The creative–destructive force of hurricanes: evidence from technological adoption in colonial Jamaican sugar estates

Abstract

AbstractWhile in the early part of the nineteenth-century Jamaica was one of the world’s leading sugar producers, the abolition of slavery, the flooding of sugar markets with cheap European beet sugar, and the equalization and finally elimination of sugar import duties across the British empire led to a need for more efficient ways to produce sugar. However, it has been widely noted that Jamaica sugar estates were late in adopting more efficient production techniques, arguably due to inadequate financing. This paper investigates what role the destructive forces of hurricanes may have played in inducing Jamaica to finally modernize its sugar production. To this end, we combine a geo-referenced exhaustive data set of Jamaican sugar estates with a measure of localized hurricane damage constructed from historical hurricane tracks over the period 1882 to 1930. Our econometric analysis shows that hurricane strikes increased the probability that a surviving estate upgraded its sugar processing technology, particularly when the price of sugar was high and the price of the other main exporting crop (bananas) was low. Additionally, while a government hurricane loan programme working through local loan banks did help plantations to adopt new machinery, this depended on the damage not being too large.