Strategic colonies and economic development: real wages in Cyprus, Gibraltar, and Malta, 1836–1913

Abstract

What if a colony is neither extractive nor settler material? European powers colonized some areas for military reasons: to keep those areas out of rivals' hands or to have geographically strategic outposts. In these cases, European settlement was low and there was nothing to extract. This article examines the extent to which living standards, as measured by real wages, among three such examples—Cyprus, Gibraltar, and Malta—can be explained by British rule. These highly comparable Mediterranean islands did not enjoy democratic governments nor did they endure authoritarian ones. Colonial institutions worked through ensuring an environment in which Mediterranean trade could flourish. This adds another layer to our understanding of the economic impact of colonization, extending the simple settler versus extractive dichotomy. It also contradicts the historiography's claims that living standards were low, and determined by British military expenditure. Living standards in these countries were in fact at the European average.