India's deindustrialization

In a previous news post about Afghanistan in the 60s, I mentioned British colonial rule as a major player in the deindustrialization of India. This was something I heard in my economics class a while ago, so I looked more into it and found this paper.

Section 2 of the paper gives a nice narrative of the events. In summary the paper proposes two events played a role in destroying the textile industry of India in the 18th century. Firstly, the political turmoil at the time of the dissolution of the Mughal empire, which reduced agricultural productivity, among other things. This raised prices of food, thus of manufactured goods such as textiles.Secondly, East India Company rule led to pro-British policies, namely reducing import tariffs and destroying the industry because it couldn't compete to the more advanced productivity of the British goods.

This second point is something we see often now through the mess of the Washington consensus: We get rid of trade barriers in countries whose industries couldn't possibly compete because they've not yet developed properly. This destroys any possibility of a local market being created properly. Infant industry protection is necessary to allow growth in beginning stages of developement, and destroying trade barriers is the worst thing we can do on that front.