Portugal and the Curse of Riches - Macro Distortions and Underdevelopment in Colonial Times

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This paper attempts to answer the following question: How, in economic terms, was being colonized by Portugal “different” for Lusophone African countries than was being colonized by France or Britain? Gervase Clarence-Smith addressed this question for the period after 1825, and comes to the conclusion that Portuguese economic motivations were much the same as those for other colonial powers. Nevertheless, this leaves open the question of whether the objective conditions of Portugal’s economy and its development trajectory over the long run (i.e. from the 15th century on) may have affected its colonial relations regardless of whether motivations were the same. The answer to this question is examined in terms of Portugal’s own lack of economic development and the economic processes which led to this. Most important is the fact that Portugal experienced a massive influx of foreign exchange (gold and revenue from the spice trade) during a period when other Northern European countries were undergoing the beginnings of the Industrial Revolution and the consequent transformations in their economies that this engendered. Portugal, however, never underwent these changes until the twentieth century, due at least in part to what is commonly called “Dutch Disease” in the economics literature, a name for a pattern of problems afflicting resource rich countries which distorts their development and retards the growth of productive sectors of the economy. Portuguese colonies were consequently involved in this syndrome in much the same manner that outlying provinces of modern-day resource exporting countries are. This syndrome is consistent with the parasitical nature of Portuguese exploitation during much of the colonial era, and particularly with the powerful need of Portugal to derive foreign exchange earnings from its colonies after the end of the gold and spice boom. Even so, it is difficult to conclude that Lusophone Africa was in fact worse off than its neighbors during most of the colonial era. However, the lack of development of Portugal itself can be seen as a powerful motivation for the pattern of settlement and exploitation of Portuguese Africa in the twentieth century, in that the large “exports” of unskilled labor and virtually complete marginalization of African populations from even menial labor in many instances was both more extreme than in other parts of Africa and a result of the inability of Portugal’s own undeveloped economy to provide sufficient productive opportunities by itself. Also in this vein, Portugal’s resistance to decolonization until the mid-1970's can also be viewed as stemming at least partially from the lack of development in Portugal itself. In the final analysis, it must be acknowledged that even though Dutch Disease analysis is a useful construct for aiding understanding of the long run economic processes at work in Portugal during the colonial era, it cannot be argued that this was the sole or even necessarily the primary causal factor at work. Other plausible hypotheses are possible, and at the end of the day we are left with a chicken-and-egg problem if any attempt is made to assign priority to one hypothesis over another. The paper concludes that even though no one theory of causality can be defended, we must admit that available evidence is, perhaps unfortunately for academics, capable of supporting multiple causal processes, and understanding this, and the relations between them can help us to a more accurate vision of history.

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WP 2002-03 January 2002


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Charles H. Dyson School of Applied Economics and Management, Cornell University



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