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Economic Modernization in Late British India: Hindu-Muslim Differences

44 Pages Posted: 25 Jan 2011 Last revised: 23 Mar 2012

Timur Kuran

Duke University - Department of Economics

Anantdeep Singh

University of Southern California - Center for Religion and Civic Culture

Multiple version iconThere are 2 versions of this paper

Date Written: December 2011

Abstract

The Muslims of South Asia made the transition to modern economic life more slowly than the region’s Hindus. In the first half of the twentieth century, they were relatively less likely to use large-scale and long-living economic organizations, and less likely to serve on corporate boards. Providing evidence, this paper also explores the institutional roots of the difference in communal trajectories. Whereas Hindu inheritance practices favored capital accumulation within families and the preservation of family fortunes across generations, the Islamic inheritance system, which the British helped to enforce, tended to fragment family wealth. The family trusts (waqfs) that Muslims used to preserve assets across generations hindered capital pooling among families; they were also ill-suited to profit-seeking business. Whereas Hindus generally pooled capital within durable joint family enterprises, Muslims tended to use ephemeral Islamic partnerships. Hindu family businesses facilitated the transition to modern corporate life by imparting skills useful in large and durable organizations.

Keywords: India, Islam, Hinduism, capital accumulation, inheritance, partnership, corporation, waqf, economic development

JEL Classification: N25, N85, K22, O53, P48

Suggested Citation

Kuran, Timur and Singh, Anantdeep, Economic Modernization in Late British India: Hindu-Muslim Differences (December 2011). Economic Research Initiatives at Duke (ERID) Working Paper No. 92. Available at SSRN: https://ssrn.com/abstract=1747193 or http://dx.doi.org/10.2139/ssrn.1747193

Timur Kuran (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

Anantdeep Singh

University of Southern California - Center for Religion and Civic Culture ( email )

Los Angeles, CA 90089
United States

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