Breaking the ties that bind: Metropolitan dependence and export growth in the poor periphery, 1950-90

Abstract

Decolonisation was one of the most important institutional transformations of the twentieth century. Recent work on the effect of decolonisation on bilateral trade has suggested that trade with the ex-metropolis declined significantly after independence. Due to problems related to data quality and coverage, however, there is still no consensus on whether the reduction of colonial dependence encouraged or impeded export growth. In this paper, we argue that metropolitan trade shares proxy for colonial monopsony. Using a new database of exports at constant prices for 131 countries and mean group estimators that control for a range of confounding factors, we find that trade shares with the metropole are negatively associated with export growth, with important differences across metropolitan nationalities and locations. We argue that the significance of the erosion of colonial trade ties for export growth following independence was contingent on the interaction of policy and location during the colonial period.