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The Oxford History of the British Empire: Volume IV: The Twentieth Century$

Judith Brown and Wm Roger Louis

Print publication date: 1999

Print ISBN-13: 9780198205647

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198205647.001.0001

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Imperialism and After: The Economy of the Empire on the Periphery

Imperialism and After: The Economy of the Empire on the Periphery

Chapter:
(p.357) 15 Imperialism and After: The Economy of the Empire on the Periphery
Source:
The Oxford History of the British Empire: Volume IV: The Twentieth Century
Author(s):

B. R. TOMLINSON

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198205647.003.0015

Abstract and Keywords

This chapter examines the nature of the post-colonial economy as well as the economic principles of the colonial system itself. In particular, it describes the economic history of the Imperial periphery — the overseas territories that were part of the British Empire in 1914 — from the turn of the century to the present day. It also investigates the patterns and structures of economic activity within the Imperial economic system, both before and after the British crises of the 1930s and 1940s. In addition, it considers the problems faced by Commonwealth countries in securing growth and development in the much more complex circumstances of the post-Imperial global economy of the last three decades. It is suggested that British rule did not leave a substantial legacy of wealth, health, or happiness to the majority of the subjects of the Commonwealth.

Keywords:   British Empire, post-colonial economy, Imperial economic system, imperialism, Imperial periphery, Commonwealth, British rule

This chapter deals with the economic history of the Imperial periphery—the overseas territories that were part of the British Empire in 1914—from the turn of the century to the present day. It examines the patterns and structures of economic activity within the Imperial economic system, both before and after the British crises of the 1930s and 1940s; in addition, it considers the problems faced by Commonwealth countries in securing growth and development in the much more complex circumstances of the post-Imperial global economy of the last three decades. Looking back on the economy of the Empire from a vantage-point at the end of the twentieth century, it is now clear that it was able to operate so successfully only because of a particular set of global and local circumstances. These circumstances were linked closely to the demands and levels of technological advance that emerged in Western Europe, especially in Britain, during the second half of the nineteenth century.

In 1900 much of the world’s economic activity was closely linked to the needs and capacities of the industrial centres of Western Europe, which was structured through the liberal international economic system of low transport costs, a stable international currency regime based on the gold standard, free trade, free migration, and large flows of international investment that had developed during the latter half of the nineteenth century. This international system connected industrial producers and consumers in the core (Western Europe and, increasingly, the United States) with primary product suppliers in the periphery (the less developed world) through a network of infrastructure, transport systems, and technology provided largely by exports of British capital. In a sense, all of the world outside Europe had formed a periphery for the British economy for much of the nineteenth century, since Britain dominated so much of the international networks of trade and finance, drawing in imports of food and raw materials and pumping out industrial goods, capital, and colonists that gave shape to many parts of the world. By 1914 the development of other industrial economies in Europe and the United States meant that the British economy was only one among equals, but one that (p.358) retained extensive links with the non-European world, and that still provided the strongest focal point for international economic interaction.

At the beginning of the twentieth century the British Imperial economy operated within the established liberal international system, and was heavily dependent on the institutions and economic vitality of the larger whole. In aggregate, the Empire was not of overwhelming importance to the British domestic economy during the course of the nineteenth or early twentieth centuries; for peripheral economies, too, Britain alone never provided an adequate focus for the external economic activity of her major colonies and dependencies. However, economic imperialism—the exercise of power in economic relations—did play some part in constructing and sustaining the international system at all times. Even the liberal international economy of the second half of the nineteenth century was underpinned, especially in Asia, Africa, the Caribbean, and Latin America, by a judicious use of formal and informal techniques of imperialism to provide appropriate public institutions and structures of sociopolitical and economic power within which such economic activity could flourish. After 1914 the importance of a self-conscious, discriminatory Imperial system increased as the strains imposed by the material and human costs of the First World War weakened the foundations of the established international system and the institutional networks that were integrated into it. In the 1920s, 1930s, and 1940s the world economy collapsed into regionalism, economic nationalism, autarky, and the desperate accumulation of resources for war and reconstruction. In the short term these events strengthened the Imperial economy as a viable basis for interregional integration, but as a new system of multilateral economic activity developed in the 1950s, Britain and her major colonies and ex-colonies began to disengage from each other in trade and investment once more, and British institutional structures lost their newfound rationale in the periphery as well as at the core.

The history of the British Empire as an economic phenomenon came to an end some time between 1967, when the detrimental effects of sterling’s devaluation ended the currency’s role as a reserve asset, and 1973, when Britain finally joined the European Economic Community and signalled clearly to her partners in the Commonwealth that her future role lay in Europe rather than as a global power. Over the last thirty years new patterns of trade and investment, driven by new types of technology and innovation, have fundamentally altered the shape and balance of international economic interaction once more. The pattern of international migration, trade, and investment that characterized the second half of the nineteenth and the first half of the twentieth centuries has been swept away by a greater variation and wider diffusion of economic activity throughout a globalized system of production and exchange. These latest developments have little or nothing to do with the conventional themes of Imperial economic history, but (p.359) they explain why the Imperial economy, which seemed so strong in the middle decades of the twentieth century, was quickly abandoned thereafter by even its most enthusiastic supporters, and lost its function in an international system with very different dynamics of economic growth and opportunities for development.

The long trade boom in the second half of the nineteenth century offered considerable possibilities for growth in developing countries, since many areas contained large quantities of apparently underutilized land and labour with the potential to produce exports for the world market. But growth through such trade also had negative consequences. Extensive commercial networks already existed in many areas of Asia, Africa, and Latin America before the industrialization of Europe, which dealt mainly in relatively high-value manufactured or semimanufactured goods. The expansion of international demand for primary produce over the course of the nineteenth century damaged existing patterns of production and exchange, and caused extensive structural changes in many localities and regions. In severe cases—such as on the plains of North America—the colonization of apparently unused resources of land for commercial farming destroyed entire cultures on which viable pre-existing socio-economic systems were based. Elsewhere, however, the increase in production and utilization of resources for export were maintained at less human cost. A much-cited case of such growth was that observed in South-East Asia in the quarter-century before 1914, where peasant export production of traditional crops expanded by using new land and underemployed labour, while mines and plantations used the same resources with the addition of imported capital.

The relationship between increased output of primary produce and the satisfactory development of peripheral economies was heavily influenced by the way in which individual territories were opened up to trade, and by the nature of the local response in terms of productivity, skills, and savings. The ecological, social, and political distinctions between the ‘neo-European periphery’ and the ‘tropical periphery’ in the nineteenth century can be seen as one crucial variable.1 In the ‘neo-Europes’—those parts of the world where it was relatively easy to adapt European techniques of industrial and agricultural production, and to utilize advances in labour and capital productivity developed in Europe—trade quickly expanded the market, inducing innovations, increasing productivity, augmenting savings and capital accumulation, and helping the transfer of technology, skills, and entrepreneurship, once the native peoples had been eliminated as obstacles to growth.2 The production of export staples such as wheat, timber, wool, and meat (p.360) for the international market played a significant role in stimulating local employment and investment, and augmenting the supply of capital and technology, especially in Canada, Australia, South Africa, and the River Plate countries of Latin America—all of which had close formal or informal political links with Britain.3

By contrast, export expansion was less dynamic and had fewer beneficial effects in the ‘tropical periphery’ of Asia, Africa, and most of Latin America, where European capital, technologies, colonists, and market structures could not be transplanted so easily. International demand for tropical foodstuffs and industrial raw materials certainly stimulated growth of some tropical economies, but this did not necessarily provide the best basis for their development over the long term. Apparent increases in output often occurred because the international market provided a Vent for surplus’—employing previously underutilized land and labour with low productivity using static technology—rather than stimulating productivity increases brought about by continuous improvements in skills and technological advance. Land was cleared for peasant colonization or for plantations using cheap local labour and capital, while output growth for export and domestic consumption in the commercialized sectors of tropical economies depended on drawing in supplies of labour from the subsistence economy. The presence of cheap labour, and the absence of productivity increases in agriculture, resulted in a ‘dualistic’ form of development—one that rewarded domestic and foreign capital while ensuring that the income of many rural workers lagged behind the rate of profit. The result was worsening income distribution and increasing poverty in the countryside.4

The dynamic relationship between trade in primary produce and sustained economic growth in the periphery faltered significantly after 1914. The events of (p.361) the First World War and its aftermath initially seemed to strengthen the link between export growth and increased output of primary produce. In the immediate aftermath of the war, many economies in the periphery were able to take advantage of rising demand in Europe, as the belligerents rebuilt their stocks of foodstuffs and raw materials. But the sharp depression of 1920–21 signalled problems of overproduction, and the gradual faltering of economic growth over the course of the 1920s, especially in Britain and Germany, the two largest importers of primary produce, underlined the dangers of excess supply. There was no major crisis for producers until the end of the decade, except for wheat-growers, but high levels of stockholding and heavy short-term borrowing were necessary to sustain prices in commodities such as wheat, coffee, tin, and rubber.5 When international liquidity became constricted as a result of the short-term capital flows caused by the boom and bust on Wall Street in 1927–29, primary produce prices could no longer be sustained. The result was a cycle of balance-of-payments crises, currency devaluation, and market failures, exacerbated by declining terms of trade for the commodity producers, that culminated in the Great Depression of 1929–33.

The disruptions to peripheral economies caused by these events can be seen clearly in Figures 15.1 and 15.2, which provide a simplified but bold picture of the pattern of multilateral trade flows in the 1920s and 1930s. As before 1914, peripheral economies outside Europe were important to multilateral trade and payments in two main ways.6 The regions of recent settlement such as Canada, Argentina, and Australasia (roughly equivalent to the neo-Europes defined above) supplied primary produce to Europe and imported significant amounts of industrial goods in return. They also relied on imports of long- and short-term capital from Britain and the United States to develop their resources and sustain the infrastructure of production and trade. The tropics of Asia, Africa, and most of Latin America supplied significant amounts of primary produce to all the industrial regions of the world, and represented the only area of the world with which Britain could earn a trade surplus, although this surplus was no longer as large in relation to Britain’s deficits elsewhere in the world as it had been in the nineteenth century.

(p.362)

                   Imperialism and After: The Economy of the Empire on the Periphery

Figure 15.1. The system of multilateral trade, 1928

Note: The figures in circles represent the net export surpluses in $ million at 1928 rates of exchange, net of transport, and insurance costs.

Source: League of Nations, The Network of World Trade (Geneva, 1942), Diagram 9

The disturbed economic conditions of the early 1930s had important consequences for the pattern of international trade and payments that had been reestablished in the 1920s. The imposition of tariffs in the United States in 1930 (the Hawley-Smoot tariffs) cut the links between the tropical economies and their most important single market, and also priced American farm produce out of European markets. One effect of this was to exacerbate the income and balance-of-payments difficulties already being suffered by peripheral economies, which led to a fall in demand for industrial products, especially from Britain, and to widespread fears of currency devaluation and default on their external debt which, in the case of the Empire, was mostly held in Britain. These problems contributed to the pressures that forced sterling off the gold standard in 1931.

The Great Depression of 1929–33 encouraged economic nationalists throughout the world in the belief that the benefits brought by an open economy, fixed exchange rates and a strategy of export-oriented growth through trade in primary produce were ephemeral, and that economic recovery could best be achieved by partial withdrawal from the international system. Even in Britain, for so long the citadel of laissez-faire economic policies, the economic revolution of the 1930s led to import restrictions and tariffs, a managed exchange rate for sterling, and a search for preferential treatment in colonial economies. The imposition of tariffs under the Import Duties Act of 1932 made the levying of preferences possible, and Imperial Preference had been one of the great rallying-cries of the debate about Imperial economics since the 1890s. By the time of the Imperial Economic Conference held at Ottawa in the summer of 1932, the National Government in London had hammered out a new external economic policy in which the countries of the periphery were assigned an important and distinctive role. At Ottawa the Dominions and India were expected to open their markets to British industrial goods, by giving preferences to British exports over those from other industrial countries in return for free access to the British market for food and raw materials. Arrangements between Britain and her major Imperial trading partners were controlled along these lines, which were meant to set Britain’s relations with the Dominions on a new basis. But, as subsequent events clearly proved, the British Empire was no longer a self-contained economic unit. Britain, the Dominions, and India all had diverse trading and manufacturing economies with complex requirements that could not be satisfied by simple models of Imperial preference. The attempt to create a semi-closed Imperial economy at Ottawa was doubly ironic, since perceptive observers at the time could see that the experience of international trade and finance in the 1930s proved conclusively that this sort of economic system was not viable.7

(p.363)

                   Imperialism and After: The Economy of the Empire on the Periphery

Figure 15.2. The system of multilateral trade, 1938

Note: The figures in circles represent the net export surpluses in $ million at official rates of exchange, net of transport, and insurance costs.

Source: League of Nations, The Network of World Trade (Geneva, 1942), Diagram 10

(p.364) The Imperial economic ties of trade and finance that had been strengthened by the institutional changes of the 1930s were further intensified by the problems of financing the Second World War and post-war reconstruction between 1945 and the early 1950s. Britain’s urgent need for men and equipment from the colonies and Dominions during the war led to the creation of a system of sterling balances—credits set up in London to pay overseas territories for the Imperial defence expenditure and the supply of strategic goods. Once the war was over, the legacy of these arrangements made it necessary for Britain to retain close contacts with her creditors, and to negotiate ways of conserving and controlling their sterling expenditure. Even more pressing was the problem of the dollar ‘gap’. Britain was now desperate for food and capital equipment from the western hemisphere—primarily from the United States itself—which had to be bought in dollars. With her own dollar reserves and dollar investments already spent, and with the Anglo-American loan of 1946 proving to be largely inadequate, Britain’s recovery depended in large part on the dollar-earning capacity of her colonial territories. As Table 15.1 shows, certain parts of the Empire ran significant balance-of-trade surpluses with the United States, and the dollars earned by these territories were put into an Empire dollar pool, administered in London, from which Britain drew freely to meet her own dollar deficit until the 1950s.8

The problems of economic co-operation within the Empire during the 1930s and 1940s had important implications for the process of political change that led to decolonization. The crisis of 1929–31 had brought a strong sense of Imperial economic solidarity, but the Ottawa Conference of 1932 had demonstrated to (p.365) British policy-makers how difficult it was to win the wholehearted co-operation of Dominion politicians. Even India, the only participant at Ottawa that was still ruled directly by Britain, was able to take a semi-autonomous line in trade matters during the 1930s, especially over Imperial Preference in tariffs on steel and cotton goods. In monetary matters the British retained a greater capacity for command, and the Treasury and the Bank of England worked hard to set up reserve banks in the Dominions and India as a way of asserting informal control in defence of sterling. However, except in India (where the Reserve Bank’s statutory commitment to a fixed sterling exchange rate of Rs.13.3 = £1 added fuel to a long-running dispute over exchange-rate policy), there was little opportunity in practice for banking imperialism to secure British interests in the Dominions during the 1930s.9

Table 15.1 United States trade with sterling area countries, 1950 ($m)

Exports

Imports

United Kingdom

511.3

334.8

Ceylon

6.3

65.9

India

212.4

259.4

Malaya and Singapore

19.7

308.6

Australia

100.4

141.0

New Zealand

26.6

64.3

South Africa

119.8

140.3

Gold Coast

5.6

61.1

Nigeria

5.7

34.8

Northern Rhodesia

2.1

29.6

Total £ Area

1,270.3

1,601.3

Note: Both exports and imports are listed (free on board).

Source: United Nations Statistical Office, Direction of International Trade: Supplement, May 1952 (New York, 1952).

Within important territories in South Asia, South-East Asia, and West Africa, the economic dislocations caused by the Depression strengthened political nationalism by weakening the vertical linkages between landlord and tenant, creditor and debtor, farmer and agricultural labourer.10 The crucial importance of certain (p.366) colonies to the British balance of payments after 1945 raised the stakes over constitutional reform in West Africa and South-East Asia, and complicated Britain’s relations with heavy dollar earners such as Kuwait. During the Second World War British colonial administrations in Africa and South-East Asia had regulated export prices and domestic money supply through a network of colonial Currency Boards and commodity control schemes. These remained in place during the 1940s and early 1950s, maintaining close institutional links between colonial export crops and currency arrangements and British firms and monetary institutions. Retaining such territories in the sterling area allowed London to keep control over their dollar earnings, and their internal monetary policies and export prices. However, the balance of any advantage to be gained from closer economic ties had to be weighed against the impossibility of restraining mass nationalism in the Gold Coast, and the need to retain the support of the Malay population against a Communist insurrection during the Emergency. Elsewhere in Africa, and in the Caribbean, where colonial development policies were belatedly brought into effect to boost the export potential of tropical economies to meet British needs for foodstuffs and raw materials, even mild intervention in economic affairs often had disruptive political consequences, and tended to undermine the paternalistic structures on which British authority had rested hitherto.11 The coming of independence, in its turn, saw the partition of old colonies into new states, and encouraged closely linked groups of colonial territories to follow separatist policies of national economic development, which seriously disrupted regional economic integration in South Asia, the Caribbean, and East Africa. Political disturbances at independence, and even conflict or civil war within or between successor states, further weakened many of the internal and external connections that had been built up under colonial rule, notably in Nigeria.

The self-conscious ‘Imperial’ economy of the 1930s and 1940s was created by market failure and political desperation rather than consistent policy or self-sustaining developments in the economies of Britain and her dependencies. With the ending of the dollar problem, the revival of world trade, and the re-emergence of a multilateral payments system during the 1950s, the institutional structures of British and colonial overseas trade and finance were gradually liberalized. However, British colonial development policies in Africa and the Caribbean remained somewhat Empire-centric, and one effect of this was to sustain the pattern of economic activity that had been established in an Imperial (p.367) context during the late nineteenth and early twentieth centuries well into the postwar era.12 As a result, many Commonwealth countries still relied on a narrow range of primary produce for two-thirds to three-quarters of their commodity exports in the mid-1960s, as the trade data for the major exporting countries of the British Empire-Commonwealth summarized in Table 15.2 demonstrates. Furthermore, a relatively small number of Commonwealth producers remained major world suppliers of particular raw materials and foodstuffs, with Britain an important market, especially for temperate foodstuffs. The most intense Imperial trade relationships were in meat and dairy produce, especially between New Zealand and Britain. The dominance of the export sector in primary produce in the economies of Britain’s colonies and ex-colonies in West Africa, South Asia, and South-East Asia was also the result of the colonial development schemes of the post-war years. However, political independence in these regions led inexorably to policies that discriminated against agricultural exports in favour of industry. In some places—Ghana, for example—this seriously damaged the rural economy without any effective compensation in other sectors; elsewhere, as in Malaysia, an effective industrial sector was created by a mixture of state-sponsored enterprise and foreign capital.

The economic history of Britain’s ex-colonies changed in fundamental ways as the ties of Empire began to slacken and dissolve in the 1970s. Indeed, the modern economic history of Africa, South-East and South Asia, and the Caribbean can be said to have begun as their links to the British Empire came to an end. The breakup of the Imperial enclave within the international economy, as former colonies have disengaged their economic institutions from the failing British centre, opened up new opportunities for Commonwealth countries in trade, industrialization, and technical progress. Equally significant is that, for the first time since the end of the eighteenth century, the centre of gravity of the global economy has shifted decisively away from the Atlantic towards the Pacific Rim, and from Western Europe to the countries of East, South-East, and South Asia. In a very real sense, the whole global system based on a ‘core’ of industrial economies in Europe and North America and a ‘periphery’ of raw-material and primary producing economies in the rest of the world—within which the economy of the British Empire fitted so snugly from the late eighteenth century to the mid-twentieth century—has recently come to an end.13

(p.368)

Table 15.2 Commodity composition of exports of selected sterling area countries, 1964 (%)

Tropical beverages

Sugar

Meat

Dairy

Fruit

Cotton and wool

Jute

Rubber

Vegetable oil and oilseeds

Hides and Skins

Non-Ferrous metals

Manufactures

% of total exports

India

17

2

23

2

4

20

68

Pakistan

17

48

2

18

85

Ceylon

62

16

11

89

Malaysia

1

61

4

22

3

91

Hong Kong

91

91

Mauritius

94

94

Ghana

66

66

Nigeria

19

3

6

36

2

6

72

Uganda

58

24

82

Kenya

49

49

Zambia

92

92

Tanzania

18

13

31

South Africa

4

10

12

1

3

5

15

50

Australia

6

9

3

4

34

3

5

10

74

New Zealand

25

22

35

4

4

90

Fiji

82

82

Barbados

74

74

Guyana

34

12

46

Jamaica

26

11

43

8

88

Source: Alfred Maizels, Exports And Economic Growth Of Developing Countries (Cambridge, 1968), Appendices A–C.

(p.369) The new opportunities provided by the global system for economic growth and development in the periphery during the last third of the twentieth century can be seen most clearly in trade and industrialization. Specific statistical estimates of the economic development of Commonwealth countries in the aggregate are not available for the period after decolonization. Instead, the argument must be based on the aggregate data that exist for the contemporary Third World as a whole, and by regions, on the assumption that the economic history of individual Commonwealth countries since 1960 has not been significantly different from others in their region. Using such data, it is possible to see that the pattern of economic activity across the world has changed fundamentally from that established by the international and Imperial economic system of the previous hundred years.14 Global networks of trade, in particular, have evolved considerably. Since 1970 the growing sectors of world trade have been those concerned with exchanging manufactures for manufactures, rather than for primary produce: as Figure 15.3 shows, the major industrial economies of Western Europe and North America now trade between themselves in similar products, rather than trading substantially with other regions in complementary commodities. These changes have rewarded national economies in the periphery that can raise productivity by investment in technology and human capital. In successful developing countries over the last thirty years growth in output and in exports has been based on production of manufactured goods (resulting from investment in machinery and in the skills of the workforce), or on new sources of agricultural productivity (the result of ‘Green Revolution’ techniques and increased investment in agricultural capital goods). Such countries, mainly in East and South-East Asia, have been able to trade successfully with Europe and North America in manufactured goods, and have proved themselves competitive in global terms. One consequence is that Asia has now re-emerged as a region of renewed economic importance; whereas the region’s share of world trade fell consistently from the early eighteenth century (p.370) until the early twentieth century, in the 1970s and 1980s it exceeded the level of the 1720s for the first time.15 In the late 1990s current trade and payments crisis in the region has suggested that some of the policies on which this growth was built are not sustainable, but it has also underlined emphatically the importance of the region to the post-colonial global economy of the late twentieth century and beyond.

                   Imperialism and After: The Economy of the Empire on the Periphery

Figure 15.3. World exports within and between trading areas, 1990 (percentage share)

Note: North America ‘bloc’ is defined as Canada, Mexico, and the United States. European Community is EC-12. Asia-Pacific ‘bloc’ is Hong Kong, Japan, Malaysia, Republic of Korea, Singapore, and Thailand.

Source: United Nations, Department of International Economic and Social Affairs of the United Nations Secretariat, World Economic Survey, 1991/92: A Reader (New York, 1991)

Another significant contrast between the underpinning structures of economic growth in the Imperial and post-Imperial decades of the twentieth century is shown by the pattern of agricultural expansion. Before 1914 the most rapidly expanding economies on the periphery were those—like the United States—that opened up new croplands using imported capital and labour. However, the link between an expanding agricultural frontier and economic growth has been broken decisively in the twentieth century. As Tables 15.3 and 15.4 make clear, the world’s croplands increased three times in area between 1850 and 1980, but the percentage farmed by Europeans (in Europe, North America, Russia/Soviet Union, Australia, and New Zealand) declined from 57 per cent in 1920 to 43 per cent in 1980. Since 1950 the heavily populated countries of Africa, South Asia, and China have maintained their agricultural expansion, while North America and Russia/ Soviet Union have finished the process of land colonization that accompanied their economic growth in the nineteenth century. The highest yields in contemporary farming come from the most intensive agriculture. The Western European model of capital-intensive and land-intensive food-grain production based on industrially derived inputs such as fertilizers, tractors, and pesticides is mirrored in Japan and other parts of East Asia. By contrast, the majority of peasant-based agricultural systems in mainland Asia and Africa have relatively little land per head, a relatively large proportion of the labour force dependent on rural employment, and relatively low levels of investment and productivity.16

(p.371)

Table 15.3. Expansion of land use, 1850–1980 (percentage increase or decrease in cropland area, by region)

1850–1920

1920–50

1950–80

Tropical Africa

54.4

54.5

63.2

North Africa/Middle East

59.3

53.5

62.1

North America

258.0

15.1

–1.5

Latin America

150.0

93.3

63.2

China

26.7

13.7

24.1

South Asia

38.0

38.8

54.4

South-East Asia

200.0

66.7

57.1

Europe

11.4

3.4

–9.9

USSR

89.4

21.3

7.9

Pacific developed countries

216.7

47.4

107.1

TOTAL

70.0

28.1

28.3

Table 15.4. Distribution of world croplands, 18501980 (%age by region)

1850

1920

1950

1980

Tropical Africa

11

10

12

15

North Africa/Middle East

5

5

6

7

North America

9

20

18

14

Latin America

3

5

7

9

China

14

10

9

9

South Asia

13

11

12

14

South-East Asia

1

2

3

4

Europe

25

16

13

9

USSR

18

19

18

16

Pacific developed countries

1

2

2

4

TOTAL (million ha.)

537

913

1,170

1,501

Source: Calculated from B. L. Turner and others, The Earth as Transformed by Human Action: Global and Regional Changes in the Biosphere over the Past 300 Years (Cambridge, 1990), Tables 10.1 and 10.2.

(p.372) Perhaps the best indicator of the pace of economic change in major regions of the periphery, and of the possibilities for economic development opened up in the post-Imperial world economy of the last thirty years, is provided by estimates of energy use. The process of technological development since the industrial revolution has been largely based on the intensive use of the earth’s accumulated stocks of solar energy, stored in the form of fossil fuels: thus, energy consumption provides the best measurement of technological change (and hence, investment and productivity), as well as of levels of industrialization and the internal mobility of goods and people, in modern industrial and post-industrial economies.17 Estimates of national energy consumption are based on measurements of total domestic energy supply, summarized in Table 15.5. These show that in the early 1970s, at the close of the British Imperial age in international economic history, the developed, industrialized, market-based economies of the twenty-three member-countries of the Organization for Economic Co-operation and Development (OECD) consumed two-thirds of world energy production, demonstrating their dominance of the world’s industrial and transportation systems in the first six decades of the century.18 By contrast, the developing countries of the non-European periphery in Africa, Latin America, Asia, and the Middle East consumed about one-sixth of the total. During the 1970s and 1980s, however, this established pattern of economic activity changed fundamentally, and by 1991 non-OECD countries consumed almost half of the world’s energy supplies, more than twice as much as they had twenty years before. In this period the share of the developing countries of the non-European periphery almost doubled, to a total of 27 per cent, with the largest new consumers in the Middle East and Asia.19 Industrializing countries in Asia, notably South Korea, China, and to a lesser extent India, were the fastest-growing users of energy, and used this to expand their industrial and transportation sectors.20

(p.373)

Table 15.5. Total primary energy consumption (million tons of energy (t.o.e.) and % of world consumption).

1971

1981

1991

million t.o.e

%

million t.o.e.

%

million t.o.e.

%

Africa

81.59

1.7

150.38

2.3

214.70

2.7

South Africa

45.98

68.93

95.29

Latin America

175.35

3.6

308.40

4.8

399.69

5.0

Brazil

35.40

68.53

100.86

Mexico

33.97

92.84

125.51

Asia

408.62

8.4

715.73

11.2

1269.57

16.0

China

235.98

407.17

680.88

India

63.61

104.16

192.88

South Korea

16.53

43.09

101.68

Middle East

53.54

1.1

143.22

2.2

237.57

3.0

Non-OECD Europe

240.77

5.0

342.38

5.3

299.74

3.8

(Former) USSR

770.16

15.8

1,131.04

17.7

1,336.57

16.9

Total non-OECD

1,730.06

35.6

2,791.22

43.6

3,757.77

47.4

Total OECD

3,135.45

64.4

3,612.05

56.4

4,164.75

52.6

WORLD TOTAL

4,865.51

100.0

6,403.27

100.0

7,922.52

100.0

Source: Calculated from International Energy Agency, Energy Statistics and Balances of Non-OECD Countries, 1991–1992, OECD (Paris, 1994), pp. 20–23.

(p.374) Economic growth and economic expansion are slippery concepts, and it is dangerous to assume that an increase in either the extent or intensity of the production and exchange of material goods in a society necessarily reflects an improvement in the overall welfare of its members. Evaluating such issues means assessing the extent of economic ‘development’, a concept that incorporates qualitative change in economic performance representing, in turn, long-term improvements in productivity, income, and equity of distribution. It requires an element of qualitative, or even moral, judgement.21 Conventional indicators of growth rely on measurements of Gross National Product (GNP) and GNP per head, but these beg many questions about the measurement of informal and non-monetized sectors of the economy, and about issues of distribution and welfare. To overcome this, other indicators have been devised—notably the Physical Quality of Life Index (PQLI) and the Human Development Index (HDI)—which seek to assess levels of socio-economic freedom and welfare by indicators based on national income, life-expectancy at birth, child survival rates, and educational attainment in literacy.22 Such measurements are themselves the subject of considerable debate, but a complete account of the economic history of the British (p.375) Empire in the twentieth century must try to take such concepts into account. For many observers today, both in the peripheral countries themselves and in the developed world, the central economic issue in the Third World is that of maximizing the life-chances of its millions of inhabitants. This, in turn, depends on the supply of basic needs and opportunities for personal fulfilment that come from the resources generated by economic activity inside and outside the world’s developing countries.

There are no reliable estimates of levels of economic development or welfare over the long term for any of Britain’s colonies in Asia, Africa or the Caribbean, or any aggregate data that can provide useful comparisons between regions or territories during the Imperial age. Contemporary development indicators for large and medium-sized Commonwealth countries in the 1980s and early 1990s are summarized in Table 15.6. These figures show that by far the highest levels of income, welfare, and intensity of economic activity are found in those territories that had been intensively settled by Europeans after 1800, and which had few pre-colonial inhabitants left alive by 1914. Countries such as Canada, Australia, and New Zealand, which had among the highest per capita incomes in the world at the end of the nineteenth century, have remained richly endowed throughout the twentieth century.23 By contrast, Britain’s ex-colonial territories in Africa and South Asia have experienced relatively high levels of poverty, and low levels of international trade and expenditure on welfare, with the Caribbean and South-East Asian Commonwealth countries, broadly speaking, somewhere in the middle. While it is dangerous to extrapolate such data backwards, it is very probable that the levels of magnitude that they suggest would hold true for the twentieth century as a whole, and probably for the nineteenth century as well.24 This situation was not simply the result of the colonial system, but the suggestion remains that British rule did not leave a substantial legacy of wealth, health, or happiness to the majority of the subjects of the Commonwealth.

(p.376) (p.377)

Table 15.6. Economic and social indicators of development, 19851987

Population mid-1987 (ml.)

Per capita GNP 1985 ($)

Average annual growth rate of real GNP per capita 1965–85 (%)

Per capita public education spending 1983 ($)

Annual growth rate of Population (%)

Value of exports per capita 1986 ($)

Value of imports per capita 1986 ($)

Physical Quality of Life Index (1985)

Human Development Index (1992)

Africa

Gambia

0.8

230

1.1

14

2.1

86

210

28

0.083

Ghana

(Gold Coast)

13.9

380

–2.2

5

2.8

63

63

55

0.310

Kenya

22.4

290

1.9

17

3.9

60

82

58

0.366

Malawi

(Nyasaland)

74

170

1.5

5

3.2

38

39

37

0.166

Nigeria

108.6

800

2.2

16

2.8

81

52

47

0.241

Sierra Leone

3.9

350

1.1

10

1.8

45

46

26

0.062

South Africa

34.3

2,010

1.1

97

2.3

575

373

66

0.674

Tanzania

(Tanganikya)

23.5

290

0.0

14

3.5

16

43

63

0.268

Uganda

15.9

220

–2.6

4

3.4

28

21

51

0.192

Zambia

(N Rhodesia)

7.1

390

–1.6

32

3.5

97

83

62

0.315

Zimbabwe

(S Rhodesia)

9.4

680

1.6

64

3.5

106

123

67

0.397

Asia

Bangladesh

(East Pakistan)

107.1

150

0.4

2

2.7

8

23

43

0.185

Burma

(Myanmar)

38.8

190

2.4

4

2.1

13

17

71

0.385

Hong Kong

5.6

6,230

6.1

n/a

0.9

6,325

6,314

95

0.913

India

800.3

270

1.7

8

2.1

13

24

55

0.297

Malaysia

16.1

2,000

4.4

141

2.4

859

672

81

0.789

Pakistan

104.6

380

2.6

8

2.9

32

51

43

0.305

Sri Lanka

(Ceylon)

16.3

380

2.9

10

1.8

71

112

87

0.651

Singapore

2.6

7,420

7.6

339

1.1

8,560

9,810

91

0.848

Caribbean

Bahamas

0.2

7,070

–0.5

n/a

1.8

3,245

11,110

89

n/a

Barbados

0.3

4,360

2.3

228

0.9

933

1,907

95

0.927

Belize (British

Honduras)

0.2

1,190

2.7

n/a

2.7

420

675

86

0.665

Guyana (British

Guiana)

0.8

500

–0.2

52

2.0

303

289

86

0.539

Jamaica

2.5

940

–0.7

102

2.0

233

388

92

0.722

Trinidad and

Tobago

1.3

6,020

2.3

367

2.0

1,055

1,025

90

0.876

Oceania

Australia

16.2

10,830

2.0

741

0.8

1,391

1,618

100

0.971

Fiji

0.7

1,710

2.9

115

2.3

353

541

83

0.713

New Zealand

3.3

7,010

1.4

391

0.8

1,797

1,817

96

0.947

Papua New Guinea

3.6

680

0.4

58

2.4

286

274

54

0.321

North America

Canada

25.9

13,680

2.4

951

0.8

3,464

3,308

98

0.982

United Kingdom

56.8

8,460

1.6

482

0.2

1,885

2,224

97

0.962

Source: Cols. 1–8: calculated from Michael P. Todaro, Economic Development in the Third World, 4th edn. (London, 1989), Table A2.2. Col. 9: UNDP, Human Development Report, 1992, reproduced in Barabara Ingham, Economics and Development (London, 1995), Tables 1.7 and 1.8.

Select Bibliography

Bibliography references:

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PAUL BAIROCH The Economic Development of the Third World Since 1900 (London, 1975).

IAN BROWN , Economic Change in South-East Asia, c.18301980 (Kuala Lumpur, 1997).

P. J. CAIN and A. G. HOPKINS , British Imperialism: Crisis and Deconstruction, 19141990 (London, 1993).

IAN M. DRUMMOND , Imperial Economic Policy, 19171939 (London, 1974).

Economist Intelligence Unit, The Commonwealth and Europe (London, 1960).

W. K. HANCOCK , Survey of British Commonwealth Affairs, Vol. II, Problems of Economic Policy, 19181939, Part 1 (London, 1942).

RONALD HYAM , ed., The Labour Government and the End of Empire, 19451951 British Documents on the End of Empire Project (BDEEP), Series A, 4 Parts (London, 1992).

MICHAEL HAVINDEN and DAVID MEREDITH , Colonialism and Development: Britain and its Tropical Colonies, 18501960 (London, 1993).

CALVIN B. HOOVER , ed., Economic Systems of the Commonwealth (Cambridge, 1962).

A. G. KENWOOD and A. L. LOUGHEED , The Growth of the International Economy, 18201990, 3rd edn. (London, 1992).

IRVING B. KRAVIS ,Alan Heston, ROBERT SUMMERS , and others, World Product and Income: International Comparisons of Real Gross Product, United Nations/World Bank (London, 1982).

W. ARTHUR LEWIS , Economic Survey, 19191939 (London, 1949).

ANGUS MADDISON , Monitoring the World Economy, 18201992, OECD (Paris, 1995).

ALFRED MAIZELS , Industrial Growth and World Trade: An Empirical Study of Trends in Production, Consumption and Trade in Manufactures from 18991959 (Cambridge, 1963).

LLOYD G. REYNOLDS , Economic Growth in the Third World, 18501980: An Introduction (New Haven, 1985).

PETER N. STEARNS , The Industrial Revolution in World History (Boulder, Colo., 1993).

MICHAEL P. TODARO , Economic Development, 5th edn. (London, 1994).

PHILIP WEST and FRANS A. M. ALTING VON GEUSAU , eds., The Pacific Rim and the Western World: Strategic, Economic and Cultural Perspectives (Boulder, Colo., 1987).

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Notes:

(1) On the use of these terms, see Vol. III, chap, by B. R. Tomlinson pp. 53, 55.

(2) In the United States, the largest of these neo-European countries, the rapid expansion of the domestic industrial economy determined the rate of economic transformation after 1860, ensuring that trade was a contributory factor to economic growth, rather than its prime cause. See Irvin B. Kravis, ‘Trade as a Handmaiden of Growth: Similarities between the Nineteenth and Twentieth Centuries’, Economic Journal (hereafter EJ), LXXX (1970), pp. 850–72.

(3) Important theoretical insights into this process came with the development of ‘staple theory’ by economists in Canada, which suggested that successful producing and trading regions in the periphery were linked to the production of export staples for the international market. While ‘staple theory’ cannot explain all cases of development through trade, especially in export economies with a relatively large subsistence agriculture or with significant urbanization, it is still of some relevance when applied to the sparsely populated regions of North and South America and Oceania in the nineteenth century. See Melville H. Watkins, ‘A Staple Theory of Economic Growth’, Canadian Journal of Economics and Political Science, XXIX, 2 (1963), pp. 141–58, and Richard E. Caves, ‘“Vent for Surplus” Models of Trade and Growth’, in Robert Baldwin and others, eds., Trade, Growth and the Balance of Payments (Amsterdam, 1971), pp. 403–42.

(4) There is a classic critique of the ‘vent for surplus’ model of growth through international trade in Hla Myint, ‘The “Classical Theory” of International Trade and the Underdeveloped Countries’, EJ, LXVIII (1958), pp. 317–37, and of dualistic development in W. Arthur Lewis, ‘Economic Development with Unlimited Supplies of Labour’, Manchester School, XXI (1954), pp. 131–91.

(5) For a convenient introduction to the literature on the origins of the Great Depression, see Peter Fearon, The Origins and Nature of the Great Slump, 1929–1932, Economic History Society, Studies in Economic History and Social History (London, 1979).

(6) By the 1920s the United States could no longer be classed as an economy of the periphery, and was well on the way to becoming the single most important influence on world stability, growth, and development. The United States was now a net exporter of capital, and had a significant balance-of- payments surplus sustained by exports of both primary produce and manufactured goods. Her economic growth and fluctuations had always depended significantly on internal forces, and these became important determinants of the cyclical behaviour of the international economy as a whole.

(7) The classic work here is W. K. Hancock, Survey of British Commonwealth Affairs, Vol. II, Problems of Economic Policy, 1918–1939 Part 1 (London, 1942). For recent work that broadens and deepens the analysis, see Ian M. Drummond, Imperial Economic Policy, 1917–1939: Studies in Expansion and Protection (London, 1974); Tim Rooth, British Protectionism and the International Economy (Cambridge, 1992); and Catherine R. Schenk, Britain and the Sterling Area: From Devaluation to Convertibility in the 1950s (London, 1994).

(8) An excellent summary of the economic institutions of the British Commonwealth in the 1950s and 1960s, especially those of the sterling area, will be found in J. D. B. Miller, Survey of Commonwealth Affairs: Problems of Expansion and Attrition, 1953–1969 (Oxford, 1974).

(9) For a case study of the informal imperialism of central banking, see P. J. Cain, ‘Gentlemanly Imperialism at Work: The Bank of England, Canada and the Sterling Area, 1932–1936’, Economic History Review, XLIX, 2 (1996), pp. 336–57. The classic contemporary account is A. W. F. Plumptre, Central Banking in the British Dominions (Toronto, 1940). On India, see G. Balachandran, ‘Gold and Empire: Britain and India in the Great Depression’, Journal of European Economic History, XX, 2 (1991), pp. 239–70, and S. L. M. Simha, History of the Reserve Bank of India, 1935–1951 (Bombay, 1970).

(10) See the case studies in Ian Brown, ed., The Economies of Africa and Asia in the Inter-War Depression, (London, 1989) and Gareth Austin and Kaoru Sugihara, eds., Local Suppliers of Credit in the Third World, 1750–1960 (Basingstoke, 1993).

(11) On the interaction of political, economic, and social change in the major colonial regions during this period, see Ronald Hyam, ed., The Labour Government and the End of Empire, 1945–1951, British Documents on the End of Empire Project (BDEEP), Series A, 4 Parts (London, 1992).

(12) As W. Arthur Lewis had pointed out in his 1950 report on The Industrialization of the British West Indies, Colonial Office officials held to ‘the mystical view that the Almighty meant some countries to specialize in manufactures and others on agriculture’. Colonial territories were placed firmly in the latter category. Quoted in Barbara Ingham, ‘The Manchester Year, 1947–58: A Tribute to The Work of Arthur Lewis’, Journal of International Development, III, 5 (1991), p. 534. For a stimulating recent critique of orthodox economic analyses of the links between trade, liberalization, and development, see Erik S. Reinert, ‘The Role of Technology in the Creation of Rich and Poor Nations: Underdevelopment in a Schumpeterian World’, in Derek H. Aldcroft and Ross E. Catterall, eds., Rich NationsPoor Nations: The Long-Run Perspective (Cheltenham, 1996), pp. 161–80.

(13) The economic history of trade and development outside Europe over the last two centuries is summarized in Patrick Karl O’Brien, ‘Intercontinental Trade and the Development of the Third World Since the Industrial Revolution’, Journal of World History, VIII, 1 (1997), pp. 75–133. On the most recent trends in international economic history, see Daniele Archibugi and Jonathan Michie, Technology, Globalisation and Economic Performance (Cambridge, 1997).

(14) A convenient summary of the very imperfect historical data that exist for individual Third World countries and regions for the twentieth century may be found in Paul Bairoch, The Economic Devel opment of the Third World Since 1900 (London, 1975). On the nineteenth century, see J. R. Hanson, Trade in Transition: Exports from the Third World, 1840–1900 (New York, 1980); for a useful statistical digest of the Imperial economy, analysed in conventional terms, see Michael Havinden and David Meredith, Colonialism and Development: Britain and its Tropical Colonies, 1850–1960 (London, 1993).

(15) See Carl-Ludwig Holtfrerich, ‘Introduction: The Evolution of World Trade, 1720 to the Present’, in Carl-Ludwig Holtfrerich, ed., Interactions in the World Economy: Perspectives from International Economic History (London, 1989), pp. 1–23.

(16) For a summary of indicators of agricultural structure and performance, see World Resources Institute, World Resources, 199091 (Oxford, 1990), Tables 17.1, 17.2, 18.1, and 18.2.

(17) For a provocative introduction to these issues, see E. A. Wrigley, ‘Reflections on the History of Energy Supply, Living Standards and Economic Growth’, Australian Economic History Review, XXXIII, 1 (1993), PP. 3–21. A useful introduction to the use of energy-mapping in environmental history will be found in I. G. Simmons, Changing the Face of the Earth: Culture, Environment, History (Oxford, 1989).

(18) The Organization for Economic Co-operation and Development (OECD) consists of the major European economies—Austria, Belgium, Denmark, Finland, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United King dom—plus the largest of those in the ‘neo-European’ periphery, Australia, Canada, New Zealand, and the United States, and two in Asia—Japan and Turkey.

(19) The significance of these figures is modified somewhat by evidence of increased efficiency in energy use in developed countries during the 1970s. Calculations of energy intensity in major econo mies (megajoules consumed per unit of GNP) suggest that Japan reduced its energy intensity by 30% between 1973 and 1985, while the United States, the United Kingdom, Italy, the Netherlands, and West Germany all reduced energy intensity by about 20%. See data from International Energy Agency, Energy Conservation in IEA Countries, OECD (Paris, 1987), reproduced in Nathan Rosenberg, Exploring the Black Box: Technology, Economics and History (Cambridge, 1994), Table 9.4.

(20) Taiwan does not appear in these statistics. In OECD economies secondary and tertiary sectors are by far the most intensive in their energy use. In 1991 the sectoral use of energy (as a percentage of total final consumption) was 33% for industry, 31% for transport, and 32% for other users, with agriculture consuming less than 2% of the total. See International Energy Agency, Energy Statistics and Balances of OECD Countries, 1991–1992, OECD (Paris, 1994) p. 20.

(21) See Gerald M. Meier, Leading Issues in Economic Development, 4th edn. (Oxford, 1984), pp. 5–9. The United Nations Development Programme’s first Human Development Report in 1990 defined human development as the process of enabling people to have wider choices.

(22) The strengths and weaknesses of such measurements are summarized in Barbara Ingham, Economics and Development (London, 1995), chap. 1.

(23) The success of the ex-colonies of settlement in international trade and the export-led growth of the major economies of South-East Asia since 1960 suggest that there may be a positive correlation between high levels of GNP, large-scale participation in international trade, and high per capita expenditure on education, although no simple causal linkages in this relationship should be inferred from the data presented in Table 15.6.

(24) More impressionistic evidence for individual colonies confirms this—in colonial South Asia, for example, the increase in population after 1921 was not linked to any increase in the standard of living, while food-grain availability per head fell significantly between 1900 and 1947. See B. R. Tomlinson, The Economy of Modern India, 1860–1970 (Cambridge, 1993), pp. 6–7, 30–32. One great advantage that the neo-European periphery of the nineteenth century held over today’s Third World is that European settlers and European agricultural techniques could be used profitably there.