1. Trade, Institutions and Ethnic Tolerance:
Evidence from South Asia
Saumitra Jha
Stanford Graduate School of Business
Fellow, CSDP and Niehaus CGG, Princeton
IFPRI, October 2012
3. Feb-Apr 2002: Ahmadabad massacres, Surat peace
Ahmadabad: 13 percent
Muslim: 24+ days rioting,
324+ dead (including old city).
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Surat: 12.3 percent Muslim: 6
Ahmadabad
days of rioting, 9+ dead (in
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Godhra
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new suburbs)
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Over the course of 20th
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# Surat
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century- Ahmadabad
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riot-prone;
Surat, “an oasis of peace”.
0 30 60 120 Miles
4. The research agenda
How do we encourage cooperation and peaceful
co-existence between members of different ethnic,
religious and social groups?
What strategies have achieved these aims historically?
What lessons can such strategies provide for
contemporary policy?
Financial innovations (“Swords into Bank Shares”)(Jha 08,
Jha and Mitchener, in prog.)
Organizational capacity acquired through war (among
vulnerable minorities)(Jha and Wilkinson 12)
Exogenous ∆ inter-ethnic complementarities
5. This paper
Can exogenous changes that generate robust inter-ethnic
complementarities have a lasting effect on peaceful
co-existence in ethnically- diverse societies?
In South Asia- yes.
6. This paper finds...
200 yrs after decline of exogenous, non-replicable minority
complementarities in overseas trade, medieval ports that were
the geographical focuses of the resulting Hindu-Muslim
exchange:
5x ↓ Hindu-Muslim riots (S. Asia, 1850-1950), (Gujarat, 2002).
25 pp ↓ any Hindu-Muslim riot
10x ↑ survival probability of tolerance each year (though
diminishing over time).
Despite: ↑ ethnic mix, ↓ income. In fact, effects bigger in larger,
more ethnically diverse towns. Further, household and
town-level evidence for:
∆ voting consistent with minority safe havens (Gujarat 2002)
∆ in between group inequality, membership in inter-ethnic
organizations, sustained ethnic specialization in trade, behavioural
measures of minority trust, 2005
7. Mechanisms: what it might be and what it ain’t
Evidence that highlights role of exogenous non-replicable
minority complementarity. Not just:
. . . Historic wealth in towns which lacked complementarities (mint
towns).
. . . Or medieval trade (inland trade routes) or modern trade (modern
ports) where complementarities could be replicated
. . . Or survivorship (medieval towns)
. . . Or historic human capital by itself (artisanal towns) - in fact human
capital and institutions are complements
. . . Or selection of ports due to continued congenial geography
Silted medieval ports show similar effects to other ports.
Medieval natural harbour driver of medieval port location
was medieval period-specific (does not predict colonial
ports).
9. Medieval ports and religious violence in India
Towns, Not Medieval Natural Harbours, Not Medieval Ports
Ports Medieval Ports
Riots, 1850-1950 Obs Mean SD Obs Mean SD Obs Mean SD
# of Hindu-Muslim Riots 476 1.116 3.416 53 0.925 5.487 59 0.136 0.472
Any H-M Riot 476 0.418 0.494 53 0.170 0.379 59 0.102 0.305
# Killed in H-M Riots 476 23.277 242.361 53 88.906 639.995 59 0.136 0.571
Total Days of H-M Riots 476 1.630 11.301 53 3.000 20.598 59 0.051 0.289
Colonial Era Outcomes and Covariates
% Muslims 1901 244 29.879 17.732 20 18.596 14.884 22 32.449 22.101
Mun. Income per Capita 316 1.805 3.092 28 2.155 2.6382 28 1.580 1.103
Colonial Overseas Port (1907) 476 0.038 0.191 53 0.170 0.379 59 0.356 0.483
Log. Population 1901 476 9.672 1.129 53 9.420 1.209 59 9.170 1.315
10. A paradox?
Montesquieu (18C): commerce encourages “civility”
between individuals due to mutual self-interest.
However: Chua (21C): commercially-oriented ethnic
minorities are often the focuses of ethnic violence.
Examples:
Chinese in Indonesia
Indians in East Africa
Many others.
11. A framework
Focus: environments with “non-local” ethnic minorities: better
outside options.
Our example: “non-local” Muslim traders had external
resources (information and ties to the Middle East): made
leaving town less costly than for “local” Hindus.
12. Conditions that favour “peaceful co-existence”
(SPNE with mixed populations, full production, no leaving)
1. Non-locals provide complementary goods
If not: “strong” locals have incentive to target non-locals to
seize goods and induce non-locals to leave, reducing future
competition
If so: reduced incentive for ethnic violence: if non-locals
leave, non-local- supplied goods become more costly in
future.
2. High cost to seize or replicate source of other group’s
complementarity.
If not: incentive to violently seize or (over time) replicate.
3. Mechanism to redistribute gains from exchange
If not: complementarity + limited supply ⇒ higher returns
for non-local goods⇒ incentive for strong locals to seize
non-local profits.
Formal model
13. Muslims in medieval Indian ports
Complementarity:
Pilgrimage ↔ Trade
Non-expropriable,
replicable (intangible,
network externalities)
Non-violent transfers:
Ease of entry
Complementary
“institutional”
mechanisms: cultural
norms, organizations,
beliefs.
(source: Diogo Homem 1558)
14. A 1000 years of religious tolerance?
Now in all these (Malabari ports) the
population became much increased and the
number of buildings enlarged, by means of the
trade carried on by the Mahomedans, towards
whom the chieftains of those places abstained
from all oppression; and, notwithstanding that
these rulers and their troops were all pagans,
they paid much regard to their prejudices and
customs, and avoided any act of aggression on
Hogenburg the Mahomedans, except on some
and extraordinary provocation; this amicable
Braun footing being the more remarkable, from the
(1572) circumstance of the Mahomedans not forming
a tenth part of the population . . .
- Shaikh Zaynnudin al Ma’abari,
Tuhfat-ul-Mujahideen, 1528.
15. Definitions
Riots
a violent confrontation between 2 communally-identified
groups
newspaper reports, official records
Medieval trading ports:
Evidence of direct overseas trade, prior to 18th C &
independent of Europeans.
Periplus Maris Erythraei (ca. 1st-3rd C) Traveller’s
narratives (eg Ibn Battuta 1355, di Verthema 1503, Zayn al
Din 1528) Imperial gazetteers (1907)
17. GIS allows a rich set of controls and correlates
1. Initial geographic factors: Latitude/ Longitude2 , Prox. to
coast, coastal town, Prop. natural disasters, Prox.
navigable rivers
2. Historical factors: Prox. Ganges (caste), Centuries
Muslim Rule, Mint Town, Skilled Crafts, Historical Shi’a rule
3. Contemporaneous factors: Province / Native State
intercepts, Modern overseas port
4. Correlates: Prop. Muslim 2 in town, district, Municipal
income per capita