'How Does Colonial Origin Matter for Economic Performance in Sub-Saharan Africa'

Abstract

This paper carefully investigates some of the existing hypothesis regarding the transmission of different colonial legacies to modern day economic performance in sub-Saharan Africa (SSA). It focuses on four key channels of transmission namely, human capital, trade openness, market distortion and initial endowments (or selection bias). The methodology applied in the paper is slightly different to that of previous studies, where only initial conditions at independence were held to influence the subsequent growth path. In contrast, the study combines the pre-colonisation initial conditions, the initial conditions at independence and the subsequent post colonial changes in explaining income differences amongst former SSA colonies. The results suggest that former British colonies have had marginally higher income levels than former French colonies during 1960-2000, and this is attributable to the legacy of British colonisation in trade openness and human capital. We do not find robust evidence in support of the initial endowments and market distortion hypotheses. This evidence challenges the conventional wisdom that differences in initial endowments are largely responsible for the differential path of development in SSA. Furthermore, besides highlighting the importance of the trade openness channel, the study is also the first, to the best of our knowledge, to simultaneously examine a range of feasible transmission channels between colonial origin and economic growth performance.