This is a job market seminar organized for selected candidates from the European Job Market.
The spatial allocation of public investments can have long term consequences. This paper analyses the effects of opium production in British India on colonial government spending on physical and human capital, and evaluates the relative persistence of these investments over time. My empirical strategy exploits administrative boundaries that demarcated opium-growing areas and fine-grained local variation in environmental suitability for poppy cultivation. In opium-growing districts, suitability for poppies was associated with higher colonial-era spending on irrigation and the rural police but lower investment in schools and healthcare. A century after the end of the opium trade, there are no significant effects on irrigation or police presence. However, former opium-cultivating villages have lower literacy, fewer schools and fewer health centres today. These results indicate that the physical capital investments favoured by colonial officials in opium-growing districts had less persistent consequences than the resultant underprovision of human capital. Evidence that past opium cultivation is associated with lower turnout and more votes cast for criminal politicians, suggests that differences in human capital were relatively more persistent because they affected the political equilibrium that emerged after independence.