Economics deals primarily with the concept of scarcity. money. poverty. banking

The large European populations were a source of both educated workers and capital, but arguably their most important contribution to industrialisation was the political commitment to support it even at the cost of consumer prices that were often above world market levels Austen , ; Kilby ; Wood and Jordan Moving up the value chain became an ambition of substantial proportions of white voters where they controlled governments, as in South Africa after and to a large extent in Southern Rhodesia from , as well as of African voters since independence.

Southern Rhodesia followed in the s, partly in response to the challenge of the new South African customs regime Phimister This was absolutely not a case of settler independence or autonomy. As in southern Africa, however, mines provided a favourable context for import-substituting industry, providing infrastructure, import-purchasing power and part of the market. If the radical school was right about the contribution of repressive racial policies to economic growth in the early 20th century Trapido , the liberals were right about the period preceding the fall of apartheid, i.

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In the rest of Sub-Saharan Africa it was much smaller. Next, on 9. In West Africa even these low levels of manufacturing represented a very late surge, propelled by post-war developmentalism government subsidies for manufacturing in the case of Senegal and decolonisation, which led European firms to establish local factories to protect their existing markets Kilby , , ; Boone , Where there were opportunities, colonial governments were rarely interested in upsetting the status quo in which colonial markets for manufactured goods were supplied largely by monopsonistic European merchants, selling goods disproportionately produced in the European metropolitan economy concerned Brett , ; Kilby But given that, despite rising population, the factor endowments of even the larger African economies were not suited to industrialisation in , the more important question is perhaps whether colonial rule, directly or indirectly, laid foundations on which Africa might later develop the conditions for a much larger growth of manufacturing.

In the long term the most fundamental change of the colonial period was probably the start of sustained population growth, which in aggregate can be dated from the end of the influenza pandemic, although local timing varied. How far the demographic breakthrough was the result of colonial actions, such as the suppression of slave raiding, the post peace within Africa and public health measures that reduced crisis mortality, is difficult to determine Iliffe , The Sub-Saharan population is estimated to have doubled to about million between and for references see Austin a, So the demographic conditions for cheaper labour were beginning, but only beginning, to be established.

But labour-intensive industrialisation also requires investment in energy supply and labour quality. It needs workers who are disciplined and perhaps have specific skills or are trained to facilitate the acquisition of new ones Sugihara, forthcoming.

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School enrolment rates rose during the colonial era from low or non-existent levels and in many countries doubled or tripled between and This was especially helped by African politicians gaining control of domestic budgets during the transition to independence, such as in Nigeria where primary enrolment was raised from , to 2,, and secondary enrolment was raised from 28, to , Sender and Smith , In annual electric power output stood at 2, million kilowatts in the Belgian Congo and at 2, million kilowatts in the Central African Federation within which most of the electricity was produced in Southern Rhodesia.

In contrast, according to figures for the previous year, French West Africa produced a combined total of million kilowatts, 7 Nigeria million kilowatts and the rest of British West Africa 84 million kilowatts Kamarck , Hence, despite the popularity of industrialisation with nationalists, the newly-independent countries were not well equipped to embark on labour-intensive industrialisation in the s.

Those that sought to industrialise opted for capital-intensive methods subsidising capital, protective tariffs and the factories tended to became creators of economic rents rather than of profits from competitive success Boone The colonial impact on African entrepreneurship and on the markets in which they operated again turned to a large extent on whether there were large-scale appropriations of land for the use of Europeans, be they individual settlers or corporations. Where African producers were able to enter export markets early and on a wide scale, before European exporters really got going, their success was sufficient to tip the balance of the argument among colonial policy-makers in favour of those who thought it economically as well as politically wisest to leave agricultural production in African hands.

As we saw in chapter 6, British West Africa was the major example of this. In South Africa, Southern Rhodesia and Kenya African farmers responded quickly to opportunities to grow additional grain to supply internal markets. African production for the market proved resilient, however, and the governments eventually accepted this and shifted to imposing controls on agricultural marketing that favoured European producers rather than trying to displace African ones.

In Kenya it was only in the mids, during the Mau Mau revolt, that the government lifted restrictions on African production of high-value cash crops Mosley Admittedly, we have seen that the colonial State in Ghana protected the property of agricultural investors, in the sense of preserving the ownership of a farmer over trees or crops that he or she had planted, irrespective of the outcome of legal disputes about the ownership of the land on which they stood. This policy eventually changed in Southern Rhodesia and Kenya, with selective promotion of land registration, in response to the de facto emergence of land sales and individual proprietorship cultivable land having become increasingly scarce in the areas left to Africans and with African land-owners being seen as a politically conservative force in the context of Mau Mau Mosley , ; Kanogo In West Africa, without the settler pressure on African access to land, and given the expansion of cash crops that occurred early in the colonial period and again in the s, neither the political case nor the economic case for compulsory land titling was as yet compelling Austin In this context the colonial record was one of gradual, mostly reluctant, innovation.

Sooner or often later, they legislated against slavery.

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But in West Africa, the region with evidently the largest slave population at the start of the 20th century, the replacement of the slave market by a wage labour market depended very much on the progress of African cash crop agriculture Austin During the inter-war decades the continued use of forced labour by colonial administrations came under sustained pressure from the International Labour Office in Geneva.

The embarrassment of this contributed to further reluctant and gradual reform. By the end of the Second World War, as Frederick Cooper has shown, British and French authorities had accepted that wage labour had become a regular occupation for Africans, rather than a seasonal sideline from farming. Indeed, Cooper went on to show that in London and Paris the long-run fiscal implications of having to give workers in Africa the same rights as workers in Europe contributed to the decisions to withdraw from tropical Africa.

For African societies the end of slavery and the rise of wage labour was arguably a condition of continued large-scale participation in international trade.

Roger L. Ransom, University of California, Riverside

By slavery was generally no longer acceptable among trading partners. The survey by Herbert S. Frankel of external capital investment in white-ruled Africa remains the only comprehensive study for the colonial period. According to Frankel, in gross and nominal terms, during such investment totalled GBP 1, million, of which This meant GBP Public investment constituted Governments, and to some extent mining and plantation companies, invested in the transport infrastructure required for the development of, mainly, the export-import trade.

In Nigeria and Ghana Africans also took a leading role in building motor roads and pioneering lorry services Heap In institutional terms the colonial period saw the eventual abolition of human pawning, with its replacement by promissory notes and, in those areas of West Africa where it was possible, by loans on the security of cocoa farms. The initial imposition of colonial rule and boundaries itself disrupted intra-African networks of exchange, and the increasing presence of European merchants in the interior relegated many African traders further down the chain of intermediation between shippers and farmers Goerg ; Nwabughuogu Though largely confined to the lower levels of the commercial pyramids, they benefited from the overall expansion of the economies, especially in West Africa Hopkins , At independence, new governments were faced with the familiar problems of this financial dualism, notably lack of cheap credit from the formal sector for informal enterprises.

Early post-colonial policy did not always build on this, for example in the case of Ghana, with high taxation of export agriculture and the creation of State monopolies in certain sectors Austin b. Therefore, we should ask how colonial rule affected the historic constraint on political centralisation in Africa, namely the difficulty of raising revenue. Beyond this we need to consider the size of the State and the nature of authority and legitimacy, i. Although European empires introduced to Africa the possibility of raising loan finance at least in an impersonal, law-governed though undemocratic way , the colonial administrations were restricted in their resort to money markets by the metropolitan insistence that each colony be fiscally self-sufficient and balance its budget.

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  5. The introduction in each colony of a single currency as legal tender probably reduced net transaction costs although in some cases the demonetisation of existing currencies hurt Africans holding them. But the metropolitan treasuries denied their colonial subordinates the autonomy to print money Herbst , The French colonies used the French franc. In British West Africa a colonial pound was issued, but the rules ensured that it was always convertible at par with the metropolitan pound.

    It was only at independence that the new African governments had the option of creating national currencies, an option the former French colonies mostly declined while the former British colonies soon accepted. It was the above-mentioned discovery, during the Second World War, that the export marketing board could be a major revenue-raiser, which was the major fiscal innovation of colonial rule.

    As independence approached, this unintended consequence of a wartime expedient offered African politicians unprecedented opportunities to, for example, transform educational opportunities for their populations. The marketing board as a fiscal instrument was an important colonial legacy, and its possibilities and implications were only beginning to be understood. By the s the limits of the device had become clear, as ordinary traders and producers could evade it by trading on parallel markets Azarya and Chazan There is much in these criticisms, but recent research has shown that the borders were not necessarily so arbitrary in their origin and that at least some of them have subsequently acquired social reality and even popular legitimacy Nugent Again, while the colonial legacy includes several very small States, most colonies even the small ones were larger than the pre-colonial polities on which or in place of which they were imposed; and some of them formed parts of larger regional units notably French West Africa.

    While the colonial borders have been largely preserved, colonial attempts to introduce Weberian bureaucracy have proved much less durable Bayart One reason for, or manifestation of, this is the salience of ethnicity in most African countries for political competition over resources.

    Recent historiography has shown that the emphasis on the capacity of colonial States to invent and manipulate traditions, including those relating to ethnicity and chieftaincy, was partly justified, but it underestimated the capacity of African elites and peoples to influence the outcomes themselves Spear By no means all ethnic divisions originated in the colonial period Vansina , although they were usually deepened and reified by the interaction of colonial and African elites Prunier Whatever the precise division of responsibility in this interaction, there is general agreement among scholars that ethnicity has been a more important organising principle of political association and conflict since colonial rule than before it.

    This matters for economic development because ethnic divisions are often seen, by public opinion and by some economists notably Easterly and Levine , as primarily responsible for rent-seeking rather than growth-promoting policies in post-colonial Africa. However, that approach has been criticised on various grounds notably by Arcand, Guillaumont and Jeanneney , and it is arguable that the salience of ethnicity in African political and economic life is as much a response to as a cause of the difficulties of enlarging the economic cake in African conditions and of the continued weakness of State capacity.

    Daron Acemoglu, Simon Johnson and James Robinson a argue that it is an exception that proves the rule, i. In my view two considerations point to a different conclusion. First, without the discovery of diamonds, it is hard to see how post-colonial Botswana could have grown dramatically faster than colonial Bechuanaland. Indeed, during the first three decades of indendence the non-diamond mining sector of Botswana did no better than Zambia Jerven Second, British rule was relatively intense, rather than the opposite, in Bechuanaland. By the criterion of the number of Africans per administrator, circa it was fifth out of 33 African colonies Richens, forthcoming.

    Simultaneously French firms were apparently becoming less interested in colonial economies Marseille If so, it is ironic that the French government remained closely involved with its former colonies after their independence, not least through the franc zone.

    Economics deals primarily with the concept of scarcity

    Again, in the s British firms on the spot expressed concern about their future under independent African governments, but they failed to attract much notice from the decolonising authorities Tignor ; Stockwell Colonial governments and European firms invested in both infrastructure and especially in southern Africa in institutions designed to develop African economies as primary-product exporters. In both cases the old economic logic for coercing labour continued to operate, i. But there were changes and variations. The resultant income at least enabled many of the slave-owners to become employers instead.

    Thus, the first generation of post-colonial rulers presided over economies which were as yet too short of educated and cheap labour and sufficient and sufficiently cheap electricity to embark successfully on industrialisation. It has taken post-colonial investment in education and other public goods to move West African economies, and tropical Africa generally, closer to the prospect of a substantial growth of labour-intensive manufacturing, if international competition permits it.

    The large-scale use of coercion was the basis for the construction of white-ruled economies that, especially in South Africa, eventually became profitable enough for a partly politically-impelled policy of import-substituting industrialisation to achieve some success. Thus, the rents extracted from African labourers were channelled into structural change, although the process became self-defeating as it progressed, contributing to the fall of apartheid. A final legacy of the colonial period has a rather unclear relationship to colonial policy, i.

    The colonial origins of comparative development: An empirical investigation. American Economic Review 91, no. An African success story: Botswana. London: Centre for Economic Policy Research. Reversal of fortune: Geography and institutions in the making of the modern world income distribution. Quarterly Journal of Economics , no. Ajayi, J. Colonialism: An episode in African history.

    In Colonialism in Africa, , vol. Gann and Peter Duignan, — Cambridge: Cambridge University Press. Amin, Samir. Paris: Editions de Minuit. How to make a tragedy: On the alleged effects of ethnicity on growth. Journal of International Development 20, no. Austen, Ralph A.

    African economic history: Internal development and external dependency. London: James Currey. Austin, Gareth. Indigenous credit institutions in West Africa, c. Gareth Austin and Kaoru Sugihara, London: Macmillan. Mode of production or mode of cultivation: Explaining the failure of European cocoa planters in competition with African farmers in colonial Ghana. In Cocoa pioneer fronts since The role of smallholders, planters and merchants , ed. Clarence-Smith, Basingstoke, UK: Macmillan. Journal of International Development 8, no.

    Scarcity, the Basic Economic Problem

    Labour, land and capital in Ghana: From slavery to free labour in Asante, Rochester: Rochester University Press. Labour and land in Ghana, A shifting ratio and an institutional revolution. Australian Economic History Review 47, no. Resources, techniques and strategies south of the Sahara: Revising the factor endowments perspective on African economic development, Economic History Review 61, no.

    Cash crops and freedom: Export agriculture and the decline of slavery in colonial West Africa. International Review of Social History 54, no. Markets, slaves and States in West Africa. Austin, Gareth, and Chibuike Ugochukwu Uche.

    Economics deals primarily with the concept of scarcity. money. poverty. banking / Freebies flower

    Collusion and competition in colonial economies: Banking in British West Africa, Business History Review 81 1 : Azarya, Victor, and Naomi Chazan. Comparative Studies in Society and History Bauer, P. West African trade: A study of competition, oligopoly and monopoly in a changing economy. Dissent on development. Cambridge, Massachusetts: Harvard University Press.