Colonial adventures in tropical agriculture: new estimates of returns to investment in the Netherlands Indies, 1919–1938

Abstract

How profitable were foreign investments in plantation agriculture in the Netherlands Indies during the late colonial era? We use a new dataset of monthly quoted stock prices and dividends of international companies at the Brussels stock exchange to estimate the returns to investment in tropical agriculture (1919)(1920)(1921)(1922)(1923)(1924)(1925)(1926)(1927)(1928)(1929)(1930)(1931)(1932)(1933)(1934)(1935)(1936)(1937)(1938). We adopt the Dimson-March-Staunton method to compute real geometric annual average rates of return and assess our estimates in an international comparative perspective. We find that returns to colonial FDI in the Netherlands Indies during 1919-1928 were impressive (14.3 %), being almost 3 percentage points higher than the world average. In the following decade 1929-1938 fortunes reversed, with a rate of return of -2.8 % compared to a world average of 2.2 %. Over the entire period the returns to colonial FDI (5.4 % in 1919FDI (5.4 % in -1938 were about a factor 2.5 higher than returns to investment in the Dutch domestic economy (2.1 % in 1920-1939). We argue that these returns should be interpreted in a colonial context of systematic labour repression, but that they may also partly reflect a higher risk-premium of investments in colonial commodities.

What drove the profitability of colonial firms? Labour coercion and trade preferences on the Sena Sugar Estates (1920–74)

“…6 The presence of a causal relationship running from colonial institutions to prices in local factor markets on to investor returns in colonial stocks has been proposed in a number of contributions (e.g. Beulens and Frankema 2016;Beulens and Marysse 2009). 7 However, the evidence base here is largely circumstantial.…”

“…Similarly, but using Bank of England and UK Board of Trade data for 'net earnings abroad',Svedberg (1982) finds that in 1938-57, UK investors earned a return from less developed sterling-area countries around three times higher than from non-sterling ones-a spread that vanished in 1958-74. The only study showing higher or broadly similar UK returns over a prolonged period is that ofRönnbäck and Broberg (2019), who give 1900-69 rates for UK annual returns as 5 per cent vs. 3.9 per cent for African ones.6 Beulens and Marysse (2009) give 1889-1955 rates of 2.1 per cent for investor annual returns in Belgium and of 4.7 per cent in the Congo, whileBeulens and Frankema (2016) give 1919-38 rates for investors on the Brussels Stock Exchange of 2.2 per cent for companies in the Netherlands and 5.4 per cent for those in the Dutch Indies. Two noncomparative studies calculate returns to Dutch investors in colonial Indonesia at an average annual rate around 17.5 per cent (Linblad 2018) or in average annual cash terms at around £9m (1926-38) (van der Eng 1998) but in neither case are their time series continuous.7 Rönnbäck and Broberg (2019)(and Rönnbäck et al 2022) explain higher returns on colonial investments as a form of risk premium.…”

Rescuing marketing from its colonial roots: a decolonial anti-racist agenda

“…Craemer (2015, p. 653) estimates the modern value for “US slave labor to range from $5.9 to $14.2 trillion in 2009 dollars.” In the context of the colonization of The Netherlands Indies, and in terms of agricultural investments, the returns on financial investments “were about a factor 2.5 higher than returns to investment in the Dutch domestic economy (2.1% in 1920–1939). We argue that these returns should be interpreted in a colonial context of systematic labour repression” (Buelens and Frankema, 2016, p. 197). If as Shabbir et al (2020, p. 232) asserts in a call to consider reparations, “ignoring historical injustices to Blacks is tantamount to ignoring their voices as wholesome, which is a counter-marketing prerequisite […]” then what are the appropriate remedy for marketplace inequities?…”

Between tough voyages and empowering tourism: Can Muslim Bugis seafarers tackle the maritime-sector crises in Indonesia?

“…The locals no longer relied on the sea for their livelihood. The Dutch colonial government made a surplus out of their investment in the agrarian sector although the economic system was carried out by means of systematic oppression of the locals (Buelens & Frankema, 2016).…”