THE IMPACT OF COLONIALISM AND INDEPENDENCEON EXPORT GROWTH IN BRITAIN AND FRANCE'

By IAN LIVINGSTONE

Britain's poor economic performance in recent years is well known, and it isclear that its rate of economic growth is at least partly associated with slow exportgrowth. A possible contributory factor is the loss of markets in British ex-colonies,as these have been given independence and subsequently been more free to 'shop'away from the metropolitan power. Certainly in some cases a fall in Britain'smarket share is observable, and since a large number of colonies were grantedindependence in the early 1960's and just before, this could have been an importantfactor affecting Britain's trade position during the 1960's and since. This paperinvestigates the extent to which this fall in market share has been a generaloccurrence, and the impact on British exports. France has passed through asimilar process of losing colonies. Since the most interesting question is whyBritain's economic growth has lagged behind that of other Western countries,such as France, we shall compare the experience of Britain with that of France.

The market share of the metropolitan country may be kept high under colonial-ism by both deliberate and non-deliberate actions. For example, local expatriateconcerns will deliberately favour parent companies, while government purchasingpolicy may be similarly biased. But also expatriate firms will be more familiarwith potential suppliers in their own countries and ignorant of other potentialsources, so that importation will also be biased towards the metropolitan countrythrough business inertia, while inertia rather than deliberate policy may also affectgovernment purchasing. We may refer to this as the 'market share' effect ofcolonialism. There will, of course, be other effects or gains to the colonial powerfrom colonialism besides this. For convenience we shall refer simply to the 'gainsfrom colonialism' and the 'losses from decolonization' although these will be con-fined here to market share effects. The special ties with the metropolitan countrymay be maintained in part, at least, after independence. Where this results in arelatively high market share for the former colonial power it will be convenient torefer to this as the result of 'neocolonialism', again to be interpreted in terms of amarket share effect only.

Table 1 is a fairly complete list of British ex-colonies. The years compared are1972 and a four-year period prior to and including the year of independence.The percentage share of imports from Britain within the total of imports for thefour years is taken in order to eliminate the effect of annual fluctuations, and thusprovide a better bench mark. We see that in about 14 out of 20 countries there wasa substantial drop in the British share in imports, suggesting that the 'marketshare effect' is in fact a significant phenomenon. The arithmetic mean share fellfrom 27.4 per cent to 19.7 per cent in 1972. It should be remembered that in the

1 am grateful to George Kinyua for assistance with the calculations in this paper.211

212 BULLETIN

latter year there may still be some 'neocolonial' market benefit, so that this fallrefers to only the reduction in market benefit over the period, not the total benefit.

Table 2 compares the experience of France. This shows that France sufferedthe same phenomenon, much greater falls in fact, substantial reductions occurringin 12 out of 14 cases. The mean share fell from 67 per cent to 42 per cent, that is,by over one third, over the same period. Two further interesting observationsmay be made. First, the French were apparently much the more successful'colonialists', obtaining a mean share of 67 per cent in 1960, compared to Britain'spre-Independence share of 27 per cent. Secondly, they are apparently much moresuccessful 'neocolonialists' also, managing to retain a mean share of 42 per cent in1972 compared to Britain's pre-Independence share of 27 per cent. Some ofFrance's market shares up to Independence were extraordinarily high: 80 per centfor Algeria, 79 per cent for Malagasy, 77 per cent for Niger, and 72 per cent forGuinea. Even in 1972 its share in the imports of Gabon was 59 per cent and inthose of the CAR 62 per cent.

The two tables also reflect interestingly on the policies pursued since Indepen-dence by individual African countries. Those in which British 'neocolonialism'was apparently stronger up to 1972 include Malawi and Uganda, while there wasonly a small fall in market share in Kenya.2 Although the British share fellconsiderably in Tanzania, this was by no means confined to left-inclined countries,and substantial falls are recorded for Nigeria and Sierra Leone. Among theFrancophone countries the less 'liberated' include not only the CAR and Gabon,but also Senegal and the Ivory Coast. But, though substantial falls are recorded,the share has nowhere fallen below a high level, except in the extreme case ofGuinea.

How far have these falls in market shares in the ex-colonies affected aggregateexports in Britain and France? This is calculated for Britain in a very rough wayas follows. First we calculate, what imports from Britain into each of the ex-colonies would have been in 1972 if the benchmark percentages had been main-tained. These are then subtracted from the usually smaller actual figure ofimports from Britain in 1972 to obtain the 'hypothetical loss of exports' byBritain from each of the countries as a result of her falling market share, shown inTable 3. These sum to $1852 million, the total British loss in 1972 due to fallingmarket shares. Since total UK exports were $24,344 million in 1972, this losswas equal to 7.7 per cent of actual exports in 1972.

However, this is a crude figure which needs some adjustment. The whole ofthe loss need not have been due to 'decolonization'. The shares might have fallenanyway, owing to diminishing competitiveness of British products or reducedattractiveness of product lines offered compared to those of other exportingcountries. Since this factor would be expected to affect British exports to ailcountries, whether former colonies or not, a large control group was taken, com-posed of 18 countriesmainly, but not all, European. The share of Britain in the

2 The figure for Zambia reflects the special factor of a fall in imports from Rhodesia andSouth Africa.

COLONIALISM AND EXPORT GROWTH 213

imports of these countries over the three years 19GO-62, corresponding to the yearsof independence of most of the ex-colonies concerned (this is more accurate for theex-French colonies), is compared with Britain's share in 1972. A similar calcula-tion is made for France. Both are shown in Table 4. As one would expect, Francehas done better than the UK, increasing her share, on average, in the controlgroup countries, while Britain's share has clearly dropped. However, the increasefor France is only fractional, less than might be expected considering France'srate of economic growth in this period; and it starts from a lower level. Thechange in the import shares of both Britain and France, whether to individualcountries or to the group as a whole, are less unfavourable for the control groupcountries than for the ex-colonies over the same period. This confirms that thefall in market shares sustained in the ex-colonies was relatively large.

We can now make a rough estimate of what portion of the 7.7 per cent loss ofexports in 1972 was due to decolonization. Britain's import share in the controlgroup countries fell from 11.2 per cent to 9.4 per cent. In the absence of a loss ofcompetitiveness, they would have been equal to 11.2 per cent of control countryimports from Britain in 1972, rather than merely 9.4 per cent, i.e. they would havebeen greater by 1.8/9.4 or 19.2 per cent. Since UK exports in 1972 to the ex-colonies listed accounted for 11.0 per cent of total UK exports, if these had alsobeen 19.2 per cent higher, they would have been higher by an amount equal to19.2 percent of 11.0 2.11 per cent of UK exports in that year. Hence the loss dueto decolonization alone is equal to the total loss due to falling market shares(7.7 per cent) less that due to general loss of competitiveness (2.1 per cent), i.e. to5.6 per cent of total UK domestic exports in 1972.

It is possible to reverse this calculation to estimate the benefit to Britain in19GO from the larger market shares as compared to 1972. Again this must beadjusted to take into account the generally better competitiveness Britain had atthat time, to find the market benefit due to 'colonialism'. Table 3 shows thehypothetical gain to Britain in 19GO from having the 19GO market shares ratherthan the 1972 shares. These amount to $602.8 million, out of the actual level ofUK exports in 19GO of $9966 million, i.e. 6.0 per cent of 1960 exports. Britain'sshare of imports to control group countries in 19GO was 11.2 per cent compared to9.4 per cent in 1972; without the extra competitiveness they would have been9.4 per cent, that is 1.8/11.2 = 16.1 per cent less than they actually were. Since UKexports to ex-colonies were 16.9 per cent of total UK exports in 1960, we can saythat if they also had not had the benefits of extra competitiveness they wouldhave been 16.1 per cent less, i.e. they would have been lower by 16.1 per cent of16.9 = 2.7 per cent of total UK exports in 1960. Hence the gain due to 'colonialism'in 19GO is equal to the total benefit from larger markets (6.1 per cent) less thebenefit due to extra competitiveness in 19GO (2.7 per cent), i.e. to 3.4 per cent oftotal domestic exports in 19GO.

Similar calculations were made for France, the effect of changed generalcompetitiveness operating this time in the opposite direction to loss of marketbenefit from colonialism. The results for the two countries, all measured as apercentage of current metropolitan exports, can be summarized as follows:

214 BULLETIN

Britain FranceMarket benefit fromcolonialism in 1960 3.4 12.9Loss resulting in 1972from decolonization 5.6 5.2

These are quite interesting results. \Ve can say that in the early 1970's Britainwas not shouldering any heavier 'cross' from loss of exports to former colonies thanwas France. In both cases the loss amounted to 5 or 6 per cent of total exports.That is large enough to be a nuisance, particularly in terms of balance of payments,but not to make the difference between stagnation and growth if one compares, forinstance, the progress made in this period by Italy or Japan.

In any case the market benefit to Britain from colonialism in 1960 was evensmaller, 3.4 per cent of her exports; certainly not enough to make her anxious tohold on to her colonies in order to profit from their markets. This would not havebeen true, however, of France, whose 'hold' over her colonies was worth 13 per centof her exports in 1960 as compared to a reduced but still successfully 'neocolonial'position in 1972. What seems to have happened is that France has beenmuch more successful than Britain in finding alternative markets for her exportsand therefore absorbing the market effects of the loss of colonies. This is reflectedin the following figures of export shares:

The main sources of gain to Britain in 1960 and of loss in 1972, as shown inTable 3, were:

Sources of gain in 1960

$mn%Sources of loss in 1972

India 180 30 India 387 21

Pakistan 54 9 Pakistan 94 5Sri Lanka 43 7

Nigeria 218 12Nigeria 79 13

Ghana 77 13

Trinidad 129 7Trinidad 50 8 Jamaica 87 5Jamaica 33 5 Singapore 120 7

Other 819 44Singapore 30 5Other 57 9

Total 603 100 Total 1852 1(K)

Export to colonies or ex-colonies as apercentage of total exports for 1960 1972

Britain 16.9 11.0France 26.5 6.2

COLONIALISM AND EXPORT GROWTH 215

This indicates that India and the Indian sub-continent were easily the mostlucrative from Britain's point of view, followed by West Africa, particularlyNigeria, and Trinidad and Jamaica in the West Indies, with Singapore also sig-nificant. The important countries are either large ones like India and Nigeria, orrelatively rich ones (for less developed countries) like Singapore or Trinidad. TheEastern African countries, for example, even taken together, are much lessimportant.

The main sources of gain and loss to France were:

France's gains (over and above the remaining 'neocolonialism') and losses are evenmore concentrated: Algeria accounts for 67 per cent in 1960 and 40 per cent in1972, and the North African countries together 64 per cent in 1972. Their proxim-ity to France and the extent of direct French settlement is a special factor here.Elsewhere it is the two richer territories of Ivory Coast and Senegal that areimportant. Guinea is a special case where for political reasons France's share hasbeen drastically reduced to below the level at which France is 'competitive',presumably at an economic cost to Guinea as well as to France.

University of Newcastle upon Tyne.

Sources of gain in 1960

$mn %Sources of loss in 1972

$nin %Algeria 446 64 Algeria 472 39Morocco 74 10 Tunisia 177 15

Morocco 156 13

Ivory Coast 37 5 Ivory Coast 76 6Senegal 47 7 Senegal 44 4

Guinea 150 13Other 95 13 Other 119 10

Total 699 100 Total 1194 100

Mean: 66,55 Mean: 42.0

1971 instead of 1972.

Coun tryYear of

independence

Years for whichBritain's share inimports calculated

Britain's %share for those

yearsBritain's %

share in 1972

1. Nigeria 1960 1957-60 43.8 29.42. Ghana 1964 1961-64 32.8 15.53. Sierra Leone 1961 1958-61 49.3 23.14. Gambia 1965 1962-65 40.3 28.35. Kenya 1963 1960-63 33.4 28.46. Uganda 1962 1959-62 36.2 33.67. Tanzania 1961 1958-61 35.2 17.88. Zambia 1964 1964 only 17.2 23.69. Malawi 1964 1964 only 23.4 30.1

10. India 1948 1948-50 30.0 12.6li. Pakistan 1958 1955-58 22.9 9.212. Sri Lanka 1956 1953-56 17.4 11.713. Malaya 1957 1954-57 18.3 13.014. Singapore 1959 1956-59 10.2 6.715. Hongkong 1960 1957-60 11.9 17.716. Jamaica 1962 1959-62 33.0 19.017. Barbados 1961 1958-61 38.6 26.818. Trinidad 1961 1958-61 29.7 12.819. Br. Guyana 1961 1958-61 41.9 30.420. Honduras 1961 1958-61 3.2 3.5

CountryYear of

independence

Years for whichFrance's share inimports calculated

France's %share for those

yearsFrance's %

share in 1972

1. Algeria 1962 1959-62 80.0 44.82. CAR 1960 1957-60 61.3 61.73. Chad 1960 1957-60 62.1 47.14. Dahomey 1960 1957-60 59.5 38.3a5. Gabon 1960 1957-60 62.5 58.76. Guinea 1958 1958 only 72.0 0.27. Ivory Coast 1960 1957-60 64.1 47.18. Malagasy 1960 1957-60 71.3 55.39. Mauretania 1960 1961 only 79.1 36.5

10. Morocco 1956 1953-56 51.5 31.111. Niger 1960 1957-60 77.3 46.612. Senegal 1960 1957-60 65.3 49.313. Togo 1960 1960 only 51.3 35.614. Tunisia 1958 1957-60 74.4 35.3

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APPENDIX

TABLE 1

The Fall in Britain's Market Shares in Ex-Colonies

Mean: 27.4 Mean: 19.7

Source: derived from the Yearbook of International Trade Statistics.a 1970 .. . 1972.

TABLE 2

The Fall in France's Market Shares in Ex-Colonies

COLONIALISM AND EXPORT GROWTH 217

Country

I. NigeriaGhanaSierra LeoneGambiaKenyaUgandaTanzaniaZambiaMalawiIndia

Il. PakistanSri LankaMalayaSingaporeHong KongJamaicaBarbadosTrinidadBr. GuyanaHonduras

TABLE 3

Estimates of Market Share Effects of Colonialism and Decolonization on British Exports

Hypothetical loss ofexports in 1972 b

Hypothetical gain inexports in 1960

($mn) ($mn)

217.850.631.7

3.324.7

2.963.9

(-30.95)(-8.8)387.393.720.372.5

119.5(-225.0)

86.716.7

128.516.7

(-0.6)

1852.2 mn 602.8 mn

Negative items, given in brackets, indicate that Britain has succeeded in increasing herhare, implying a negative loss (positive gain) over the period.

b Independence period currencies converted to dollars at 1960 exchange rates as given in the'earbook of International Trade Statistics.

TABLE 4

British and French Import Shares in Control Group Countries

78.577.114.1

1.414.10.1

14.1not calculatednot calculated

180.154.442.9

(-0.8)29.7

-(65.1)33.3

6.149.8

0.10.1

Percentage of importsfrom UK

Percentage of importsfrom France

Country 1960-62 1972 1960-62 1972

1. United Kingdom - - 2.3 5.32. France 4.5 4.9 - -3. West Germany 3.1 3.6 10.3 14.24. Italy 5.7 3.5 8.8 15.75. Netherlands 7.1 5.7 15.0 8.16. Belgium and Luxembourg 7.7 6.4 20.8 19.37. Denmark 14.2 12.4 4.3 4.68. Sweden 13.8 13.1 3.9 4.49. Norway 15.2 11.7 2.4 3.7

10. Austria 5.0 6.1 3.8 4.111. Switzerland 6.0 7.3 13.0 13.512. Spain 8.6 7.6 8.9 9.713. Portugal 14.2 13.0 8.5 6.314. Greece 10.9 7.0 6.2 8.215. Turkey 8.6 11.0 3.9 6.816. USA 6.3 5.4 2.7 2.517. Canada 10.1 5.1 0.9 1.318. New Zealand 28.7 26.0 1.0 1.019. Australia 31.8 19.8 1.4 1.8

Means: 11.2 9.4 6.6 7.3

NOTES:

a Negative items, given in brackets, indicate France has succeeded in increasing her share,implying a negative loss (positive gain) over the period.

1970 import figure used.1971 import figure used.

d 1961 import figure used.

Coun fry

Hypothetical loss ofexports in 1972a

($ mn)

Hypothetical gain inexports in 1960

($ nm)

1. Algeria 472.4b 446.32. CAR (_0.l)C (-0.3)3. Chad 930 1.94. Dahomey 16.2 8.35. Gabon 1.4 0.16. Guinea 149.7 14.37. Ivory Coast 75.9 37.08. Malagasy 32.3 23.29. Mauretania 26.8 19.8"

10. Morocco 155.7 73.911. Niger 19.9 0.512. Senegal 44.1 47.113. Togo 13.2 5.814. Tunisia 177.3 21.1

1194.0 698.9

218 BULLETIN

TABLE 5

Estimates of Market Share Effects of Colonialism and Decolonization on French Exports