Living Standards in British Africa in a Comparative Perspective, 1880-1945

109 Pages·2010·7.04 MB·English

Living Standards in British Africa
in a Comparative Perspective, 1880-1945
Is Poverty Destiny?

Student: Supervisor:
M.F.M. van Waijenburg Dr. E.H.P. Frankema
Student number: 0338990 Assistant Professor Economic History
Faculty of the Humanities
Utrecht University
MA Thesis Comparative History
March 2010 Second Supervisor:
Faculty of the Humanities Prof. Dr. M. Prak
Utrecht University Professor Socio-Economic History
Faculty of the Humanities
Utrecht University
CONTENTS

ACKNOWLEDGEMENTS
CONTENTS

1 INTRODUCTION 1

2 GEOGRAPHICAL, TECHNOLOGICAL OR INSTITUTIONAL IMPEDIMENTS 7
2.1 Introduction 7
2.2 Input-Orientated Approaches: Human Capital and Geographical Endowments 7
2.2.1 Solow Growth and the Human Capital Stock
2.2.2 Geographical Endowments
2.3 Socio-Political Structures – Institutional Barriers 13
2.4 New Empirical Evidence – Implications for the Current Academic Debate 18
2.4.1 Compilation and Validity of the Dataset
2.4.2 The ‘Missing’ Numbers – GDP per Capita Performance in Colonial Africa
2.4.3 Income Growth and Distribution – A Revision of Colonialism’s Extractive
Nature?
2.5 The African Colonial Economy – A New Research Agenda 25

3 COMPILATION DATA 28
3.1 Introduction 28
3.2 Data and Methodology 32
3.2.1 Sample Selection
3.2.2 Compilation of the Wage Data
3.2.3 Compilation of the Price Data
3.3 Results 44
3.3.1 The Development of Real Wages – Long-run Trends and Levels
3.3.2 Periodical Changes in Nominal Wage, Price and Real Wage Levels
3.3.3 African Real Wages in a Comparative Perspective
3.3.4 Real Wages and Taxation Pressure
3.4 Conclusion 73

4 CONCLUSION – REFLECTIONS ON THE AFRICAN GROWTH TRAGEDY 75

BIBLIOGRAPHY 80

APPENDICES
I. Wage and Price Indices
II. Figures and Tables
1. INTRODUCTION

The unprecedented global income disparities that characterize the modern world, both among
and within nations, remain one of today’s most profound concerns. Ever since the economic
‘take-off’ of several prime movers in the course of the nineteenth century, a number of
regions have witnessed an astonishing steady transformation in terms of living standards. For
most individuals in the developed world, per capita income and purchasing power has
rocketed, and the spectrum of available and affordable consumer goods has widened.
Moreover, on the physiological plane, unparalleled levels have been reached, with average
body size increasing over fifty percent and human life expectancy even doubling. This trend
of taller and healthier humans has, in turn, further accelerated the process of economic
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growth. However, this remarkable rise in living standards and prosperity, in particular its
long-term sustainable variant, has unfortunately not yet been attained globally. Although all
world regions took part in the economic boom of the early post-WWII decades, for many of
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them this epoch of economic convergence was soon reversed again. More than 168 countries
experienced economic stagnation or even deterioration after the mid-1970s, and a pattern of
increasing global divergence vis-à-vis the OECD countries set in. In particular the former
USSR states, the African continent and Latin America have not been able to maintain their
earlier steady development achievements, and nearly all of them have relapsed into a state of
comparative economic stagnation, political instability, poverty, and low standards of living.
Ranking consistently at the bottom of almost all of the general development indices,
Sub-Saharan Africa (SSA) has become a rewarding focal point for scholars who seek to
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explain dismal economic growth performance. This trend contrasts sharply with the pre-
1970s literature on Africa’s economy, when it was believed that the continent – with its low
population density and rich natural resource endowments – had ample opportunities for
economic expansion. Influential publications at the time, therefore, perceived Africa’s growth
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potential as much stronger than that of East Asia. Evidently, these optimistic visions were far

1
For an elaborate discussion of the synergetic relationship between physiological and economic progress, see for
example: Robert Fogel, The Escape from Hunger and Premature Death, 1700-2100: Europe, America and the
Third World, (Cambridge: Cambridge University Press, 2004).
2
As has been pointed out by Angus Maddison, the global economy grew at a historically unique rate between
1950 and 1973 (when the oil shocks set in). World per capita income increased by nearly 3 per cent annually, and
global trade by close to 8 per cent. Although all regions took part in this economic upheaval in these decades,
Europe and East Asia had the fasted growth records. See: Angus Maddison, The World Economy: A Millennial
Perspective. Paris: Development Centre of the Organisation for Economic Co-operation and Development, 2002.
3
Any reference to ‘SSA’ or more generally ‘Africa’ in this paper will hereafter refer to the countries south of the
Sahara, except for South Africa.
4
See: Gunner Myrdal, Asian Drama: An Inquiry into the Poverty of Nations (3 Vols.), (Harmondsworth,
Middlesex: Penguin Books, 1968); Andrew M. Kamarck, The Economics of African Development, (New York:
1
from realized. As can be derived from graph 1.1, depicting SSA’s per capita income trajectory
from 1950-2006, Africa is an ultimate exemplar of a region whose ‘growth tragedy’ became
established during the 1970s, when the per capita income growth trend stagnated, or even fell
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below previously attained levels. Interestingly, conventional contemporary studies on the
underlying causes of Africa’s dismal performance have frequently ignored the two decades of
growth preceding it, or have simply dismissed it as a form of ‘catching-up’ growth. Let alone
have any systematic analyses been conducted about the economy’s functioning during the first
part of the twentieth century, when the continent was under colonial rule. Consequently, the
theoretical arguments that have been postulated about SSA’s structural growth impediments –
whether technological, geographical, or institutional in nature – have traits of deterministic
disaster-proneness, suggesting that poverty is destiny, and have too often been based on
speculative premises without a solid empirical basis.

Figure 1.1: GDP per capita Performance Sub-Saharan Africa, 1950-2006
(In 1990 International Geary-Khamis dollars)
1800
1600
1400
1200
1000
800
600
400
200
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995
Average GDP per capita for SSA

Source: Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1-2006 AD”

Praeger, 1967). References partially derived from: Easterly, W. and Levine, R. "Africa’s Growth Tragedy:
Policies and Ethnic Divisions", Quarterly Journal of Economics 112, 1997: 1203.
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The figures used for graph 1.1 are based on an average of the GDP per capita estimates for all countries south
of the Sahara, thereby excluding Algeria, Egypt, Libya, Morocco and Tunisia from this aggregate trend. For data
observations of individual countries see: Angus Maddison, “Statistics on World Population, GDP and Per Capita
GDP, 1-2006 AD”, http://www.ggdc.net/maddison/.
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Not until recently though, have serious efforts been made to reconstruct Africa’s
colonial growth record. Moreover, first insights have even been presented into the
development of living standards in the late nineteenth and early twentieth century. These
valuable contributions, albeit somewhat preliminary, allow for a revision of SSA’s long-term
economic development pattern, based on actual quantitative empirical evidence from this
early period. From these new research projects, it appears that Africa’s growth record before
WWII has been widely underestimated. The agenda-setting GDP time-series from 1910-1950,
as presented by Jan Pieter Smits, suggests a respectable and even comparatively good
performance of the African colonial economy. Additionally, a growing body of literature
seems to support this image of the emergence of a fairly dynamic economy under colonial
rule. Moreover, such studies, in part responding to popular allegations about the inherent
‘extractive nature’ of colonial institutions, even point towards increases in living standards for
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the average (British) colonial subject.
Building on this new research agenda, this economic historical study sets out to
contribute to our understanding of the performance of the British African colonial economy in
general, and the development of living standards in particular. First, in chapter 2, an in-depth
discussion will be provided of the existing body of growth literature, and, following from this,
some reflections will be presented on the reigning paradigm that ‘poverty is – either
geographical or institutional – destiny’. For the latter evaluation, some of the most recent
empirical evidence will be presented on both the colonial growth record and the development
of living standards in this period. From here, the central questions of this study will follow. If
the economy under colonial rule was indeed fairly dynamic, then, were the economic rents
resulting from such commercial expansion mainly extracted by colonial authorities and local
elite representatives, or did living conditions improve as well for the average African subject?
In chapter 3, the empirical results of this study on living standards will be presented,
compared and analyzed. To examine the development of standards of living, two empirical

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Jan-Pieter Smits, “Economic Growth and Structural Change in Sub Saharan Africa during the Twentieth
Century: New Empirical Evidence and Outlook to 2030,” Groningen Growth and Development Centre.
Presented at the Conference World Economic Performance; Past, present and future, Groningen, 2006. See for
the other works referred to here: Gareth Austin, “The ‘Reversal of Fortune’ Thesis and the Compression of
History: Perspectives from African and Comparative Economic History”, Journal of International Development
20, 2008: 996-1027; Gareth Austin, Jörg Baten, and Alexander Moradi, “Exploring the evolution of living
standards in Ghana, 1880-2000: An anthropometric approach”, presented at the Annual Conference of the
Economic History Society, University of Exeter, 2007; Moradi, “Towards an Objective Account of Nutrition and
Health in Colonial Kenya: A Study of Stature in African Army Recruits and Civilians, 1880-1980.” Centre for
the Study of African Economies, Working Paper No. 284, 2008; and Ewout Frankema, “Raising Revenue in the
British Empire, 1870-1940: How ‘extractive’ were colonial taxes?”, presented at the WEHC, University of
Utrecht, 2009.
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indicators have been created for eight different colonies or protectorates in British Africa: (1)
a time-series of absolute real wage levels for urban and rural unskilled labour, indicating the
development of purchasing power for an as large as possible share of the population over
time; and (2) a time-series for total and direct per capita taxation incidence, allowing for some
insights on overall the taxability of the population, and on the impact of colonial economic
policy on real wage levels. The British African colonies that have been included in this real
wage study are respectively: The Gambia, The Gold Coast (current Ghana), Kenya (former
East Africa Protectorate), Mauritius, Nigeria, Nyasaland (former Central Africa Protectorate
and current Malawi), Sierra Leone, and Uganda. The temporal scope of this analysis, ranging
from 1880-1945, entails that for the first time nearly the entire period under effective British
rule has been included.
By placing the empirical findings in various dia-chronological and intra-spatial
comparative frameworks, this study sets out to transcend some of the limitations that have
characterized previous contributions on the advancement of living standards in colonial
Africa. The benefits for social scientists of conducting comparative analyses are multiple. As
explicated by Charles Tilly, scholars embark on such studies to distil the ‘individualizing’,
‘universalizing’, ‘variation-finding’ or ‘encompassing’ causal patterns of macro-social
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phenomena. This comparative study on living standards in British Africa is based on both
universalizing and variation-finding components. The global comparative perspective, the
core of this study, has a clear variation-finding objective, seeking to reveal whether living
standards, both in terms of trend and level, differed from other parts of the world.
Additionally, by incorporating a large set of countries into the analysis and not aggregating
them into one unit, it becomes possible to make intra-African comparisons as well. These
intra-African comparisons are both nationally and regionally-based; the former highlighting
variation between the individual African colonies; the latter emphasizing common patterns
within the regions (West and East Africa) when contrasted with each other.
Nonetheless, it has to be mentioned here that carrying out a solid and systematic
comparative study, especially when posing historical questions, is not without pitfalls. As a
result of the objective to make generalizations about causal patterns of complex historical

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Individualizing comparisons attempt to distinguish “a small number of cases in order to grasp the peculiarities
of each case”. Universalizing comparisons seek to “establish that every instance of a phenomenon follows
essentially the same rule.” Variation-finding comparisons aim to ascertain a “principle of variation in the
character or intensity of a phenomenon by examining systematic differences between instances.” And finally,
encompassing comparisons seek to place “different instance at various locations within the same system on the
way to explaining their characteristics as a function of the varying relationships to the system as a whole.” See:
Tilly Charles Tilly, Big Structures, Large Processes, Huge Comparisons, (New York: Russell Sage, 1984): 82-3.
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phenomena, such comparative analyses are bound to find themselves caught in the tension
field between qualitative and quantitative approaches. Qualitative, or case-oriented, studies
generally take on a holistic form, where each single case is treated as a ‘whole’, embedding
the examined phenomena fully in a historical context. One of the main weaknesses of the
case-oriented method, though, is that it is incapacitated to deal with a large number of cases as
a result of causal complexity. In order to substantiate general patterns, the empirical basis of
the researcher’s analysis should be based on as large as possible a sample size. However, the
exponential nature of causal complexity makes it particularly difficult for researchers to take
on even more than two or three cases.
The variable-oriented method, on the other hand, relying upon statistical techniques, can
take on a large number of cases by establishing controls over the conditions and causes of
variation. By simplifying assumptions about causes and their interrelation, the researcher can
reduce the complexity of the data structure artificially. Yet, as a result of such simplifications,
the variable-oriented method has to give way to the holistic nature of the individual cases.
Cases in these types of studies are not viewed as wholes, but as collections of parts, and are
thus no longer understood within the context of the whole, which in turn can lead to such a
de-contextualization that the study produces meaningless results that have little connection to
actual historical processes. In other words, the objective of generality here is achieved at the
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expense of causal complexity.
This comparative study is neither purely case- nor variable-oriented. First and foremost,
the nature of the main research inquiry, placing the development of British African living
standards in a global perspective, concerns the question of causality in an indirect manner. As
will be explicated more elaborately in chapter 2, this comparative analysis aims to contribute
to our understanding of the Sub-Saharan growth potential by using the empirical results on
living standards to assess the validity of other hypothesized causal relationships, such as
geographical and institutional impediments, that have become well-established in the body of
growth literature. More specifically, we set out to examine whether the African real wage
trends and levels lend more support to hypotheses of a persistently stagnant economy, or to
that of a dynamic colonial economy in which attained rents were dispersed at all levels of
society. As such, this study is not as much caught in the methodological tension field between
qualitative and quantitative strategies, allowing for comparisons that can both treat cases

8
See for an excellent discussion of the methodological divide in comparative studies: Charles Ragin, The
Comparative Method. Moving Beyond Qualitative and Quantitative Strategies, (Berkeley: University of
California Press, 1989).
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holistically and take on a large number of cases.
Finally, in the concluding part of this study, a summary of the main findings will be
presented, followed by some brief reflections on broader thematic questions that follow from
the results found in this empirical analysis. If most of these countries were able to perform
relatively well in the first part of the twentieth century, and can therefore not be considered
structurally disaster-prone or destined for poverty, why, then, did their economic growth
trajectory collapse so dramatically in the closing decades of the century? Why, if the root
causes of the current economic stagnation cannot rigidly be attributed to geographical
impediments or poor colonial institutions, does most of SSA up until today seem to have such
great difficulties in creating a relatively stable, well-functioning economy again? Evidently,
these questions have significant implications for the configuration of a future research agenda
on what causes growth and what impedes it. Moreover, as research agendas could intersect
with and complement the domain of the deep-seated problems that characterize current
development strategies, it is important to evaluate what the core areas are that we still know
relatively little about. It will be argued that economic historical research on Africa’s colonial
political-economy is such an essential research area, one that will matter for the way in which
we will interpret SSA’s development past, its present and its future outlook; and how such
scholarly contributions could go beyond the deterministic approaches that have dominated the
debate on Africa’s development trajectory so far.

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2. TECHNOLOGICAL, GEOGRAPHICAL AND INSTITUTIONAL IMPEDIMENTS

2.1 Introduction
The sum of economic literature that is concerned with unequal growth achievements is
extensive, reflecting clear patterns of the different approaches that have been taken towards
this end. In line of Adam Smith, they ask themselves, why, and how, did the wealth of certain
nations come about? Why is economic development still far from a universal phenomenon?
What impedes developing countries in attaining higher per capita income levels? And why,
more specifically, does SSA seem to have the greatest development problems? In economics,
albeit diverging somewhat in methodological approaches, traditionally the fields of
development economics and economic history have been preoccupied with these profound
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questions. This chapter will start out with a general overview of the various explanations that
have been promulgated for Africa’s poor growth record, focussing both on their strengths and
on their limitations. It will become evident that the rather deterministic variants of these
approaches fall short in their explanatory power to account for SSA’s recent path of economic
stagnation. In order to interpret the African growth tragedy in a more convincingly manner, it
is indispensable to gain deeper insight in the actual performance of its economy over a longer
time frame; a time frame longer than the five to six decades following WWII. This chapter
will, therefore, finish with a brief discussion of such recent pioneering answers – in which
general trends about SSA’s performance under colonial rule are being revealed – and their
implications for the broader economic growth debate.

2.2 Input-oriented approaches: Technology, Human Capital and Geographical Endowments

2.2.1 Solow Growth and the Human Capital Stock
Classical economic theory, with its emphasis on output levels, has proven an inspirational
starting point for both development economists and economic historians alike. Following
these theoretical lines of thought, the economy is perceived as a sort of transformative
apparatus, through which input quantities, the labour (L) and capital stock (K), are being
converted into output quantities. Ever since Robert Solow has demonstrated that the physical
amount of inputs can only account for a small share of realized output levels, and that, instead,
it is the technology level (A) that allows a society’s economy to progress towards a higher

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Apart from specialized fields in economics, in the political science department, the field of political economy
has increasingly turned towards these questions as well. Additionally, economic history has been a discipline
located in both economics and history departments.
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steady-state (k*) growth level, researchers have increasingly turned towards such arguments
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of ‘technological’ change. A particularly popular variation of this neo-classical kind of
national income theory, also referred to as the augmented Solow growth model, has been
presented by N.G. Mankiw, David Romer and David Weil. Alongside investment rates in
physical capital, they incorporate investment rates in human capital into the production
function – both in terms of skills and knowledge – which accordingly also come to affect the
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equilibrium income. For SSA, the implications of these, as termed by Dani Rodrik,
‘proximate cause oriented’ frameworks affects the manner in which its growth problems are
perceived; it being largely the result of the low technological standards in labour and capital,
thereby failing to realize “(a) physical capital deepening; (b) human capital accumulation, and
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(c) productivity growth.”
Albeit recognizing that technology levels in capital forms matter, both material and
human, this quantitative strategy is still severely hampered in its ability to establish causality.
The most problematic effect, in this respect, is that of reverse causality: is the independent
variable, the income level (Y) caused by the independent variables, low investment levels in
technology, or vice versa? Although statistical techniques do exist to control for such wide-
ranging econometric problems, in terms of growth analysis, they remain difficult to utilize.
Moreover, as generally put in question by economic historians, even if these correlations
reflect causality, they still fail to explain why economies fail to realize their full growth
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potential. This more ‘ultimate cause’ or ‘deep cause oriented’ outlook on economic
development, in which structural patterns are central to the question of dismal growth

10
Robert M. Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and
Statistics 39, (1957): 312-320.
11
N.G. Mankiw, David Romer, and David Weil, “A Contribution to the Empirics of Economic Growth,”
Quarterly Journal of Economics 107, (1992): 407–437. Other significant contributions made along these lines to
account for SSA’s failure to attain higher growth rates are for example: R.J. Barro, “Economic growth in a cross
section of countries”, Quarterly Journal of Economics 106, 1991: 407–444.
12
See: Dani Rodrik (ed.), In Search of Prosperity. Analytic Narratives on Economic Growth, (Princeton:
Princeton University Press, 2003): 4. For a more elaborate discussion of ‘proximate’ versus ‘ultimate’ causes
and how they interrelate see p. 3-9.
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This does not entail that economic historians have not made any, more qualitative, attempts to account for
long-term economic growth patterns, or ‘the rise of the West’, predominantly in terms of technology arguments.
See in this respect: David S. Landes, The Unbound Prometheus: Technological Change and Industrial
Development in Western Europe from 1750 to the Present, (Cambridge: Cambridge University Press, 1969); and
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor, (New York: Norton, 1998), or
Joel Mokyr, The Gifts of Athena: Historical Origins of the Knowledge Economy, (Princeton: Princeton
University Press, 1983). And a more recent account: Gregory Clark, A Farewell to Alms: A Brief Economic
History of the World, (Princeton: Princeton University Press, 2007).
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