, and education is the probable channel through which colonial origin affects growth. Like Klerman et al., they do not probe into the different mechanisms through which colonial origin affects growth.5 Furthermore, their analyses are limited to the initial conditions at independence. They suggest, however, that ‘examining the channels through which colonial origin could affect growth is therefore the first priority for future research’ (Rostowski and Stacescu 2006: 17).

This chapter further investigates the channels through which colonial origin affects economic growth performance, focusing only on sub-Saharan African (SSA) countries. Besides limiting the sample of study to a set of countries which do not appear to display significant differences in the initial geographical conditions, this chapter goes beyond the previous studies by distinguishing between the direct and indirect effects of colonial legacies, that is, by separating the initial conditions at the time of independence from the changes that were subsequently introduced by independent African states themselves.

The sample comprises 36 SSA countries over the period 1960-2000. The Hausman-Taylor (HT) estimation technique is applied to annualized panel data. We investigate two probable transmission channels between colonial origin and growth, namely, education and trade.

The results suggest that the indirect influences of colonial educational policies matter more for post-colonial growth than the direct influences emanating from colonization. They suggest further that former British SSA colonies have grown marginally faster than former French colonies during 1960-2000, and this is attributable to the favourable contribution of the indirect influence of the legacy of British colonization in education. I do not find any evidence in support of the trade transmission mechanism. The finding that post-independence education matters more than the initial conditions at the time of independence seems to contradict the findings of previous studies which suggest that it is the initial condition at independence that mattered for the post-colonial growth path.

The rest of the chapter is organized as follows. First, there is a brief historical overview of the probable transmission mechanisms at work between colonial origins and growth, then the next section presents the methodology of the study. This is followed by a discussion of the key findings and checks for their robustness, also a comparison of the results with those in the literature. The final section is the Conclusion.

 
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