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Pre-Colonial Warfare and Long-Run Development in India∗

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Pre-Colonial Warfare and Long-Run Development in India∗ Pre-Colonial Warfare and Long-Run Development in India∗ Mark Dinceccoy James Fenskez Anil Menonx Shivaji Mukherjeek August 24, 2018 Abstract This paper analyzes the relationship between pre-colonial warfare and long-run devel- opment patterns within India. We construct a new, geocoded database of historical con- flicts on the Indian subcontinent, which we use to compute measures of local exposure to pre-colonial warfare. We document a positive and significant relationship between pre-colonial conflict exposure and local economic development levels across India to- day. The main results are robust to numerous checks, including controls for colonial- era institutions, ethnic fractionalization, and colonial-era and post-colonial conflict. We show evidence that the early development of fiscal capacity, greater political stability, and basic public goods investments are channels through which pre-colonial warfare has influenced local economic development outcomes. Preliminary Version for 2018 EHA Annual Meeting: Methods and Results May Change ∗We thank Traviss Cassidy, Latika Chaudhary, and Namrata Kala for helpful comments, Latika Chaudhary, Alexander Lee, and Rinchan Mirza for generous data-sharing, and Justin Huang and Eric Payerle for excellent research help. We gratefully acknowledge financial support from the Department of Political Science at the University of Michigan. yUniversity of Michigan; [email protected] zUniversity of Warwick; [email protected] xUniversity of Michigan; [email protected] kUniversity of Toronto; [email protected] 1 1 Introduction Do local economic development patterns within India have deep historical roots? A re- cent literature says yes (Banerjee and Iyer, 2005; Iyer, 2010; Castello-Climent,´ Chaudhary and Mukhopadhyay, 2017; Lee, 2018). This literature analyzes the colonial origins of Indian development. India’s history, however, did not begin with European colonialism and its af- termath. In this paper, we analyze the role of pre-colonial history for long-run development outcomes across India. We focus on a prominent feature of pre-colonial India: warfare. For hundreds of years prior to European colonial rule, a multitude of rival states competed for political domi- nance on the Indian subcontinent. A well-known literature links interstate military com- petition within Europe to institutional reforms, which governments undertook in order to enhance their fiscal (and thus military) prowess (Tilly, 1975; Brewer, 1989; Besley and Pers- son, 2011; Gennaioli and Voth, 2015). In time, more powerful government institutions may have helped promote long-run development through the provision of basic public goods. Much of this literature, however, centers on historical state-making in Europe. In this paper, we recast this framework in terms of local development outcomes within India. A new, geocoded database of historical conflicts on the Indian subcontinent forms the basis of our analysis. To proxy for local exposure to pre-colonial warfare, we compute a measure in which a district’s exposure is increasing in its physical proximity to pre-colonial conflicts. Our empirical analysis documents a positive and significant relationship between pre-colonial conflict exposure and contemporary economic development levels within India. This relationship is robust to numerous checks. First, we restrict our analysis to within-state variation by including state fixed effects in order to show that state-specific, time invariant features of Indian states do not drive our results. Second, we control for a wide range of local geographic features, including climate zones, terrain ruggedness, soil suitability, and disease environments. Third, we perform an instrumental variables analysis that exploits variation in pre-colonial conflict exposure driven by events external to India. Fourth, we show that pre-colonial conflict exposure significantly predicts local development levels today above and beyond the role of colonial-era institutions such as direct British rule and non-landlord revenue systems. Similarly, we show that this relationship continues to hold after controlling for inter-ethnic relations within India, and after controlling for colonial-era and post-colonial 2 conflict exposure. Critically, we control in all specifications for local population density. Thus, our main results are not driven by the greater prevalence of pre-colonial conflict in more populated zones, nor do they simply capture greater population density in conflict- affected zones today. We next analyze the potential channels through which pre-colonial warfare may have influenced long-run development patterns across India. Here, we draw on a wide array of data from both secondary and archival sources. Consistent with the “war makes states” logic described above, we find evidence for a positive and significant relationship between local exposure to pre-colonial conflict and both the early development of local fiscal capacity and greater eventual political stability. Furthermore, we find that pre-colonial conflict exposure significantly predicts greater eventual investments in irrigation and related improvements in agricultural productivity, along with greater such investments in literacy and primary education. Here, we view local public goods investments as functions (at least in part) of more powerful local government institutions and greater political stability. 1.1 Literature Review The results of our analysis contribute to two major debates. 1.1.1 Beyond Europe The first debate concerns the long-run development implications of past warfare in different global contexts. The bulk of this literature analyzes Europe (Tilly, 1975; Mann, 1984; Brewer, 1989; Downing, 1992; Gennaioli and Voth, 2015). Here, the main conclusion is that inter- state military competition between 1500 and 1800 promoted institutional reforms, which governments undertook in order to enhance their fiscal and military prowess. It is still un- clear, however, how well the logic by which “war makes states” travels beyond the early modern European context. Centeno(1997), for example, argues that, due to a lack of prior institutional organization, interstate warfare was not conducive to fiscal development in nineteenth-century Latin America. Thies(2005), by contrast, finds a positive relationship between the extent of interstate military competition and taxation in Latin America over the twentieth century. In the context of Africa, Herbst(2000, 13-21) argues that, given the low historical population density, the main goal of warfare was to capture slaves rather than territory, thereby muting the relationship between warfare and state-making. Similarly, 3 Osafo-Kwaako and Robinson(2013) do not find any significant correlation between war- fare and state centralization in pre-colonial Africa. Both Besley and Reynal-Querol(2014) and Dincecco, Fenske and Onorato(2018), in fact, show evidence that higher pre-colonial conflict levels have been detrimental to African development.1 Recently, scholars have begun to analyze the relationship between interstate military competition and long-run state development in the Indian context. Gupta, Ma and Roy (2016) argue that the threat of internal rebellion made it more likely that rulers in early modern India would forego higher fiscal extraction in exchange for greater local support in interstate wars. Roy(2013, 13-38) links eighteenth-century military competition in India to the emergence of European colonial rule. Foa(2016) finds a positive relationship between eighteenth-century pre-colonial Indian “challenger” states and local state capacity outcomes today. He argues that, unlike “successor states”, challenger states were conflict-prone, pro- moting local fiscal improvements that have endured. This paper goes beyond this current literature in several ways. First, we analyze the long- run implications of historical warfare in India for economic development, rather than for state development only. Second, we construct a new, geocoded database of historical conflicts on the Indian subcontinent. To the best of our knowledge, this database is the most comprehen- sive construction effort of this kind. We use these data to compute a new measure of local conflict exposure across India. Thus, the scope of our analysis is significantly wider than most previous works. To examine colonial-era outcomes, moreover, we construct new fiscal data from a secondary archival source. Finally, unlike Roy(2013) and Gupta, Ma and Roy (2016), we take advantage of rigorous statistical methods to establish our argument. Overall, our analysis sheds new light on the “universality” of the relationship between warfare and long-run development outside of Europe. 1.1.2 Pre-Colonial Legacy The second debate concerns the historical origins of contemporary development patterns in India. The majority of this literature analyzes the role of European colonialism.2 Banerjee and Iyer(2005) argue that zones in which British colonial rulers granted property rights over 1A related literature analyzes the economic consequences of industrial-era wars including World War II and the Vietnam War (Davis and Weinstein, 2002; Brakman, Garretsen and Schramm, 2004; Miguel and Roland, 2011). This literature shows that post-war economic recovery is quite common. 2Chaudhary et al.(2016) provide a general overview of this colonial-oriented literature. 4 land to individual cultivators display better modern development outcomes than zones in which landlords were in charge. Lee(2018), however, shows evidence that colonial-era
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