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London School of Economics and Political Science Department of Economic History Doctoral Thesis The economic impact of Italian colonial investments in Libya and in the Horn of Africa, 1920-2000 Author: Mattia Cosma Bertazzini A thesis submitted to the Department of Economic History of the London School of Economics for the degree of Doctor of Philosophy, London, August 2019 Declaration I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I can confirm that chapter3 was the result of previous study (for a MPhil award) I undertook at the University of Oxford. I can also confirm that chapter3 was copy edited for conventions of language, spelling and grammar by Karen Brandon and Helen Aitchison. I declare that my thesis consists of 76,633 words, excluding bibliography and indexes. 1 A mio nonno Pierfranco Abstract This dissertation examines the micro-level effects of Italian colonial investments in Libya, Somalia, Eritrea, and Ethiopia, and sheds light on both their short and long-term impact. It focuses on two flagship projects, launched by the dictator Benito Mussolini during the 1930s, namely the construction of a modern road network in the Horn of Africa and the settlement of Italian farmers in Libya. The contributions are twofold. First, this thesis focuses on types of colonial investment that have not been studied before, while looking at a group of colonies that have previously been neglected by the cliometrics revolution in African economic history. Thus, it enhances our understanding of the effect of colonialism in general and, on Africa, in particular. Second, by exploiting a set of quasi-natural experiments from the history of Italian colonialism to explore the micro-effect of specific policies, this thesis also contributes to the economic geography and development literatures that have looked at the determinants of agglomeration and productivity in developing countries. It is structured around three substantive chapters. The first one studies the effect of Italian road construction in the Horn of Africa on economic development and shows how locations that enjoyed a first-mover advantage in transportation thanks to the Italian road network are significantly wealthier today. The second substantive chapter assesses the effect of Italian agricultural settlement on indigenous agriculture in Libya at the end of the colonial period and pinpoints an adverse effect of Italian presence on Libyan productivity. Finally, the third substantive chapter studies the effect of the expulsion of Italian farmers from Libya after World War II and finds a reduction in agricultural commercialization in affected districts following the shock. 3 Acknowledgments I would have not been able to complete my Ph.D without help, advice, and support from sev- eral people. First, I would like to thank Joan Rosés and Leigh Gardner, my supervisors, for their constant help throughout this journey and their insightful feedback on my work. They made my research infinitely better. I would also like to thank my examiners, Giovanni Federico and Elias Papaioannou, for reading this thesis and for giving me extensive and extremely use- ful feedback. The Economic and Social Research Council and the Economic History Society provided generous funding throughout my Ph.D., which I gratefully acknowledge. The per- sonnel of the Archivio Centrale dello Stato (ACS), Archivio Storico dell’Agenzia Italiana per la Cooperazione e lo Sviluppo (ASAIC) and of the David Lubin Memorial Library (FAO) have been incredibly professional. In particular, I would like to thank Antonella Bigazzi (ASAIC) and Laura Galeotti (FAO). Without their help, I would not have found most of my data. Silvia Tonelli and William Jenkins provided indispensable assistance with data digitization. During these four years, I have also benefited from the invaluable, detailed feedback of many colleagues. In particular, I want to thank Bob Allen, Gareth Austin, Gerben Bakker, Gabriele Cappelli, Denis Cogneau, Kara Dimitruk, James Fenske, Johan Fourie, Leander Heldring, Ed Kerby, Alex Moradi, Mohamed Saleh, Eric Schneider, and Noam Yuchtman. I am also grateful to the editor of the Journal of Economic Geography Frederic Robert-Nicoud and two anonymous referees for extensive comments. The Economic History Department of the London School of Economics is a fantastic place to study economic history. Here, I met many extraordinary people that made my intellectual life more stimulating and my London days more fun. It would be impossible to mention them all, but you know who you are, and I am genuinely grateful for your friendship. In Stellenbosch, I made new friends and found an exciting research environment with the LEAP group. 4 Finally, I would certainly not be doing what I love without the unconditional support of my fantastic parents, Luca and Flora. You are the most wonderful parents. Dorit could not have come into my life at a busier or more complicated time. Yet, she very charmingly coped with my stress and grumpiness and gave me fantastic support. She makes me feel lucky every day. 5 Contents Declaration 1 Abstract 3 Acknowledgments4 1 Introduction 13 1.1 Why Italian colonialism?............................... 14 1.1.1 Country-specific motivations ........................ 14 1.1.2 Italian colonialism in comparative perspective............... 17 1.2 Contribution ..................................... 20 1.2.1 General contribution............................. 20 1.2.2 The substantive papers and their contribution............... 22 1.3 Structure ....................................... 27 2 Literature review 28 2.1 Introduction...................................... 28 2.2 Comparative development and colonialism..................... 29 2.2.1 Pre-colonial institutions and geography .................. 29 2.2.2 Colonialism.................................. 33 2.3 Economic geography and transportation...................... 40 2.3.1 The first vs second nature advantage debate................ 40 2.3.2 Transport infrastructure........................... 43 2.4 Agriculture ...................................... 46 2.4.1 Causes and consequences of agricultural productivity........... 46 2.4.2 African agricultural history and the effect of colonialism......... 49 2.4.3 Settler agriculture .............................. 51 6 2.5 Historiography of Italian Colonialism........................ 53 2.5.1 The colonial period.............................. 54 2.5.2 The historiographical debate after World War II ............. 57 2.6 A note on the archival sources............................ 63 3 The long-term impact of Italian colonial roads in the Horn of Africa, 1935-2000. 66 3.1 Introduction...................................... 66 3.2 Historical framework: Italian road construction in the Horn of Africa . 71 3.3 Empirical strategy .................................. 72 3.4 Data.......................................... 75 3.5 Main results...................................... 78 3.5.1 Living standards ............................... 80 3.6 Causality ....................................... 81 3.6.1 IV estimation: Least Cost Path (LCP) ................... 81 3.6.2 Placebo: unfinished roads .......................... 83 3.6.3 Additional robustness checks ......................... 83 3.7 Mechanisms...................................... 84 3.7.1 The effect over time ............................. 84 3.7.2 Relocation, or population growth? ..................... 86 3.7.3 Persistence .................................. 89 3.8 Conclusion ...................................... 95 Appendices ......................................... 97 3.A Additional estimations and figures chapter3.................... 97 3.B Data appendix chapter3...............................110 3.B.1 Dependent variables .............................110 3.B.2 Historical data ................................111 3.B.3 Geographical and environmental controls . 113 3.B.4 Market potential...............................114 3.B.5 Least Cost Path Network (LCP) ......................114 3.C History of road construction in the Horn of Africa . 116 3.C.1 Italian colonialism in the Horn of Africa..................116 7 3.C.2 Road construction before 1936 .......................117 3.C.3 Italian road construction 1936-1941.....................118 3.C.4 Post-colonial road construction (1941-2000) . 120 3.D List of Abbreviations Chapter3...........................121 4 Cultivating the “Fourth Shore”: The effect of Italian farming in colonial Libya, 1920-1942 122 4.1 Introduction......................................122 4.2 Historical context...................................127 4.2.1 The occupation of Libya, 1911-1931 ....................127 4.2.2 Main features of the Italian agricultural settlement . 128 4.3 A new database on colonial Libya..........................132 4.4 Identification .....................................133 4.5 Main Results .....................................137 4.6 Robustness ......................................140