History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India

Posted: 7 Apr 2006

See all articles by Abhijit V. Banerjee

Abhijit V. Banerjee

Massachusetts Institute of Technology (MIT) - Department of Economics

Lakshmi Iyer

Harvard Business School - Business, Government and the International Economy Unit

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Abstract

We analyze the colonial land revenue institutions set up by the British in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post-independence period than areas in which these rights were given to the cultivators. These areas also have significantly lower investments in health and education. These differences are not driven by omitted variables or endogeneity problems; they probably arise because differences in historical institutions lead to very different policy choices.

Keywords: History, land tenure, development

JEL Classification: O11, P16, P51

Suggested Citation

Banerjee, Abhijit V. and Iyer, Lakshmi, History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India. American Economic Review, Vol. 95, No. 4, pp. 1190-1213, September 2005. Available at SSRN: https://ssrn.com/abstract=895472

Abhijit V. Banerjee (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-252D
Cambridge, MA 02142
United States
617-253-8855 (Phone)
617-253-6915 (Fax)

Lakshmi Iyer

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States

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