Colonial trade encouraged colonies specialization in primary products. Did this prevent industrialisation in colonies? And did the absence of industrialisation help to keep colonies under control? To answer these questions, we examine the impact of the temporary trade collapse between Britain and India due to World War I, on industrialisation and anti-imperial feelings in India. Exploiting cross-district variation in exposure to the trade shock, we find that districts more exposed to the trade shock experienced substantially faster industrial growth in 1911-21, placing them on a higher level of industrialisation which persisted up to today. Using the WWI trade shock as an instrument for industrialisation levels, we also find that more industrialised districts were more likely to express anti-imperial feelings in 1922, and to vote for the Indian National Congress in the landmark election of 1937.
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Roberto Bonfatti and Björn Brey
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