Mughal Decline, Climate Change, and Britain's Industrial Ascent: An Integrated Perspective on India's 18th and 19th Century Deindustrialization

Abstract

India was a major player in the world export market for textiles in the early 18th century, but by the middle of the 19th century it had lost all of its export market and much of its domestic market. India underwent secular deindustrialization as a consequence. While India produced about 25 percent of world industrial output in 1750, this figure had fallen to only 2 percent by 1900. We ask how much of India's deindustrialization was due to local supply-side forces --such as political fragmentation in the 18th century and rising incidence of drought between the early 18th and 19th century, and how much to world price shocks. We use an open, three-sector neo-Ricardian model to organize our thinking about the relative role played by domestic and foreign forces. A newly compiled database of relative price evidence is central to our analysis. We document trends in the ratio of export to import prices (the external terms of trade) from 1800 to 1913, and that of tradable to non-tradable goods and own-wages in the tradable sectors back to 1765. Whether Indian deindustrialization shocks and responses were big or small is then assessed by comparisons with other parts of the periphery.

Water, Climate, and the Limits of Human Wisdom: Historical-Geographic Analogies Between Early Mughal and Modern South Asia

“…Clingingsmith and Williamson (2005) sought to link climate change, specifically El Nino Southern Oscillation (ENSO) and drought periods, with variations in textile prices and trade relations with England. Their inferences about climate change from prices and trade are intriguing and call for more detailed historical geographic analysis with extant archival evidence available from the eighteenth century onward (cf.…”

Globalization, De-Industrialization and Mexican Exceptionalism 1750-1879

“…Thus, the explanation must lie with productivity events in agriculture, where the most important non-tradable commodity was produced. The fact that the relative price of textiles fell (the relative price of corn rose) faster in England than it did in Mexico is especially notable when compared with India where a collapse in agricultural productivity after the mid-late 18 th century produced a spectacular rise in the relative price of grains, generated immense upward pressure on the nominal wage and contributed to diminished wage competitiveness in textiles (Clingingsmith and Williamson 2005). Domestic forces in agriculture contributed powerfully to Indian de-industrialization in the century after 1750.…”

“…This would have been manifested by rising food prices relative to other products, by falling profitability in manufacturing, and by a decline in its output. This story seems to work well in accounting for the spectacular demise of Indian and Ottoman manufacturing in the face of British competition after 1750 (Clingingsmith and Williamson 2005;Williamson and Yousef 2006). It has also been cited by Lewis (1978) as a cause of de-industrialization in the tropical periphery more generally.…”

“…In order to formalize our intuitions about the relationship between relative prices and deindustrialization, we use a simple neo-Ricardian model (Clingingsmith and Williamson 2005).…”

“…In an open economy like colonial Mexico, domestic demand may have influenced trade volumes, but it did not influence the relative price of goods actively traded in world markets. Imported factory goods were competing with Mexican spinning and weaving, and such competition was hardly unique to Mexico since it was also taking place in India (Clingingsmith and Williamson 2005), the Ottoman Empire (Pamuk 1987;Williamson and Yousef 2006) and elsewhere in the poor periphery (Williamson , 2006b). The evidence also suggests that, like Mexico, there was no significant increase in Indian and Ottoman per capita income which might have had the local demand affects Salvucci hypothesizes.…”