A CHOGM Post: Did Britain grow rich by exploiting its colonies?

When we were is school we told that the British (and the Portuguese and Dutch before them) invaded the country and exploited its resources and grew rich in the process. This was said as if it were accepted wisdom, simple statements but with no analysis. No one thought this was very important, since it was old history anyway and no one bothered to question this. 

They were rich, we were poor; they colonised us, ergo this must be true. This claim and variants of it is now in the media.

The question that I have been pondering is, if the British were growing rich on the country's resources, why did the country fail to prosper after independence? The easy answer to give is that although the country received political independence, trade and business remained in the hands of the British. A neo-colonial instrument of control that continued after independence.

Some of our leaders believed this and a  wave of nationalisation and land reform saw the end of almost all foreign owned businesses by the 1960's and early 1970's.

Yet we did not prosper.

Indeed the country's fortunes declined further. At independence the country's economy was primarily agricultural, the most important produce being tea, rubber and coconut.  By the 1970's these were all controlled by the local population, either directly or indirectly through the state.

Sri Lanka was not alone in this experience. All over Africa and Asia the European powers retreated from their colonies but their exit did not result in a sudden increase in wealth. Many African nations, despite enormous wealth in natural resources; Nigeria, the Congo, Angola to name just three, are now poorer than they were at independence.

Meanwhile, the nations of Western Europe rebuilt from the ruins of the second world war are, despite all the problems they face now, much richer than they were at the end of the 19th Century. Countries like the United States, Australia and New Zealand, which started off as colonies prospered despite a lack of significant colonial expansion.

The answer to the question of as to how colonial powers grew rich seems a bit more complex than the simple statement that we were taught.

I believe the enormous wealth that was created in Britain between the 17th and the end of the 19th century was due to two factors: the industrial revolution and free trade.

In Britain's case  the colonies did assist trade by creating new markets in which British companies and products had preferred access. Thus British business had an advantage over other European and American companies (and any local businesses that were around) which helped them prosper. This helped but I don't think it was the key determinant of success, ultimately it was trade that created wealth.


The countries that have prospered over the last fifty years did so through increased trade, Japan and East Asia being spectacular successes. In the early 1950's the bet was that it was the African continent, with its abundant resources that would succeed, but it was not to be. Countries that looked inwards, from India until the 1990's to China until 1978, remained stagnant. Once China started to trade its fortunes improved.

At first China started trading internally. Instead of only being allowed to work on the collective farms farmers were allowed to cultivate a part of the land and sell the excess. Food production increased rapidly and soon the private produce exceeded that of the collective farms. This experiment was extended gradually to other areas of the economy and now it is the largest trading nation in the world.

If we close up to the world, try to trade only internally, a popular suggestion these days, we will be doomed. It was tried in the 1960's and 1970's it did not work; it will not work any better now.