Economics: How might present day inequalities (for example in income, opportunities, or access to services) be related to colonialism?

Note: The following essay was written by Freddie Parr L6 (20parrf@students.watfordboys.org), and was highly commended in the Rex Nettleford Essay Competition 2026

The persistence of present day global inequality presents a profound paradox. Despite decades of economic growth and the supposed triumph of liberalising markets, the world's richest 1% own more wealth than 95% of humanity (Oxfam International, 2024), while the Global South, home to 79% of the world's population, controls just 31% of global wealth (Behar, 2025). This disparity cannot be adequately explained by contemporary policy failures alone; instead one must move beyond linear causality to analyse the durable institutional structures bequeathed by colonialism. In this essay I will argue that present-day inequalities are actively reproduced through the path-dependent operation of extractive institutions established during the colonial era, which have shown remarkable adaptability in the twenty-first century. Utilising the concept of path dependence, I compare Mauritius as an exemplar of the extractive plantation path with Canada as a 'neo-European' settler colony, demonstrating how initial institutional differences result in divergent development trajectories, shaping present day inequalities. I further contend that contemporary globalisation has provided new channels through which core-periphery extraction continues.

Path dependence theory posits that historical conditions and contingent choices can create self-reinforcing feedback loops, entrenching a nation's development trajectory henceforth, whilst making alternatives progressively more costly to achieve. As Douglass North argued (1993), institutions are both the formal and informal 'rules of the game' that structure human interaction and evolve incrementally. Once established, they create vested interests, shape societal norms and impose high switching costs that 'lock in' a particular path (North, 1991).

The colonial encounter represents a decisive critical juncture that set many such paths with immense staying power. That said, the development trajectories of colonies are highly dependent on the form of colonial extraction and institutions imposed by the metropole (Acemoglu and Robinson, 2012). As Engerman and Sokoloff note (2002), the mechanism of colonial extraction was not monolithic but instead was shaped by 'factor endowments', giving rise to either extractive or inclusive colonial institutions. This explains not just the inequalities we see today between metropoles and former colonies but the differences in inequality we see between ex-colonies themselves.

In regions suitable for large-scale, capital intensive plantation crops, colonisers established extractive institutions that demanded coercive labour systems and concentrated asset ownership through land and export monopolies, channeling resources from the many to the few. This was accompanied by systematically under-investing in public goods like mass education and infrastructure for the subordinate majority, suppressing broad-based economic participation and innovation (Mizuno, Naito and Okazawa, 2017).

Mauritius exemplifies this extractive path. Engineered as a mono-crop sugar colony, Mauritius's fertile land was allocated to a white planter elite by French (1715) and later British colonisers (1810), whilst enslaved Africans and indentured labourers formed a dispossessed majority (Andrieu, 2022). This resulted in extreme inequality in wealth, human capital and political power from the outset (Michalopoulos and Papaioannou, 2017).

Conversely, in areas where factor endowments favoured smallholder agriculture, with low mortality rates therefore making European settlement viable, colonial societies developed with greater relative equality among settlers. In these 'neo-Europe' states, the settlers tried to replicate European institutions, with emphasis on private property and checks against government power. For instance, Canada as a settler colony with factor endowments suited to smallholder agriculture developed with relatively broad-based land ownership and political institutions that gradually extended rights and representation. However, as Lawson and Snow (2015) document, Canada's development was simultaneously built upon the dispossession and forced assimilation of Indigenous peoples, creating a foundational inequality that continues to shape Canadian society today.

Furthermore, Julian Go's work on the 'modes of reverberation' provides a sophisticated taxonomy for analysing how these colonial structures persist within modern nations (Go, 2023):

1. The persistence of power through formal and informal institutionalisation. This is the process whereby colonial mechanisms of control become 'baked into' the state foundations. Following independence, post-colonial administrations inherit and utilise these mechanisms, perpetuating colonial logic and inequalities.

2. Path-dependent historical trajectories, where colonial-era economic specialisation and elite formation create durable interests that resist reform, thus locking in development pathways.

This enduring institutional persistence and locking-in of an extractive development pathway has been seen in Mauritius following independence in 1968. At this moment, the extractive structure of Mauritius's economy did not simply vanish. Instead, the fundamental logic of its plantation economy, requiring high fixed costs and economies of scale, had become entrenched, ensuring wealth and political power remained concentrated. Simultaneously, the emerging Indo-Mauritian political elite negotiated with the Franco-Mauritian economic oligarchy to preserve colonial land laws and export monopolies, maintaining their dominant role in the economy in exchange for political stability (Sandbrook, 2007). Thus, as Andrieu (2022) notes, 'circumstances in Mauritius conspired to generate broad-based institution-building over a century and a half', yet this occurred within the constraints of an economy built on concentrated land ownership.

In the modern age, this plutocratic influence has remained in the hands of the Franco-Mauritian oligarchy, who continue to own the major sugar conglomerates that collectively control close to 85% of arable land. The Bertelsmann Transformation Index confirms the Franco-Mauritians as a whole remain 'the country's richest ethnic group' (Bertelsmann Stiftung, 2024), predominantly controlling the sugar industry and broader economy whilst the nation's high wealth Gini coefficient of 0.33 quantifies this enduring asset concentration (International Monetary Fund, 2025).

Subsequent diversification efforts in Mauritius, such as the 1970s Export Processing Zone (EPZ), have replicated this plantation logic in industrial form as the EPZ model still relied on low-wage, precariously employed labour and external demand, prioritising export earnings over broad-based skills development or technological sovereignty (World Bank, 2011). The state's recent embrace of the 'blue economy' further illustrates this pattern as contemporary state spatial strategies in Mauritius are 'conditioned by historical sociospatial relations between the state and landed elites', building new economic imaginaries that often ignore the needs of coastal residents (Wiehe, Gray and Silver, 2025). Thus, Mauritius has experienced a 'lock-in' effect, maintaining high levels of inequality through the initial implementation of extractive institutions designed to manage external commodity flows rather than foster inclusive innovation.

Elsewhere, the persistence of these structures is evidenced by Dell's (2010) study of the Peruvian mita—a Spanish colonial system of forced mining labour active from 1573 to 1812. Using the precise geographic boundary of the mita catchment area as a natural experiment, Dell found that districts subject to the mita have 25% lower household consumption today than households just outside the boundary. The causation was institutional: the mita created a 'vertical' state-society relationship in its zone, as opposed to more 'horizontal' relationships elsewhere. This institutional character was inherited and perpetuated by local elites long after 1812 through the deliberate under-provision of public goods and the persistence of large, semi-feudal landholdings that stifled development.

In contrast, Canada has experienced an immensely different development trajectory to that of Mauritius. As a 'neo-Europe', colonial Canada developed relatively inclusive political and economic institutions for its settler population. This inclusive institutional foundation enabled Canada to diversify its economy, industrialise and achieve the high levels of prosperity and human development that characterise the nation today (Masaeli and Munro, 2018). However, as Munro (2018) observes, this process of development, while transformative, 'has also been very incomplete, in that the fruits of prosperity and democracy have not been shared at all equally'. As Zota, Melouka and Wemmers (2025) explain, 'the colonization of North America by Europeans meant the violent destruction of its Indigenous Peoples.' Hence, the inclusive institutions extended to settlers were built upon the explicit exclusion and dispossession of indigenous people, creating a foundational inequality that Christensen and Hall (2025) term 'welfare colonialism' or 'resource colonialism'.

The legacy of this settler colonial foundation is measurable in the 21st century. StatCan data from the first quarter of 2025 reveals that Canada's income gap between the wealthiest and most vulnerable demographics has reached all-time highs. In particular, income levels are rising more slowly for Indigenous Peoples; this widening gap is largely driven by the underrepresentation of Indigenous students in advanced degrees and fields of study with higher earnings. Even when Indigenous graduates obtain equivalent educational credentials, they receive systematically different labour market outcomes, suggesting 'structural or systemic differences such as labour market barriers or discrimination that lead Indigenous graduates' characteristics to be valued differently in the labour market than those of their non-Indigenous counterparts' (Dubois and Mongeon, 2025). The Truth and Reconciliation Commission (2015) explicitly linked these ongoing disparities to the structural nature of settler colonialism, recognising that the residential school injustice had both human and structural dimensions, the latter representing 'an attempt to dispossess Indigenous lands through colonialism' (Nagy, 2020).

In modern economic literature, the conventional view presents the liberalisation of trade and capital flows driven by globalisation as a panacea for the inequalities we see today. However, this optimism often masks the political and economic violence that globalisation perpetuates between the Global North and the Global South. Globalisation is not a spontaneous, unavoidable and irreversible process equally accessible to all nations; rather it results from a set of political decisions that promote exclusion stemming from neoliberal policies maintaining the structural inequalities constructed during the colonial era (Bouet, 2023). Many globalising initiatives such as the spread of free markets, foreign lending and intellectual property regimes have been used to mirror neo-colonial practices, fostering asymmetric power relationships (Lodigiani, 2020). It is this continuity between colonial and neo-colonial structures which Aníbal Quijano refers to as the 'coloniality of power' (Quijano, 2000). Globalisation, therefore, understood as an ideological construct and political project of the advanced capitalist core, has been employed as a vehicle for neo-colonialism, perpetuating the colonial hierarchy established under formal empire while rendering its operations diffuse, decentralised and thus more difficult to resist.

Samir Amin specifies five monopolies through which the global North reproduces its dominance: the monopoly of technology generated by the military expenditures of the imperialist centres; the monopoly of access to natural resources; the monopoly over financial flows at the international level; the monopoly over international communication and the media; and the monopoly over the means of mass destruction (Amin, 1997). These monopolies tend to be regionally concentrated in the countries of the North but could also persist in a more multipolar world; multipolarity does not necessarily represent a decline in imperialist tendencies or in traditional centre–periphery relations of hierarchy and domination (Ghosh, 2021).

The contemporary evolution of these monopolies is apparent in what scholars term 'digital colonialism'. Couldry and Mejias (2018) conceptualise this as a new stage of colonial appropriation, wherein the spaces of social life itself have become captured by the extractive business models of commercial social media. Contrary to the dominant narrative that the internet liberates, the rapid growth in information communication technology has imprisoned rather than liberated. This represents not merely cultural imperialism but an entirely new mode of economic extraction. The digital infrastructure upon which ex-colonial societies increasingly depend is overwhelmingly owned by Western corporations. Platforms extract user data, process it into behavioural predictions and sell to advertisers, generating revenues that flow upstream to the Global North. This creates a new form of dependency: economies become consumers rather than producers of digital technology.

The principal vehicles used by the West to maintain this economic dominion have been International Financial Institutions (IFIs) such as the International Monetary Fund and World Bank, which despite being ostensibly created to promote international economic cooperation, have perpetuated structural inequalities that subordinate Global South economies to the interests of former metropoles (Yende, 2025). The structural adjustment programmes (SAPs) imposed from the 1980s onwards functioned as the predominant mechanism of this continuity (Easterly, 2001). As Dembele (2025) notes in the Senegalese case, these policies 'literally destroyed the gains accumulated during the first two decades of independence, through the dismantling of the public sector and the weakening of the State'.

At a time when many Global South countries faced debt crises following the collapse of Bretton Woods, SAPs forced trade liberalisation, privatisation of state assets and drastic cuts to public spending. These policies systematically favoured transnational corporations and re-legitimised the colonial-era position of these economies as primary commodity exporters. Whilst, the language of ‘aid’ and ‘development assistance’ masks what Yansane (1980) identifies as a system ‘based on profitability resulting from economic, political or military calculation’. Simultaneously, debt has become a disciplinary device, locking post-colonial states into cycles of borrowing and repayment, siphoning public revenue toward Northern creditors (Madonko, 2025; Ferri, 2003). This vulnerability that enables such continued exploitation is a direct consequence of the initial extractive structures established during colonialism (Rodney, 2018).

Furthermore, free markets create profound asymmetries of power as they so often favor developed countries at the expense of the developing ones (Ogar, Nwoye and Bassey, 2019). As Harvey (2005) notes, free markets are not as free as one pretends, instead the G7, the international financial institutions, and multinationals control them. This asymmetry is structural, with developing countries dependent on the North for technology and capital while the North depends on the South for raw materials and markets (Thirlwall, 2003).

Accompanying this economic domination is a parallel project of cultural homogenization as globalisation in its neo-colonial form acts as the carrier of values, which are essentially western in character, but they are aggressively promoted internationally as universal values. The dominant culture of the West, embedded in fast food, fast music and fast computers, not only erodes the particularity of foreign cultures but also promotes a radical homogenization of taste and mores globally (Barber, 2003). This cultural hegemony serves an economic function: it creates consumer markets for Western goods, displaces local industries and legitimises the subordinate position of peripheral economies within the global division of labour. Thus, global homogenization is just an extension of neo-colonialism in the form of globalisation (Li, 2018). These modes of neo-colonialism collectively represent the evolution of colonial extraction into new forms, demonstrating the adaptability and continuity of core-periphery relations, first set into place by colonialism, directly shaping present day inequalities.

In conclusion, present-day inequalities are not merely residual effects of colonial history but are actively reproduced through path-dependent institutional mechanisms that continue to structure economic opportunity globally (Fenske, Gupta and Mukhopadhyay, 2025). The comparison between Mauritius and Canada reveals how initial institutional differences result in divergent development trajectories that shape contemporary disparities. Crucially, these dynamics now operate at a global scale through neo-colonialism, distinguished from its predecessor not by its objectives but by its methods operating through indirect and subtle forms of domination by political, economic, social, military, or technical measures (Udegbunam, 2020). Addressing these inequalities, therefore, requires more than domestic policy reform; it demands confronting the global institutional architecture that perpetuates core-periphery extraction. As Yende (2025) demonstrates through dependency theory, international financial institutions function to integrate African economies into the global capitalist system as subordinate entities, perpetuating exploitative dynamics. Thus, as Mascat (2024) argues, the current infrastructures of domination cannot be repaired, they should instead be abolished and replaced with institutions founded on genuine interdependence, equity, and democratic governance that prioritise the needs of the world's most vulnerable populations.