As part of Columbia University's Spring 2024 Development Workshop, Dean Yang will present "War Mobilization and Economic Development: World War II and Structural Transformation in India" at the Development Seminar.
Abstract:
Can temporary wartime mobilization change the long-run development trajectory of an economy? We study how mobilization for World War II in colonial India influenced its subsequent long-run economic development. From 1939 to 1945, the British colonial government purchased massive amounts of war materiel within India. We study long-run impacts on Indian structural transformation -- the transition of employment from agriculture to the modern sectors (industry and services) -- in Indian districts. Causal identification takes a shift-share approach, exploiting variation across industries in war-related government orders, and variation across districts in their pre-war industrial structure. Our analysis covers nine decades (1921-2011), and makes use of a wide array of newly digitized data. We find that World War II economic mobilization (procurement of war materiel) had a positive and significant impact on long-run structural transformation in Indian districts. More than six decades later, Indian districts that experienced higher demand for war materiel during the war experienced higher structural transformation from agriculture towards industry and services. We find substantial spillovers across economic sectors, particularly towards services sectors that were not directly subject to the initial World-War-II-related demand.
