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India's De-Industrialization Under British Rule: New Ideas, New Evidence

Author

Listed:
  • David Clingingsmith
  • Jeffjrey G. Williamson
Abstract
India was a major player in the world export market for textiles in the early 18th century, but by the middle of the 19th century it had lost all of its export market and much of its domestic market. Other local industries also suffered some decline, and India underwent secular de-industrialization as a consequence. While India produced about 25 percent of world industrial output in 1750, this figure fell to only 2 percent by 1900. We use an open, specific-factor model to organize our thinking about the relative role played by domestic and foreign forces in India’s de-industrialization. The construction of new relative price evidence is central to our analysis. We document trends in the ratio of export to import prices (the external terms of trade) from 1800 to 1913, and that of tradable to non-tradable goods and own-wages in the tradable sectors going back to 1765. With this new relative price evidence in hand, we ask how much of the de-industrialization was due to local supply-side influences (such as the demise of the Mughal empire) and how much to world price shocks (such as world market integration and rapid productivity advance in European manufacturing), both of which had to deal with an offset – the huge net transfer from India to Britain before 1815. Whether the Indian de-industrialization shocks and responses were big or small is then assessed by comparisons with other parts of the periphery.

Suggested Citation

  • David Clingingsmith & Jeffjrey G. Williamson, 2004. "India's De-Industrialization Under British Rule: New Ideas, New Evidence," Harvard Institute of Economic Research Working Papers 2039, Harvard - Institute of Economic Research.
    • Handle: RePEc:fth:harver:2039
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    References listed on IDEAS

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    1. de Vries, Jan, 1994. "The Industrial Revolution and the Industrious Revolution," The Journal of Economic History, Cambridge University Press, vol. 54(2), pages 249-270, June.
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    3. Tirthankar Roy, 2002. "Economic History and Modern India: Redefining the Link," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 109-130, Summer.
    4. Javier Cuenca Esteban, 2001. "The British balance of payments, 1772-1820: India transfers and war finance[The author]," Economic History Review, Economic History Society, vol. 54(1), pages 58-86, February.
    5. repec:hhs:iuiwop:430 is not listed on IDEAS
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    Cited by:

    1. Vijay K. Seth, 2014. "Debate on De-industrialization Revisited: The Process of Decline of Traditional Flexible Manufacturing," Global Business Review, International Management Institute, vol. 15(3), pages 597-610, September.
    2. Brijesh K. Mishra & Siddhartha Rastogi, 2017. "Colonial Deindustrialisation of India," South Asian Survey, , vol. 24(1), pages 37-53, March.
    3. Vijay K. Seth, 2017. "Tale of Two Cities of South Asia: Consequences of Changes in the nature of Manufacturing on Dhaka and Kolkata," Global Business Review, International Management Institute, vol. 18(6), pages 1613-1633, December.
    4. Giovanni Dosi & Matteo Tranchero, 2018. "The Role of Comparative Advantage, Endowments and Technology in Structural Transformation," LEM Papers Series 2018/33, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Pansera, Mario & Owen, Richard, 2018. "Framing inclusive innovation within the discourse of development: Insights from case studies in India," Research Policy, Elsevier, vol. 47(1), pages 23-34.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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