The Rise of an Enclave Economy

INDIA'S NORTHEAST: DEVELOPMENT ISSUES IN A HISTORICAL PERSPECTIVE, Alokesh Barua, ed., Manohar - Centre De Sciences Humaines, 2005

21 Pages Posted: 11 Sep 2008 Last revised: 29 Nov 2009

See all articles by Hiranya K. Nath

Hiranya K. Nath

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Date Written: 2005

Abstract

Development theories of dual economy emphasize interactions between the modern sector and the traditional sector through factor and commodity market linkages for long run growth of the economy. Within this paradigm of development this paper tries to explain why substantial investments in a modern sector in Assam during the later half of the nineteenth century failed to trigger off a process of sustained growth that encompasses the agriculture-based traditional sector. On the basis of the available historical evidences - both statistical and anecdotal - it establishes that on the eve of the British colonization Assam was a labor-short, barter economy having limited trade links with the rest of the world. After the British established their rule substantial investments took place in a modern sector that consisted mainly of tea plantation. However these investments could not establish any link between the modern and the traditional sector through important linkage effects in capital, labor and commodity markets. With these missing links the dual economy that emerged, instead of projecting the economy in a path of long run growth, gave rise to an economic enclave that remained backward for years to come.

Keywords: Dual economy, Assam, linkage effects, economic enclave

JEL Classification: N15, N55, N95

Suggested Citation

Nath, Hiranya K., The Rise of an Enclave Economy (2005). INDIA'S NORTHEAST: DEVELOPMENT ISSUES IN A HISTORICAL PERSPECTIVE, Alokesh Barua, ed., Manohar - Centre De Sciences Humaines, 2005, Available at SSRN: https://ssrn.com/abstract=1265826

Hiranya K. Nath (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

SHSU Box 2118
Huntsville, TX 77341-2118
United States

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