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Old January 16th, 2013, 03:11 PM   #1

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The Myth of India's "stolen" GDP and wealth


A regular excuse for the failures of the Indian sub-continent and its inhabitants by their apologists and the professional victims is that their wealth was "stolen" by British colonialism.
While the British ruled India from 1857 after the Sepoy mutiny was crushed until 1947, the sub-continent was, of course, never colonised.
In recent years it has become fashionable for moaners to quote, or often misquote the British economist, Angus Maddison, who calculated the relative GDPs and incomes of various regions of the world at different times in history in order to provide a history of world economics.
Simplistically, many "cherry pick" little bits of data, then misuse them to prove their case that "they wuz robbed" by suggesting that, as India had 25% of the world GDP in 1600, but only 4.1% in 1950--the rest had to have been "stolen". Here, though is an interesting illumination and a different presentation---by an Indian.
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Angus Maddison, a British economic historian,, is best known for his estimates of world gross domestic product (GDP) that go back all the way to the year 1 AD. In recent times, his charts have been used to tell the fascinating story of how the share of India and China in world GDP used to be very high till about 1600 AD, but started declining thereafter as they missed the industrial revolution. With their current rapid growth, their share in the world economy is now rising once again.
In 1000 AD, according to Maddison’s calculations, China and India together contributed 50.5% of world GDP (GDP being computed in 1990 dollars and in purchasing power parity (PPP) terms). By 1600, that share had gone up to 51.4%, with China accounting for 29% and India 22.4% of world GDP. A hundred years later, China’s GDP had fallen but India’s went up to 24.4% of world output. By 1820, however, India’s share had fallen to 16.1%. By 1870, it went down to 12.2%. International Monetary Fund (IMF) projections indicate that India’s share of world GDP would be 6.1% in 2015.
Was colonialism to blame? Did the drain of wealth to Britain impoverish a once wealthy country? Or was the decline in importance merely the result of the rise in productivity in Europe?
Well, the growth of India’s GDP between 1500 and 1600 was 22.7%, between 1600 and 1700 it was 22.2% and between 1700 and 1820 it logged 21%. So it’s not as if there was any huge decline in the rate of growth. Of course, that doesn’t preclude the possibility that Indian growth, too, may have taken off if the country was not under the thumb of the British. But China continued to be an independent country, albeit one much plagued by the Western powers, and its rate of growth too during the period was nothing to be proud of. What the data seem to be saying is that the coming of the British did not, at least in the first 100 years of colonial rule, make much of a difference to the growth rate of the Indian economy.
Was India a wealthy country before the British came? The numbers that have garnered the most attention have been his GDP estimates, because they fit in with the narrative of a strong India and China getting back their clout in the world economy. But what is that to the average Indian or Chinese citizen? What if the only reason these countries had such a high GDP in earlier times was because they had a larger population?
That is what is brought out by Maddison’s estimates of GDP per capita, again in PPP terms in 1990 dollars. In 1 AD, India’s GDP per capita was $450, as was China’s. But Italy under the Roman Empire had a per capita income of $809. In 1000 AD, India’s per capita income was $450 and China’s $466. But the average of the West Asian countries, such as Turkey and Iraq, was much higher at $621. In terms of general prosperity, therefore, it was the Arab world that was doing well a millennium ago. The Caliphate in Baghdad was a centre of power at the time and both science and culture flourished.
By 1500, though, new centres of prosperity had emerged. India’s per capita income was $550 and China’s $600 in 1500. The Arab world had declined. But standards of living in Western Europe at that time had already gone far ahead. Italy topped the table, with a per capita income of $1,100, the Netherlands following with a per capita income of $761. This was the Italy of the Renaissance, the Italy of Michelangelo and Leonardo da Vinci, of Raphael and Titian. The UK was not far behind, with a per capita income of $714.
By 1600, the centre of Europe had shifted northwards and the golden age of Holland had begun. Dutch per capita income was $1,381 in 1600, while Britain in Shakespeare’s time had a per capita income of $974.
Recall that 1600 was the year the East India Company was founded. In contrast, India’s per capita income continued to be $550, while China’s was $600. Note that even Ireland, one of the poorest of Western Europe’s countries, had a per capita income of $615, higher than India’s and China’s. In short, the per capita GDP numbers mirror the changes in power, prosperity and cultural and scientific achievement.
It wasn’t till 1981 that India had a per capita income of $977, beating that of Britain in 1600. And it wasn’t until 1993 that India’s per capita income of $1,399 surpassed what the Dutch had achieved in 1600. Maddison’s calculations show that in 2008, India’s per capita GDP ( in 1990 dollars, PPP terms) was $2,975, slightly more than one-third of the world average of $7,614. We have a long way to go.

Extracted from an article by Manas Chakravarty Aug 25 2010
Published in the on-line magazine of the Hindustan Times-LiveMint.
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Old January 16th, 2013, 03:18 PM   #2
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Interesting... This is an very interesting myt I guess.... Some Indians here like Ravid blame the brits for there stolen wealth.
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Old January 16th, 2013, 03:25 PM   #3

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Originally Posted by Gorge123 View Post
Interesting... This is an very interesting myt I guess.... Some Indians here like Ravid blame the brits for there stolen wealth.
....and for everything else in their lives!
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Old January 16th, 2013, 03:35 PM   #4
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....and for everything else in their lives!
You sure about that?
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Old January 16th, 2013, 03:59 PM   #5
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I find that when people talk about colonialism and stolen wealth, they usually end up being people who define wealth as the possession of shiny objects for barter.
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Old January 17th, 2013, 01:10 AM   #6

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All these 'statistics' quoted how accurate are they GDP for AD 1 China etc?

I often question how they can be used with such certainty.
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Old January 17th, 2013, 01:53 AM   #7

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I find that when people talk about colonialism and stolen wealth, they usually end up being people who define wealth as the possession of shiny objects for barter.
That indeed conforms to the standard definition of "wealth". When people want to talk about other things that have been taken, they often call it something else.
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Old January 17th, 2013, 10:11 AM   #8
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That indeed conforms to the standard definition of "wealth". When people want to talk about other things that have been taken, they often call it something else.
They have very little to do with wealth, they are tokens in the modern world. Wealth relates to infrastructure, logistics, liquidity, leverage, information, means of production, etc. A pile of diamonds sitting in your back yard is worthless independent of a developed system of trade and economics. The trinkets taken by the British are of laughably insignificant value compared to the system of trade and economics they brought to India.
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Old January 17th, 2013, 01:36 PM   #9
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How do they actually work out the per capita of nations that existed centuries ago? It seems highly inaccurate and silly to argue that far back.
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Old January 17th, 2013, 02:41 PM   #10
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I guess now that the British are no longer burdened by occupying territories that are over all, economic negative for them--the British economy will make leaps and bounds.


Helping in Afghanistan, Iraq, Libya, and now 'helping' the french in Mali, and also in the Falkland islands--I hope your 'burden' isn't too heavy. I shall pray for you that despite these economic pitfalls your awesome GDP keeps going like a freight train.
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