PE/PI Workshop: Jennifer Bussell (Berkeley)

Abstract:
Historical land ownership and tax institutions can shape agricultural investments and yields over the long run. Yet, do they also help us to understand broader dynamics of political economy outside the agricultural sector? I posit that patterns of land tenure are linked to the long-term development of non-agricultural sectors through their effects on local capital accumulation. Specifically, where land tenure policies consolidate control of agricultural land in the hands of a small number of actors, this concentrated capital accumulation limits opportunities for business growth and innovation in the broader economy. In contrast, more distributed land ownership, perhaps paradoxically, can enable larger businesses and sectoral expansion over time. I examine this hypothesis in India, where variation in British colonial land tenure institutions enabled landlord control of large properties in some areas while in others allowed for owner-cultivator land control. Using data from the 1931 Indian Census and the 2013 6th Indian Economic Census, I show that areas falling under landlord rule during the colonial era have smaller enterprises today, as measured by number of employees, and are more likely to have enterprises in the traditional handloom and handicraft sectors. These findings suggest the need for a deeper examination of how India's post-Independence development policies, which promoted both large-scale industrialization and village-level non-agricultural economic development, interacted with the legacies of colonial institutions to produce the diverse local outcomes we see today.