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Extractive Institutions and Gains From Trade: Evidence from Colonial Africa

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  • Federico Tadei

Abstract

A common explanation for African current underdevelopment is the extractive character of institutions established during the colonial period. Yet, since colonial extraction is hard to quantify, its precise mecha- nisms and magnitude are still unclear. In this paper, I tackle these issues by focusing on colonial trade in French Africa. By using new data on export prices, I show that the colonizers used trade monopsonies and coercive labor institutions to reduce prices to African agricultural producers way below world market prices. As a consequence, during the colonial period, extractive institutions cut African gains from trade by at least one-half. JEL Classification: N17; O43 Keywords: Africa, Development, Institutions, Colonization, Trade, Labor Markets

Suggested Citation

  • Federico Tadei, 2014. "Extractive Institutions and Gains From Trade: Evidence from Colonial Africa," Working Papers 536, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    • Handle: RePEc:igi:igierp:536
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    More about this item

    Keywords

    africa; development; institutions; colonization; trade; labor markets;
    All these keywords.

    JEL classification:

    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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