A theory of colonial goverance

22 September 2012
Publication Type: Working Paper
JEL Code: F54, I20, N47, O15

This paper considers conditions of optimality in a co-optive strategy of colonial rule. It proposes a simple model of elite formation emanating from a coloniser’s quest to maximise extracted rents from its colonies. The results suggest multiple optimal solutions, depending on the specification of the production function, the governance technology chosen by the coloniser and the technological parameters of the model. For instance, in agrarian colonial societies, the results suggest that under a technology of governance by numbers, a large elite population is a direct reflection of a high productivity-enhancing technology by the coloniser. In contrast, under a governance technology by quality, the better the productivity-enhancing technology, the lower the quality of human capital that is transferred to the elite. Additionally, under a composite governance technology, and given non-linearity conditions defined by the productivity distance threshold, the better the productivity-enhancing technology, the smaller the optimal elite size that is chosen by the coloniser. An alternative set of results is obtained assuming an industrial economic set-up (or interdependent production). These results suggest that the long debate about the apparent superiority of one European colonisation experience over the other is much more intricate than is often perceived in the literature. The insight from the model is also useful in understanding why the stock of human capital available in countries emerging from colonisation varied considerably across colonial experiences and from one country to another.

Series title: Working Paper 172
1 March 2010