Was independence better than colonial rule? A comparative study of Liberia and Sierra Leone Leigh Gardner London School of Economics and Stellenbosch University

2 events on March 8 th, ) New York, NY, USA

2 events on March 8 th, ) Monrovia, Liberia Liberian President Tubman tells US Vice President Nixon that Ghana and other former colonies ‘should be conscious of the advantages which their ties with Britain and France gave them in developing their economies’

Others concurred with Tubman. From the New York Times, 23 March 1957 ‘For those who are impressed by the favourite myth of African political leaders – that before European colonization Africa must have enjoyed some sort of golden age, because its present economic and social problems are the evil legacy of wicket European colonialism – an examination of Liberia is instructive.’ – George Dalton, Northwestern University, 1965

This challenges the common view of colonialism. ‘Imperialism was in fact the extended capitalist system which for many years embraced the world – one part being the exploiters and the other part the exploited; one part making policy and the other being dependent’. Walter Rodney, How Europe Underdeveloped Africa 5

Motivation Growing literature on the long-term economic impacts of colonial rule – Duration (Greir 1999); identity of coloniser (Bertocchi and Canova 2002), priorities in colonial public spending (Bowden et al 2008; Huillery 2009), etc etc. Comparative study of similar countries (1 independent, and 1 colonized) to understand colonial ‘inheritance’ – Similar approach taken in Cogneau and Rouanet (2011) and Wood and Jordan (2000) 6

Sources Liberian archives mostly destroyed during the civil war Sources used: diplomatic correspondence (US and UK), papers of the Bank of England and Bank of British West Africa, Statesman’s Yearbook, reports of the Corporation of Foreign Bondholders (Liberia); UK colonial records (Sierra Leone) Recovery of Tubman papers (Indiana University) 7

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Shared history Founded as colonies for freed slaves and ‘recaptives’ (Sierra Leone in 1787 and Liberia in 1822) Liberia is slightly larger but with a smaller population. Sierra Loene’s ‘creole’ population is larger than Liberia’s ‘Americo’ population 9

Shared history (2) Political and economic institutions dominated by settlers and ‘recaptives’ in both. Settler elite used force to establish dominance over indigenous inhabitants – this has been called ‘black imperialism’ Elite interests linked to international trade in both cases 10

Shared history (3) Trade and agriculture were dominant industries until WWII. Similar cash-crop exports (palm products, ginger, coffee) Minerals became largest export in post-war period (iron ore, diamonds) 11

Liberia was wealthier in Current poverty linked to civil wars during the 1990s. 12 GDP per capita (1990 international dollars) Source: Maddison (2010)

The reverse was true in the early 20 th century. 13 Constant 1913 prices. Sources: Statesman’s Yearbook; Statistical Abstract of the British Empire.

Exports per capita similar until 20 th century expansion. 14

Imports (and government revenue) rose with exports. 15 Constant 1913 prices. Sources: Statesman’s Yearbook; Statistical Abstract of the British Empire.

3 main periods ‘Scramble’ up to World War I – Formative period for development of export industries, specialization Inter-war period – Volatility in prices of commodity exports Post-WWII – Changing world order 16

Trade expansion – late 19 th /early 20 th century Rising prices for primary commodities linked to increased trade with SSA (beginning with palm oil and ‘legitimate trade’) In colonies, high transport costs overcome by investments in infrastructure (particularly railways) – Grants and loans 17

‘Empire effect’ and access to capital Recent literature debates whether colonies could borrow at lower rates (Accominotti et al. 2011; Ferguson and Schularick 2006; Obstfeld and Taylor 2003) Accominotti et al (2011) – lower interest rates were linked to better financial control Ability to borrow (and make reasonable use of funds) was key in the construction of railways in Africa 18

The parallel story of the 1871 loans Liberia £100,000 at 7% for public works and to pay off internal debt Loan funds appropriated by London agents and deposed President Defaulted until loan terms renegotiated in 1898 Sierra Leone £50,000 at 6% for habour works Repaid by 1898 Borrowed further funds (£150,00 at 4%) for financial assistance, construction of railway after Protectorate established

Inter-war period (1) 20 Constant 1913 prices. Sources: Statesman’s Yearbook; Statistical Abstract of the British Empire.

Inter-war period (2) 21 Constant 1913 prices. Sources: Statesman’s Yearbook; Statistical Abstract of the British Empire.

Post-war reversal of fortune How did Liberia overtake Sierra Leone so quickly? Switch to US dollar in 1943 – avoided devaluations, sterling balances US military investments in infrastructure Post-war ‘open door’ poliicy 22

Conclusions Sierra Leone gained from being a colony before WWII owing to: – Better access to capital – Colonial trade links – ‘Agencies of restraint’ BUT - Liberia benefitted from an early move into the dollar area and post-war connections with the USA 23

Lessons for colonial impacts literature? Political independence did not necessarily mean – Less dependence on export markets (and vulnerability to downturns) – Better institutions Need to work harder to distinguish colonialism from other factors affecting African economic growth 24