Economic effects of British imperialism on India: an analysis of the goods and capital markets 1853-1947

Katrina Noyes

Document Type Dissertation/Thesis


Section 2 begins with a brief discussion of the 350 years of British colonial influence. This section is not meant to act as a complex analysis, but as an introduction to present the context under which changes in both the goods markets and capital markets occurred, and how Britain influenced the Indian economy. It describes the formation of the British stronghold in India along with general economic conditions, and also discusses current debates regarding British influence. Section 3 then provides a more complete analysis of Britain's contribution in India through the expansion of the railroads after 1850, and is followed by a discussion of price convergence as a measure of economic development and the effects that the rail expansion had on the prices of foodstuffs. Section 5 outlines Martin Feldstein and Charles Horioka's (1980) model measuring capital mobility, which is used in section 6 to examine capital market integration in colonial India. The Feldstein-Horioka model demonstrates to what extent domestic investment is constrained by domestic savings, and thus to what extent international capital flows meet excess demand for investment. Time series data examining capital mobility will illustrate how capital markets developed throughout the colonial period. Finally, conclusions are presented in section 7, showing that first, Britain did significantly impact goods markets by introducing the railroad, and second, Britain provided India with an open capital market that was eventually lost after independence.