New Countries: Successes and Failures Jes´usFern´andez-Villaverde1 September 26, 2021 1University of Pennsylvania 1 The End of European imperialism • The end of WWII is also the end of European imperialism: 1. Formal empires. 2. (Largely) informal areas of influence. • British empire will be the paradigmatic case. Relatively pain free. • More painful examples: France (Algeria, Vietnam) and Portugal (Angola, Mozambique). • Fall of the Soviet Union in 1991 is the end of the last European colonial empire. • The peculiar case of South Africa. 2 3 The sun sets down on the British Empire I • Colonies of European settlement (Canada, Australia, New Zealand, South Africa) become progressively independent (Responsible government)Dominions)Commonwealth realms). 1. In fact, it is hard to pin down an \independence day" for them. 2. Case of Canada: British North America Act (1867), Statute of Westminster (1931), British North America (No. 2) Act (1949), or Canada Act (1982)? • Ireland becomes independent in 1922 (and a republic in 1948) after a partition and a civil war. • Between 1945 and 1965, the number of people under British rule outside the UK collapses from 700 million to 5 million (out of which 3 were in Hong Kong). • Today, there are 14 overseas territories left with a population of around 265,000, with the majority living in the Caribbean Sea. 4 5 The end of the British Raj • British rule in the subcontinent has been under increasing pressure from nationalists (Indian National Congress, All India Muslim League). • Already in 1935: Government of India Act, proposed Federation of India. Elections of 1937. • Deal during WWII. Problems with Indian National Army. • Increasing conflict between communities (particularly in Punjab and Bengal). • Finally, the Labour government decides that they cannot keep India and agrees to its independence and partition (Radcliffe Line): 1. August 14, 1947, Dominion of Pakistan (republic in 1956, Bangladesh independent in 1971). 2. August 15, 1947, Union of India (republic in 1950). 3. 1948: Dominion of Ceylon (republic of Sri Lanka in 1962) and Union of Burma. • Perhaps as many as 1 million deaths, 10 million people reallocated, four wars (1947, 1965, 1971 and 1999) plus ongoing skirmishes. 6 7 8 Other colonies • Most of \supporting" colonies of the Raj lose sense (Cyprus, Oman, Aden, Suez Canal) and Africa, by itself, more of a burden than anything else. • Also in 1948, the British rather hastily leave the mandate in Palestine. • Malayan emergency (1948-1960). • Nationalization of Anglo-Iranian Oil Company. • Suez crisis in 1956. • \Wind of Change" by Harold Macmillan to the Parliament of South Africa, on 3 February 1960 in Cape Town. • Hong Kong in 1997. • The future of overseas territories? 9 10 11 12 13 Reasons for decolonization 1. Increase in nationalism agitation. 2. Increase financial problems in the U.K. 3. Loss of interest among elites in the U.K. 4. Pressure of the U.S. 14 What do new countries do? India • Leaders of Congress party deeply influenced by British Fabian socialism. • Set up five-year plans. • Strong intervention, redistribution, investment in education. • License raj. • Hindu rate of growth at 2.5%. • Positive aspects: democracy, absence of famines. 15 16 What do new countries do? Singapore • After several ineffective previous limited elections, general election in 1959 is won by the People's Action Party and Lee Kuan Yew becomes the first Prime Minister of Singapore. • Enters into an ill-fated federation with Malaysia. Independence in 1965. • Most observers think Singapore is not a viable state (too small, racial tensions...). • Government takes a vigorous approach to development: 1. Sets up industrial parks with tax holidays for FDI. 2. Promotes the harbor. 3. Oil refineries. 4. Housing and retirement funds (Central Provident Fund). 5. Constant upgrade towards higher added value products (tourism, gambling, medicine hub biotech). 6. Efficient legal system, low corruption, great civil service. 17 18 Comparison • First, comparison is a bit unfair: a subcontinent with an island. • Singapore has been several orders of magnitude more successful than India in economic terms. • But it has come at a cost in terms of freedoms. • Democracy Index compiled by the Economist Intelligence Unit: 1. India: 7.23, flawed democracy (U.S.: 7.96, full democracy, Norway: 9.87). 2. Singapore: 6.38 (higher than in recent past, when it was a hybrid regime). • Even more in contrast with China's experience 19 20 A people's republic • October 1, 1949, Mao proclaims the People's Republic of China. • Effective end of the civil war and unrest that had plagued China for decades. • Although Kuomintang survives in Taiwan. • Copy model of High Stalinism, including 5-years plans and strong emphasis on collectivization and basic industries in detriment of consumer industries. • It will lead to a fight with the Soviet Union (close to open war in 1969). 21 22 23 24 Going alone • The Great Leap Forward: 45-60 million deaths. • The Cultural Revolution: L´ınBi¯ao,Four Olds (old customs, old culture, old habits, and old ideas). • Gang of four defeated, Deng Xiaoping takes power. 25 26 27 28 MENG ET AL. INSTITUTIONAL CAUSES OF CHINA’S GREAT FAMINE 1579 (a) — Downloaded from http://restud.oxfordjournals.org/ 29 at Columbia University Libraries on April 25, 2016 (b) — Figure 1 Average and spatial variation in famine severity [17:16 23/4/2016 rdv016.tex] RESTUD: The Review of Economic Studies Page: 1579 1568–1611 Figure 1: Population and Aggregate Production 1949-76 30 Source: The CPIRC and Comprehensive Statistical Data and Materials on 50 years of New China (1999) 31 32 33 A changing world • Arrival of China to world stage. • In some sense, only returning to its natural place. • Three eras: 1. First contact: 1972-1979. 2. Reform in the countryside: 1979-1990. 3. City-biased growth: 1990-2009. 34 Deng Xiaoping, 1979 \Modernization does represent a great new revolution. The aim of our revolution is to liberate and expand the productive forces. Without expanding the productive forces, making our country prosperous and powerful, and improving the living standards of the people, our revolution is just empty talk. We oppose the old society and the old system because they oppressed the people and fettered the productive forces. We are clear about this problem now. The Gang of Four said it was better to be poor under socialism than to be rich under capitalism. This is absurd." 35 36 Intellectual foundations: The years of the high theory of development • Unequal exchange (Ra´ulPrebisch). • Big Push (Paul Rosenstein-Rodan). • Forward and backward linkages (Albert Hirschman). • Skepticism (Peter Bauer). 37 38 39 40 41 Figure 5: The Great Liberalization and Growth Accelerations Log income per worker (PWT) relative to 1975–89 trend in liberalizers and nonliberalizers 42 Notes: The samples are as in Figure 4, based on changes in tariffs for capital and intermediate goods. 53 19P16 4: COW b9LsIiAe CLOMflJEXbeuGLIce COf1UILN bGL c9b149 CDb' bGL CSb!49 CDb bGL cbus CDb .1890 4896 8LOM4p (3892 qoII9Le) (3 892 qosL2) 1890-88 (\o) 20(1W KOLGS 993 9309 993 j9(MU 4328 9503 933 CP9U9 933 932 -024 2GUG0I .1013 .1085 019 I,NO!9WP!dfle 1359 329 -556 BL9!I 1342 4.138 329 9X!CO 5389 2393 539 'UfL8GUIIU9 3564 3908 093 2orlkcG bGUUMOLlq19P1622 43 6LCb!4ØLOM4 (4pL6e-6sL WOMUO 9A6L9092) KO .LVI .10 9 9 4 5 0 4. CD CO 0 CA 4. CD VU CD 0 CA 4. (0CO 0 CA 4. CD CO 0 tU VU (0 CD (0 (0 CD I- L kI- I.- CO CO CO CO CO 0) 0)0) 0) 0) 0) 0) 0) 0) 0)0) 0) 0) 0) 0) 0) 0) 0) 0) 0) _ 4. h. 4 4.. 4 4 . 4... 4 4 £. 4... 4... 2onLcG: bGUU OLI .L9PIG 22 44 E!0AL6J Exb014\eDb bSi!Oa KOIGS 19!Mu 90 20 40 %30 JO 0 0 CA 4 CD(0 0 CA 4 CD(0 0 CA4 CD (0 0 I-.I-I-I.- 1.- (0 (0 (0 (0 (0 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 4... 4_ 4_ 4_ 4_ s_ 2onLce2: Conuc!I 101 ECOUOW!C bI9UU!U auq DGA6I0bW6Ul .L9!M9U 249fl2flC81 D9I 00( .1893 auq .180.1 ECOUOW!C bI9UUIU0 B091q1 9!0L 2491!2l!C2 01 4G KOLG9U EC0UOWA A9LIOfl2 22flG2 flpR& IUI6W9II0U9 ,JUSUCISj I9I2IIC2 45 E!8fl16 IUAGWGUI\CDbbSPO2 KO .LVI 40 32 30 % 0 10 2 0 S.. 4) IV I.- 0) 4) VU I.- 0) '- 4) VU 0) S.. 4)VU I 0) VU VU VU VU VU CO CD CD CD CO I.-I— I- I-I- CO CO CO CO CO 0) 0) 0) 0) 0) 0) 0)0) 0)0) 0)0) 0) 0) 0) 0) 0' 0) 0) 0) A.. A.. A.. A.. £ S.. A A.. S.. A A S.. S.. 2orlLcG: b6UU oqq j9P6 22 46 E!âflLG 3 spie : CowbSLsI!Ae LoqnCvAIA CLOM4P 2I9!4iC2 COnU4LA bGL!Ocl I0l ESCIOL bL0qflCAIfA CLOMP (\o béi AGSL) ECOUOW JSUn19C4nU.U0 201M1J KOLGS .1699-60 .1•5 5•5 jSLMSU Jee-po J 9 J 4 yLäGUpUs .1890-80 .10 U9 .1620-90 50 US BLS!l .1690-80 US .10 cp'ie .090-80 VS U9 COIOWP!9 .1890-90 08 U9 GX!C0 .1690-90 U.S US .1890-SO U9 43 A6U9GIS .1620-SO U9 59 • VOU-S&icnhjrILSI ecouowk 2onLcG: AonUa (.18e9) 194!U vweUcSU 29I!2IIC2 919 OLIthUSIIA 110W EDS2 (.1880) 47 IwboL suq IUAO2fWGU os 40 5../ \ IWbOLi2 32 / 5-. — -. .. —. 5% .5. 30 5% 5% IUAG2IWGUI o "S_-S 0 '5 5% .12 S.. 5% 5% 5%! 5% 40 / 2 0 I I I I I I I I I I I I I I I I I I I I I I I 0 (4 A.