chapter  1
COLONIALISM AND FOREIGN OWNERSHIP OF CAPITAL : A TREATMENT IN A MODEL OF INTERNATIONAL TRADE
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This chapter provides a framework for explaining several themes that occur frequently in the literature relating to economic development and colonial economic history. Two of the themes often developed are: (i) de-industrialization and (ii) stagnation after an initial spurt in economic activity. For example, in the context of Indian economic history it is not clear whether there was a process of de-industrialization, but there is no doubt that several historians have made statements about the "destruction" of the Indian handloom industry. There are references to the "the ruin", the "rapid collapse" and the almost "total extinction" of this industry in the nineteenth century.1 One of the important objectives of this chapter will be to show how the specificity of a factor and its accumulation over time can result in the decline of the traditional sector.