ABSTRACT
This chapter focuses on two important ones: land tenure institutions (which determine the distribution of economic wealth) and the degree of accountability of administrators (which representative assemblies might help to establish). India provides an excellent venue for comparing the long-run consequences of direct versus indirect colonial rule, which generate very different incentives for ruler accountability. The chapter reviews the persistence of investments made in colonial times, and the cross-country literature on the long-run effects of specific colonial institutions. It conducts an in-depth analysis of historical land tenure systems in India. The chapter compares outcomes across areas under direct and indirect colonial rule in India, after controlling for the highly selective nature of the British annexation policy. It also shows that the Indian case fits cross-country patterns in several respects: initial inequality in the wealth distribution leads to poorer long-run outcomes and places with initially better governance appear to derive long-run advantages.
