Globalisation, Inequality and Institutions in West Sumatra and West Java, 1800–1940

ABSTRACT

How did globalisation affect living standards and inequality in colonies relying on exports? This question is investigated through a comparison of social and economic developments in two regions of the Dutch East Indies (colonial Indonesia): Minangkabau in West Sumatra and Priangan in West Java, looking at the period between 1800 and 1940. These two regions were remarkably similar in terms of export crops grown and factor endowments and the Dutch colonial government implemented a comparable system of forced coffee cultivation in both these areas in the nineteenth century. Outcomes in terms of levels of income and economic inequality in these areas differed markedly, mainly as a result of different indigenous property rights regarding land and the power of local elites. This article highlights the interaction between indigenous and colonial institutions and the importance of this interaction for social and economic development in an age of rising global trade.

KEY WORDS:

• colonialism
• Indonesia
• inequality
• property rights
• living standards
• trade

Acknowledgments

I thank Ulbe Bosma, Ewout Frankema, Jan Luiten van Zanden, participants of the session on “Globalization and Inequality in Southeast Asia in the Long-Run” at the World Economic History Conference in Boston in 2018, the Utrecht University social and economic history seminar and the Wageningen University rural history seminar as well as the editor and anonymous referees of this journal for useful comments and suggestions. Any remaining errors and inadequacies are my responsibility.

Disclosure Statement

No potential conflict of interest was reported by the author.

On-Line Data Set

Underlying data available at: https://doi.org/10.17026/dans-xfx-7ucx.

Notes

1. Percentages represent the averages for the years 1920, 1925 and 1930 for the most important crops: coffee, kina, rubber, tea and copra (see Table 2).

2. Assuming a family of five persons (Boomgaard 1989, 153–154).

3. Breman (2010, 271) provides some examples of different types of punishment for misconduct and the use of arms to force workers onto plantations.

4. By the mid-1920s, this number had declined to about two days and almost 90% of people liable to these services bought themselves out (KV 1926).

5. Indigenous rubber production declined in West Sumatra after 1925, a peak year, probably in response to declining world prices.

6. The investigators expected a downward bias in the average income figures as they could not be certain to have included all potential sources of income. Furthermore, the local population may have reported lower income figures out of fear for higher taxes.

7. For Priangan, see Boomgaard (1989, 149); for Minangkabau, see Young (1994, 154). The assumption of five per household is slightly too high in West Sumatra, but that coverage of the tax is near universal.

8. The Appendix also shows data on inequality for the indigenous population separately, with similar results.

9. For a discussion of path dependency in the development of local institutions for market exchange in Java, see Henley (2015).

Additional information

Funding

This work was supported by the Dutch Organisation for Scientific Research (NWO) under the grant no. 275-53-016.