Colonialism is good for colonies: empirical evidence

Is colonialism good or bad? Professors James Feyrer and Bruce Sacerdote at Dartmouth College put up some hard data to shed some new light on this debate. They collect meteorological (wind speed, direction, etc), historical, and socioeconomic data for a large cross-section of islands. Based on the data, they find that the number of years spent as a European colony and the density of settlement by Europeans is strongly positively related to the island's GDP per capita and negatively related to infant mortality.

They also show that colonizers’ cherry-picking (i.e. they chose better islands to settle) did not cause the results. Instead, wind direction and speed decides where Europeans settled first, which suggest that there is some positive causality betwween colonial rules and socioeconomic outcomes.

Another surprising result is that, French islands appear to outperform British, Spanish, Portuguese and Dutch islands. Well, that’s quite an achievement considering that French are not good sailors.

Is Colonialism Good For You? Evidence From A New Database of Islands
We use a newly assembled database of islands throughout the Atlantic, Pacific and Indian Oceans to ask whether colonial origins affect economic growth and health outcomes. The number of years spent as a European colony and the density of settlement by Europeans is strongly positively related to the island's GDP per capita and negatively related to infant mortality. We show that an island's discovery by Europeans and subsequent settlement is related to the prevailing wind patterns. We instrument for length and type of colonization using wind direction and speed. We argue that wind patterns which mattered a great deal during the age of sail do not have a direct effect on GDP today, but do affect GDP via their historical effects on colonization. Which European country does the colonization and settlement appears to be less important than length of time spent as a colony. French islands appear to outperform British, Spanish, Portuguese and Dutch islands.

Niall Ferguson in his column in the Telegraph, is more explicit about this in his article “Africa doesn’t need handouts; it needs honest governments”

“Nobody, least of all me, claims that British imperial rule was perfect. But most sub-Saharan governments since independence have managed to treat their populations significantly worse than the British did. For all its imperfections, the Colonial Civil Service was not corrupt. When money was sent to build railways or schools, British officials did not simply pocket it”

He further provides evidence that most of the aids sent to African countries after their independence were simply looted by the local elites.

“Between 1950 and 1995, Western countries gave away around $1 trillion (in 1985 prices) in aid to poorer countries....... much of the money that has poured into poor countries since the 1950s has simply leaked back out - often to bank accounts in Switzerland. One recent study of 30 sub-Saharan countries calculated that total capital export for 1970-96 was some $187 billion, which, when accrued interest is added, implies that Africa's ruling elites had private overseas assets equivalent to 145 per cent of the public debts their countries owed. The authors of that study conclude that "roughly 80 cents on every dollar borrowed by African countries flowed back [to the West] as capital flight in the same year".

I think the original title of Ferguson’s article was  “Africa doesn’t need handouts; it needs Europeans governments”, and the editors of The Telegraph changed the title for political correctness reasons.