New Study Links Dutch Colonialism To Modern Industrial Development

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A new study co-authored by an MIT economist draws a link between Dutch colonialism in Indonesia and modern industrial development in the country. According to the authors of the study, who stressed that their results were surprising and not intended to justify or validate Dutch colonialism, areas of Indonesia converted into sugar plantations under Dutch colonial rule in the 1800s are more likely to have higher concentrations of industrial development in modern times. 

That’s according to their new paper, “The Development Effects of the Extractive Colonial Economy: The Dutch Cultivation System in Java,” published in The Review of Economic Studies. The study drew upon historical data on Dutch colonialism and modern economic data from the government of Indonesia, specifically focusing on sugar plantations on the island of Java, the geographic and economic center of Indonesia that’s home to its capital city, Jakarta. 

The authors argued that locations where the Dutch established sugar factories “persisted as manufacturing centers” and have a higher level of industrial development today than other nearby areas that lacked Dutch-established sugar infrastructure. The authors stress that it likely has to do with the fact that the Dutch didn’t merely establish sugar factories in these areas, but also infrastructure such as railways which could be used to extract resources from the interior of the country in order to deliver it to the colonial metropole in Europe. That infrastructure and the development which sprung up around it endured, to some extent, after Dutch rule ended. 

This story is an excellent example of why those who study economics often need a deep appreciation of history. It’s also not necessarily representative of colonialism and its long-term economic impact elsewhere; for instance, one of the co-authors of this study has conducted scholarly research on this topic elsewhere which produced different results.

According to a separate research paper from Melissa Dell, one of the co-authors of the Dutch colonialism study, colonialism in Peru ultimately negatively impacted development in the country. The “Mita” system of forced mining in Peru and Bolivia, which the Spanish Empire sponsored to extract vast sums of silver and other precious materials from the area, led to less infrastructure development and more subsistence farming in these areas, according to Dell’s paper. 

Fervent discussion on the impact of colonialism, imperialism, and other hierarchies of control on modern economics has existed for decades. A famous 1967 interview given by civil rights leader Dr. Martin Luther King, Jr., notably includes King speaking about the stigma and suffering uniquely experienced by African Americans in the United States given the historical forces of oppression which mitigated their efforts to achieve economic self-sufficiency. 

“America freed the slaves in 1863, through the Emancipation Proclamation of Abraham Lincoln, but gave the slaves no land, and nothing in reality. And as a matter of fact, to get started on,” King said. The statement gives credence to the fact that discussions centered on the long arch of history and how it impacts the modern world are nothing new, but nevertheless critically important.

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