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Economic Consequences Of Empire -- The Portuguese Case

Valério Nuno
ISEG - UTL

International Studies Association

March 18-21, 1998

Contents

Abstract

Between 1415 and 1975, Portugal was one of the main European colonial powers. This paper tries to assess the economic consequences of this colonial experience. Section 2 presents a summary of the evolution of the Portuguese colonial empire, from the North Atlantic empire of the 15th century, to the Eastern empire of the 16th century, to the South Atlantic empire of the 17th and 18th centuries, to the African empire of the 19th and 20th centuries. Section 3 elaborates on the economic consequences of the Portuguese colonial empires for the colonial regions, for Portugal and for the world economy as a whole. Section 4 discusses the economic consequences of the Portuguese colonial empires from a comparative point of view.

 

1. Introduction

Between 1415 and 1975, Portugal was one of the main European colonial powers. This paper tries to assess the economic consequences of this colonial experience. Section 2 presents a summary of the evolution of the Portuguese colonial empire, from the North Atlantic empire of the 15th century, to the Eastern empire of the 16th century, to the South Atlantic empire of the 17th and 18th centuries, to the African empire of the 19th and 20th centuries. Section 3 elaborates on the economic consequences of the Portuguese colonial empires for the colonial regions, for Portugal and for the world economy as a whole. Section 4 discusses the economic consequences of the Portuguese colonial empires from a comparative point of view.

 

2. The Portuguese colonial empires

The evolution of the geographical extent of the Portuguese colonial possessions is presented in maps 1 to 4.

2.1. The North Atlantic empire of the 15th century

The North Atlantic empire presented in map 1 was the result of three different efforts: the attempt to proceed with the reconquest of former Christian territories occupied by Moslem states in Morocco; the attempt to submit the Canary Islands and to settle the archipelago of Madeira; and the attempt to establish trade links with the western coast of Africa.

The conquests in Morocco started in 1415 with the occupation of Ceuta, dragged until the mid-15th century, and were consolidated between the late 1450s and the early 1470s with the occupation of the north-western part of the coast of Morocco. Further progress -- the occupation of the south-western part of the coast of Morocco -- would only come in the early 16th century. These were always shaky possessions because of the lack of control of the hinterland, and there were significant setbacks in the 1540s. Attempts to occupy the hinterland came only in the 1570s and led to even worse defeats. Portuguese possessions in Morocco dwindled to trifling proportions during the 17th century and were altogether abandoned in 1769. From an economic point of view these Moroccan possessions were a rather deceiving business, because its links to the European economy remained weak and military expenditure always exceeded the tax revenue that could be obtained.

The Canary Islands and the archipelago of Madeira were the issue of fierce rivalry between Portugal and Castile. Papal arbitrage (1436), later confirmed by a treaty (1479), gave the Canary Islands to Castile, while the archipelago of Madeira became a Portuguese possession. European settlers developed important agriculture and fishing activities in Madeira from the 15th century on. The staple productions of the archipelago were sugar during the 15th and 16th centuries, and wine from the 17th century on.

The exploration of the western coast of Africa proceeded steadily once a proper way of returning from the Guinea coast (which involved sailing deep into the Atlantic) was discovered in the 1430s. This innovation brought as a by-product the discovery and settlement of the Azores. The exchange of European textiles and metal works for African gold, slaves, and ivory was the main economic interest of the western coast of Africa. European settlers developed important agriculture and fishing activities in the Azores from the 15th century on. The staple productions of the archipelago were corn and dyes until the 18th century, and fruits and dairy products during the 19th and 20th centuries.

The classical study on this early phase of the Portuguese expansion is Godinho, 1962.

2.2. The Eastern empire of the 16th century

The Eastern empire presented in map 2 was the result of the attempt to discover a sea road to the Indian Ocean and the Far East by circumnavigating Africa. These efforts succeeded after the pioneering voyages of Bartolomeu Dias (1487-1489) and Vasco da Gama (1497-1499), followed by the exploration of the trade network that already stretched from the eastern coast of Africa to Japan during the first half of the 16th century.

The economy of the Portuguese Eastern empire of the 16th century was based on the trade of spices, sophisticated textiles and sophisticated pottery brought from the East to Europe. These Eastern wares were paid with precious metals in the East, but provided significant profits in the European markets.

During this period, the North Atlantic empire did not disappear, but its role became minor, except for its gold inflow. Meanwhile, two further pieces were added to the empire: Brazil, as a by-product of the exploration of South Atlantic, and Cod Land (Newfoundland + Greenland fisheries). Both had also little importance, as long as the Eastern empire remained safe and profitable.

The classical study on this phase of the Portuguese expansion is Godinho, 1981-1983. Johnson, Silva, 1992 provides a recent synthesis about the Brazilian situation in this period.

2.3. The South Atlantic empire of the 17th and 18th centuries

The South Atlantic empire presented in map 3 was the result of a shift of the Portuguese overseas concern from the Eastern trade to the colonisation of Brazil. This was partly the consequence of the almost complete success of the Dutch and English challenge to the Portuguese role in the Indian Ocean and Far East in the late 16th and early 17th centuries, and partly the consequence of the success of the Portuguese to resist to a similar Dutch challenge in Brazil and western Africa.

The economy of the Portuguese South Atlantic empire of the 17th and 18th centuries underwent two rather different phases. During the 17th century, sugar, tobacco, cotton and hides were its main staples, all originating from Brazil. In exchange, Brazil imported slaves from western Africa and a wide variety of European products. During the 18th century, gold and diamonds were added to the list of the main Brazilian productions, and soon took the lead of its economy, although the 17th century exchanges went on as before.

During this period, the North Atlantic empire disappeared, as the Moroccan possessions dwindled and were eventually abandoned, as explained above, Madeira and the Azores lost their colonial characteristics, both from a sociological and a legal point of view, and the trade factories of the western coast of Africa became almost exclusively slave suppliers to Brazil. At the same time, the Eastern empire dwindled to minor proportions.

The classical study on this phase of the Portuguese expansion is Boxer, 1969 (a book that also deals with the Eastern empire of the 16th century). Mauro, 1991 and Silva, 1986 provide recent synthesis about the Brazilian evolution in this period.

2.4. The interlude of the mid-19th century

The independence of Brazil (end of the colonial pact in 1808, formal recognition as a separate kingdom in 1815, proclamation of full independence in 1822, recognition of full separation by Portugal in 1825), and the abolition of slave trade in Portuguese overseas possessions (enacted in 1836, enforced in the 1850s) left the Portuguese empire (a few trade factories in the western coast of Africa and in the East) in a rather derelict state. Thus, it may be said that during most of the 19th century, the trend was for the colonial empire to loose its economic importance in the Portuguese life.

The classical study on this phase of the Portuguese expansion is Hammond, 1966.

2.5. The African empire of the 19th and 20th centuries

The African empire presented in map 4 was built during the last quarter of the 19th century, as the joint result of the British strategy to favour the colonial empires of small powers in order to prevent the main European powers to get colonial empires comparable to its own, and of the Portuguese hopes to find a path into modern economic growth by exploitation of a renewed colonial empire.

These hopes were deceived. Until around 1920, the colonial empire was a burden to the Portuguese exchequer, because of the need to submit the indigenous societies and to resist to German attacks during the First World War. Between the 1920s and the 1950s, there was a period of peace, but the colonial possessions remained of minor importance in Portuguese economic life, and were often plagued by economic difficulties, as their staple exports of tropical agricultural commodities (such as coffee, tea, cotton, cocoa, palm oil, and sisal) or mineral resorces (such as diamonds and iron ore) underwent significant fluctuations in the international markets. The economic situation improved after the Second World War, but the decision to resist the independence movements of Angola, Guinea-Bissau and Mozambique in the 1960s led to a colonial war, which swallowed large human and financial resources between 1961 and 1974. Although Portugal hang on to its colonial possessions until the 1974 democratic revolution, decolonisation (which took place in 1974 and 1975) was the inevitable outcome.

During this period there remained a few minor Eastern possessions. Portuguese India was occupied by India, partly in 1954, partly in 1961, Macao remained under Portuguese administration after 1975, and will be handed to China in 1999, and East-Timor was occupied by Indonesia in 1975, starting a conflict about the legal status of the territory which remains unsolved.

The main studies on this phase of the Portuguese expansion are Sideri, 1970, Clarence-Smith, 1985, and Telo, 1994.

 

3. The economic consequences of the Portuguese colonial empires

Vast regions of Africa, Asia and South America belonged to the Portuguese colonial empire for long periods. Which were the economic consequences of these links ?

3.1. The consequences for the colonial regions

The consequences for the colonial regions were quite different according to the previous situation of these regions. A detailed study of these differences was presented in Valério, 1994. Three cases may be considered: regions previously not inhabited (Atlantic islands) or occupied by societies with hunting-gathering economies (Brazil); regions previously occupied by unsophisticated agricultural or pastoral societies (Sub-Saharan Africa, and Insulindia); regions previously occupied by sophisticated civilised societies (Morocco, and Southern and Eastern Asia).

Regions previously not inhabited or occupied by societies with hunting-gathering economies

The most radical changes came in the regions previously not inhabited or occupied by societies with hunting-gathering economies. In these regions, completely new human societies were built by immigrants coming from Europe, or forcibly introduced by Europeans (mainly African slaves). These societies were politically submitted to Portugal, economically linked to the Portuguese economy by the rules of the so-called colonial pact, or by imperial preference schemes, and culturally shaped according to Portuguese standards (Portuguese language, and Roman catholic religion).

From an economic point of view, these societies developed either as plantation economies, operated by imported slave labour, or as European overseas replicas, operated by immigrated European free labour. Both supplied various commodities to the European market, in exchange of a wide range of European wares. These differences in the ethnic composition of the population were mainly due to climatic factors. They determined in a large measure their later evolution. Atlantic islands with temperate climate, which received immigrants almost exclusively of European origin -- Madeira and Azores --, became peripheral European societies, and remained politically linked to Portugal as autonomous regions until today. Atlantic islands with tropical climate, which received immigrants of mixed European and African origin -- Cape Verde --, became a creole society, remained politically linked to Portugal as an overseas province until the 1970s, and became an independent state in 1975. Atlantic islands with equatorial climate, which received immigrants of overwhelming African origin -- São Tomé and Príncipe --, became a typical African society, remained politically linked to Portugal as an overseas province until the 1970s, and became an independent state in 1975. Brazil, a vast country, ranging from equatorial to temperate climate, where immigrants from Europe and Africa mixed with the indigenous amerindian population in different proportions according to regional climate, became a very complex society, was able to obtain its independence in the early 19th century, and is on the way of becoming a significant world power.

Regions previously occupied by unsophisticated agricultural or pastoral societies

In the regions previously occupied by unsophisticated agricultural or pastoral societies there were no demographic radical changes, but the introduction of long range trade and urban life gradually disrupted the previous societies. Thus, the Negro or Malay populations were recast in new societies, politically submitted to Portugal, economically linked to the Portuguese economy by the rules of the so-called colonial pact, or by imperial preference schemes, and culturally shaped according to Portuguese standards (Portuguese language, and Roman catholic religion, although traditional languages and cultural practices did not disappear).

From an economic point of view, these societies developed first as suppliers of precious metals, raw materials and slave labour to the European market and to European colonies established in regions previously not inhabited or occupied by societies with hunting-gathering economies, in exchange of a narrow range of European wares. Later, they became plantation economies quite similar to those of the regions previously not inhabited or occupied by societies with hunting-gathering economies. In Sub-Saharan Africa, these societies -- Angola, Guinea-Bissau, and Mozambique -- remained politically linked to Portugal as overseas provinces until the 1970s, and became independent states in 1975. In Insulindia, the bulk of Portuguese possessions were lost to the Dutch colony of Indonesia in the 19th century. The remaining territory of East-Timor remained politically linked to Portugal as an overseas province until the 1970s, was occupied by Indonesia in 1975, and has today an uncertain status, as an independence movement tries to challenge its annexation by Indonesia.

Regions previously occupied by sophisticated civilised societies

In the regions previously occupied by sophisticated civilised societies, there were no demographic radical changes, and the introduction of long range links to the Euro-Atlantic world-economy did not disrupt previous societies. Thus, the Moroccan, Indian, Persian, Malay and Chinese populations were politically submitted to Portugal, and economically linked to the Portuguese economy by the rules of the so-called colonial pact, or by imperial preference schemes, but remained culturally linked to their traditional standards.

From an economic point of view, these societies became suppliers of a wide variety of sophisticated commodities to the European market, in exchange of precious metals, European services, and some European wares, in the early phases of their intercourse with the European economy. Later, these economic links with the European economy deepened, but these societies came back to their previous political links after a period of submission to Portugal, although some political and cultural traces of the Portuguese presence remained. Thus:

3.2. The consequences for Portugal

The consequences of the colonial experience for the Portuguese economy and society have been extensively discussed in the references provided in section 2. I shall stress the main conclusions in a brief synthesis.

The first Portuguese empire fostered the recovery of the Portuguese economy from the European crisis of the 14th and 15th centuries, and provided the basis for a limited enhancing of Portuguese power in international relations. Portugal was able to keep the monopoly of western Africa trade by sea route, and to encroach on the coast of Morocco, but was unable to fulfil the dreams of its kings to build an extensive empire in North Africa, or to unify the Iberian Peninsula under its hegemony.

The second Portuguese empire brought prosperity to the Portuguese economy during most of the 16th century, and made Portugal for a while a significant power in a world context. However, neither long term sustained modernisation, nor clear military superiority against European or North African neighbours followed. Portugal was unable to keep the monopoly of overseas trade in the long run, and even to resist either to the Moroccan native reaction during the 16th century, or to the building of a unified Iberian Peninsula under Castilian hegemony in 1580.

The third Portuguese empire ensured some prosperity to the Portuguese economy during the so-called depression of the 17th century, and provided the basis for a successful reaction against submission to the Hapsburg empire in the mid-17th century. During the 18th century, Brazilian gold brought prosperity again to the Portuguese economy, but, once more, long term sustained modernisation did not follow.

The effects of the fourth Portuguese empire have been the theme of some controversy. Some authors stress its importance for underpinning the short term situation of the Portuguese economy in some critical moments of the late 19th century and the first half of the 20th century, and its role as export outlet and tropical commodities supplier to the Portuguese economy. Others stress that the empire never repaid its cost and that imperial preference schemes distorted the structure of the Portuguese economy. It is almost unanimously agreed that the colonial war of the 1960s and early 1970s was a significant drawback to Portuguese economic development, in spite of some short term stimuli provided by the increase of public expenditure.

Meanwhile, Portugal eventually found its way into modern economic growth during the second half of the 20th century, in the context of the Portuguese participation in the process of European economic integration, as a member of the European Organisation for Economic Cooperation (1947-1961), of the European Free Trade Association (1959-1985), and of the European Union (from 1986 on).

3.3. The consequences for the world economy

The consequences of the Portuguese colonial experience for the world economy have also been extensively discussed in the references provided in section 2. Again, I shall stress the main conclusions in a brief synthesis.

The first Portuguese empire was the beginning of all European overseas expansion, and a decisive step to the formation of the Euro-Atlantic world-economy of the 16th, 17th and 18th centuries, in a geographical, trade, and production sense. As a matter of fact, it experimented the crucial innovations for navigation (ships adequate to high-seas navigation, and orientation using compass and latitude determination), the commercial patterns (direct and triangular Atlantic trade routes), and the typical productive systems (the plantation operated by African slave labour in Madeira, and the farm operated by free European labour in the Azores).

The second Portuguese empire suggested what would be the world economy of the 19th and 20th centuries. Although the distances and the luxury status of the commodities involved prevented the immediate formation of a true world economy, it introduced for the first time further crucial innovations (ships adequate to Eastern trade), commercial patterns (trade routes with the Indian Ocean and the Far East, and participation in intra-Eastern trade routes), and significant production elements (North Atlantic fisheries, and the evolution of former colonies into true overseas extensions of Europe, in the case of Madeira and the Azores). Later developments would build on the basis provided by these innovations.

The third Portuguese empire neither brought true innovations to the Euro-Atlantic world-economy, nor made crucial steps to the building of the world economy. However, it developed one of the extensive colonies of mainland America (Brazil), and became during the 18th century the main gold producer of the world (also in Brazil).

The fourth Portuguese empire was almost irrelevant from a world economy point of view. Of course, it brought some hitherto isolated territories into the periphery of the world economy, but it was only the fourth largest colonial empire in the world (far from the British and French ones, close to the Belgian one, clearly ahead any other colonial empire), and it may confidently be said that, in the absence of the Portuguese colonial endeavour, other countries would have stepped in to fulfil the gap in the territories that became Portuguese possessions.

 

4. The economic consequences of the Portuguese colonial empires from a comparative point of view

It is interesting, as a concluding remark, to compare the economic consequences of the Portuguese colonial empires studied in section 3 with the economic consequences of other colonial empires. There is an extensive bibliography available to such a comparison. I shall refer here only to a few syntheses, namely Braudel, 1979, Wallerstein, 1974-1993, Cameron, 1989, and Foreman-Peck, 1995.

4.1. The consequences for the colonial regions

The general pattern of consequences of colonisation for the colonial regions in the general case is very similar to the pattern of consequences of colonisation in the Portuguese case. The characteristics of previous societies and climatic factors explain the kind of societies produced by colonisation.

Regions previously not inhabited or occupied by societies with hunting-gathering economies

As a general rule, in the regions previously not inhabited or occupied by societies with hunting-gathering economies, completely new human societies were built by immigrants coming from Europe, or forcibly introduced by Europeans (mainly African slaves). These societies were politically submitted to the European colonising countries, economically linked to the national economies of the colonising countries by the rules of the so-called colonial pact, or by imperial preference schemes, and culturally shaped according to European standards (European languages, and christian religion). In the long run, decolonisation freed these regions from European rule, but usually created new political units, not linked to pre-colonial political units.

From an economic point of view, plantation economies, operated by imported slave labour, or European overseas replicas, operated by immigrated European free labour, supplying different commodities to the European market, in exchange of a wide variety of European wares, were the typical starting point of these societies. Later, some of them (especially of the second type) were able to overcome this peripheral situation, starting endogenous processes of economic growth.

Moreover, these societies also differed, especially in the ethnic composition of their populations, according to climatic factors. Regions with temperate climate, which received immigrants almost exclusively of European origin, became overseas European societies -- the northern United States of America, Canada, Australia, New Zealand, Argentina and Uruguay are the main examples (although the ethnic composition of North America later received a significant element of African origin). Regions with tropical climate, which received immigrants of mixed European and African origin, became creole societies -- the Caribbean islands are the typical example. Tropical or equatorial mainland America provides examples of more complex societies, with different proportions of European, African, and Amerindian elements.

As an exception to these rules, some regions with especially uninviting climates did not receive significant immigration, and kept much of their traditional societies -- Arctic regions and the south-western African desert are the main examples.

Regions previously occupied by unsophisticated agricultural or pastoral societies

In the regions previously occupied by unsophisticated agricultural or pastoral societies there were no demographic radical changes, but the introduction of long range trade and urban life gradually disrupted previous societies. Thus, the previous populations were recast in new societies, politically submitted to the European colonising countries, economically linked to the national economies of the colonising countries by the rules of the so-called colonial pact, or by imperial preference schemes, and culturally shaped according to European standards (European languages, and christian religion, although traditional languages and cultural practices did not disappear) -- Sub-Saharan Africa, Central Asia and the Pacific islands are the main examples. In the long run, decolonisation freed these regions from European rule, but usually created new political units, not linked to pre-colonial political units.

From an economic point of view, these societies developed first as suppliers of precious metals, raw materials and slave labour to the European market and to European colonies established in regions previously not inhabited or occupied by societies with hunting-gathering economies, in exchange of a narrow range of European wares. Later, they became plantation economies quite similar to those of the regions pr

Regions previously occupied by sophisticated civilised societies

In the regions previously occupied by sophisticated civilised societies, there were no demographic radical changes, and the introduction of long range links to the Euro-Atlantic world-economy did not disrupt previous societies. Thus, the previous populations were politically submitted to the European colonising countries, and economically linked to the national economies of the colonising countries by the rules of the so-called colonial pact, or by imperial preference schemes, but remained culturally linked to their traditional standards -- the Muslim, Indian and eastern Asian societies are the main examples. In the long run, decolonisation freed these regions from European rule, and usually reestablished pre-colonial political units.

From an economic point of view, these societies became suppliers of a wide variety of sophisticated commodities to the European market, in exchange of precious metals, European services, and some European wares, without loosing their economic specificity, in the early phases of their intercourse with the European economy. Later, these economic links with the European economy deepened, as the previously autonomous economies merged into a single world economy. Some of these societies were able to overcome their peripheral situation, starting endogenous processes of economic growth.

4.2. The consequences for the colonising regions

The first and second Portuguese empires stand as isolated cases of North Atlantic and Eastern empires in their epoch. Thus, it is impossible to compare their consequences for Portugal with other cases or with a general pattern.

The situation changes in what concerns the third and fourth Portuguese empires. Now, the comparison is meaningful, and leads to some significant similarities in the consequences of colonisation for the colonising regions in the general case and in the Portuguese case.

Regarding the third Portuguese empire, the main point to stress is the coincidence between the list of significant European colonial powers and the list of consolidated European national states of the 17th and 18th centuries -- Portugal, Spain, the Netherlands, England and France are the members of these rather short lists. Other colonial powers were modest, and other national states remained shaky. Moreover, colonial businesses made a significant contribution to some prosperity of the European economy during the so-called depression of the 17th century, and especially during the 18th century. However, the contribution of colonial businesses to the take-off of modern economic growth is still a vexed question.

This doubt extends to the consequences of 19th and 20th century colonial endeavours. It is undoubted that modern economic growth was possible without colonial possessions; and it is undoubted that the great economic powers were also significant colonial powers. The direction of causality is, however, doubtful in this case. Thus, some similarity with the Portuguese case is also clear.

4.3. The consequences for the world economy

The importance of the first and second Portuguese empires for the beginnings of the Euro-Atlantic world-economy and of the world economy have been already pointed out above. Of course, the absence of other Atlantic or Eastern colonial empires until the late 16th century makes any comparative work meaningless once more.

The expansion of the European colonial empires between the 17th and 20th centuries was certainly crucial for the development of a true world economy, by forcing previously economically autonomous societies to merge into the emerging world economy. In this context, the Portuguese role may be described again as quite similar to the general one, though qualitatively and quantitatively less important than in the early phases of Portuguese expansion.

 

References