Historical overview of the probable mechanisms of transmission between colonial origins and growth

Historical sources claim that, as of the late nineteenth century, Britain was the only imperial power that was committed to free trade, whilst the other European powers, notably France, were still building up their rival industries through pro- tectionism.6 Correspondingly, whilst British colonial economies were not under the obligation to export only to Britain, French colonial economies were compelled to trade mainly with France.7 As such, it can be argued that one of the important legacies of British colonization on its former colonies has been a long exposure to world competition through trade openness,8 which might possibly explain why former British SSA colonies adjusted more rapidly to structural adjustment programmes implemented in the late 1980s in comparison with their French counterparts.9

Another important legacy of colonization, which has found much less expression in the cross-country empirical growth literature, is the distortionary impact of different colonial taxation systems on private investment incentives.10 Historical sources11 claim that the dual system of administration of their colonies, characterized by punitive taxation and forced labour on the general population, was a distinctive feature of French colonial rule in SSA.12 The implication of this unique approach to local administration is to be found in the colonial legacy of taxation pursued in the post-colonial era. By contrast, Maddison (1971) has argued that one of the important legacies of British colonization is that its former colonies inherited relatively lower levels of taxation, because indirect rule is cheaper to administer than direct rule, which was characteristic of French colonial rule. Austin (2008) also argues that, until very late in the colonial period, there was no direct taxation in southern Ghana and Nigeria - two of the relatively successful British colonies in tropical Africa. If this is true, then it could imply that former British colonies are associated with relatively lower degrees of distortions of economic activity through taxation, which could in turn imply greater private investment incentives or more free trade on the domestic scale.

Furthermore, it is well documented that educational policy was potentially the area of greatest distinction between different imperial colonial administrations. It is generally claimed that Britain pursued more enlightened educational policies in its colonies than did France, whose educational objective aimed essentially at training personnel for the colonial bureaucracy. For instance, Gann and Duignan (1970: 354), argue that

Mission teachers in British Africa not only taught their pupils how to read and write, but also taught them how to try their hands at many different jobs because the teachers themselves, besides giving lessons, were also engaged in such diverse activities as constructing their own buildings, cultivating their own crops, experimenting in agriculture and building roads.

In addition, it is widely held that primary instruction in former British colonies was administered through village schools using native teachers and the local vernacular languages of the people, whilst in former French colonies, pupils were generally boarded from their homes to far away schools where they were taught in French by French teachers, using French textbooks. This is suggestive of a different approach to educational provision with different repercussions on post-independence human capital accumulation and development.

Finally, an important colonial legacy that also merits further attention in the empirical literature is the impact of the Franc CFA13 currency board which links France to most of its former SSA colonies. Julan (2010) has recently shown that being part of the Franc CFA currency board increases the likelihood of currency crisis, which might impede economic performance. The Franc CFA currency board, it is also argued, has been instrumental in lowering inflation and the black market exchange premium while enhancing the contribution of imports to GDP growth. However, as the evidence suggests, the impact of the currency board on economic performance could go the other way.14 Thus, a major distinction between the former British and French SSA colonies has been the fact that almost all former British SSA colonies have floating exchange regimes; whereas almost all former French SSA colonies operate under a fixed exchange regime.

In summary, this chapter will focus primarily on two probable channels of transmission between colonial origins and growth:

  • The education or human capital channel, which will be proxied by two variables, namely, secondary enrolment rates during 1960-2000 (SEC), and the average years of schooling in the population aged 15 and above during 1960-2000 (AYS).
  • The trade channel, which will be proxied by the export share in GDP during 1960-2000 (EXP) and openness to international trade during 1960-2000 (OPEN).
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