Yackee: Colonialism, Foreign Investment and Property Rights Reconsidered

Jason W. Yackee (Univ. of Wisconsin - Law) has posted Colonialism, Foreign Investment and Property Rights Reconsidered. Here's the abstract:

In an article in IO, now somewhat old but still regularly cited, Professor Jeffrey Frieden (1994) imaginatively presented European colonialism as resolving what has become known as the “credible commitment” problem in the IPE literature on foreign investment. Frieden claimed that colonialism’s aim or function was to prevent expropriation of metropolitan investment. I revisit Frieden’s provocative interpretation, arguing that it gets things wrong—both about colonialism and investment. The better interpretation highlights themes associated with the school of historical rather than of rational institutionalism: the role of subjective ideas; of path dependence, and of unintended consequences. Through a close examination of French colonialism in Africa I show that the problem of credible commitment was both subjectively and objectively absent, and that patterns of colonial investment are better explained as a function of material factors, then-dominant economic beliefs and ideas, and the French government’s policy interventions and abstentions. The investment story of French colonialism in Africa is about the relative lack of private investment—arguably due, at least in part, to an excess of rights, allocated to the wrong people and of the wrong type—even in those sectors of the economy that Frieden suggests are most sensitive to the colonial resolution of credible commitment problems.