Land, State Capacity, and Colonialism: Evidence From India

Many authors have argued that colonial institutions influenced contemporary economic outcomes by influencing levels of economic inequality and political conflict. Such accounts neglect an additional important mechanism, differences in state capacity. These two mechanisms of colonial persistence are examined in the context of India, where colonial land tenure arrangements are widely thought to influence contemporary outcomes through class conflict. However, land tenure institutions were also associated with differences in state capacity: In landlord-dominated areas, the colonial state had little or no presence at the village level. An analysis of agricultural outcomes in Indian districts, using a set of original measures of colonial state capacity, shows that while land tenure in isolation is a surprisingly weak predictor of agricultural success, state capacity has a strong and consistent positive association with 20th-century economic activity. The findings reinforce the importance of colonial rule in influencing contemporary state capacity and the importance of state capacity for development.