Monday, March 2

India and the great divergence: An Anglo-Indian comparison of GDP per capita, 1600–1871

quite an interesting paper.

Estimates of Indian GDP are constructed from the output side for 1600–1871, and combined with population data. Indian per capita GDP declined steadily during the seventeenth and eighteenth centuries before stabilising during the nineteenth century. As British growth increased from the mid-seventeenth century, India fell increasingly behind. Whereas in 1600, Indian per capita GDP was over 60% of the British level, by 1871 it had fallen to less than 15%. These estimates place the origins of the Great Divergence firmly in the early modern period, but also suggest a relatively prosperous India at the height of the Mughal Empire. They also suggest a period of “strong” deindustrialisation during the first three decades of the nineteenth century, with a small decline of industrial output rather than just a declining share of industry in economic activity.

Some of the interesting findings of this paper show that India was already much further behind the west even around the 17th century. So the idea that India was very rich and powerful before the Brits came in is not really held up based upon this rather comprehensive survey.


Its very difficult to compare properly, look at how 2 studies differ.


Let me quote the final paragraph, which is worthy of attention, because elements of this still exist..

This paper has set out to document what happened, and explaining these developments is clearly the subject of another paper. Nevertheless, it is worth making some final concluding comments in this area. First, India shared the pattern of declining GDP per capita during this period with China, although the decline started from a higher level and occurred at a faster rate in China (Broadberry et al., 2014a and Broadberry et al., 2014b). Second, in India, as in China, the decline was driven mainly by what happened in agriculture, with the growth of population outstripping the growth of the cultivated area, and crop yields rising insufficiently to offset the decline in cultivated acreage per head. Third, in common with most of the world at this time, and in strong contrast to Britain and Holland, Indian workers remained on the land, with negative consequences for agricultural labour productivity and the relative size of the industrial and service sectors. Fourth, again in common with much of the rest of the world at this time, India lacked the state institutions needed to underpin the investment and innovation which allowed Britain and Holland to break out of the Malthusian trap, allowing both population and per capita incomes to increase (Parthasarathi, 2011 and Broadberry, 2013). Fifth, although India's decline continued during the colonial period, it had already started during the Mughal Empire, and so cannot be attributed solely to colonialism. This conclusion is reinforced by the more rapid decline of China.

State Institutions! key, key, key! one of the major reasons why India has managed to be fairly successful going forward post independence compared to other countries who came out of colonial stage in the post WW2 era. The institutions were strong, although they are creaking a bit.

Secondly, I hope the United Kingdom understands the sheer weight of its history. So yes, the Mughals and others were crap at ruling India. But what’s the UK’s excuse? it had institutions, democracy, liberalism. At a time Queen Victoria was presiding over the greatest empire, it was hugely damaging India. It experienced an absolute decline of industrial output during the first 2 decades of the last century.

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