Did colonialism really cause poverty?

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A hundred years ago, Britain didn’t just control this small island; it had an empire that spanned the globe. The British Empire stretched far south throughout Africa, across the Atlantic into the Americas, and east into Asia and Australia. Over a period of about 400 years, British explorers traveled to all corners of the Earth, establishing colonies—often through violent means. Today, the map looks very different, and the British Empire is a distant memory. But what happened to the former colonies? Some grew wealthy, even surpassing their former ruler, while others suffered decades of poverty and deprivation. This leads to the question: what are the long-term consequences of colonial rule?

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Lakshmi Iyer, a development economist from the University of Notre Dame, explored this issue. She found that 19 out of the 20 poorest countries in the world had been colonies. The question was whether colonial rule caused their poverty. To investigate, Iyer looked at India. From 1858, the British government took control of the country, but only about half of India’s states came under direct British rule. The remaining 680 states were under the control of Indian kings, though Britain managed their foreign policy. Otherwise, these states governed themselves.

This created a natural experiment: comparing states directly ruled by the British with those ruled by local leaders. By 1991, there wasn’t much difference in the number of primary schools between the two groups. Healthcare and other measures of development also showed little variation. It seemed that colonialism didn’t have the predicted impact.

However, there was a problem with this analysis. The British mostly annexed states with strong agricultural potential, like the fertile plains of the Ganges, while they avoided areas like the desert regions of Rajasthan and the forests of central India. This biased the comparison since British-ruled states had more economic potential from the start.

Iyer then turned to a different historical example: Lord Dalhousie’s "Doctrine of Lapse," a policy that allowed the British to annex any Indian state where the king died without a natural heir. This annexation wasn’t based on economic potential, making it a better test of British rule’s effects. Comparing these states to those still ruled by Indian kings revealed different results. British-ruled states had fewer middle schools, paved roads, and healthcare centers. For every 100 babies born in former British states, 11 died before reaching age one, compared to 8 in native-ruled states.

Even a century later, the effects of colonialism lingered, with British-ruled states worse off in several key measures. However, in the 1970s, efforts to provide schools and healthcare centers to underserved areas started to show positive results. While British rule harmed India, the country has managed to recover over time. The impacts of colonialism are long-lasting, but they don’t last forever.