Political Economy

Local majorities: How administrative divisions shape comparative development

We study the role of subnational borders and the importance of local majorities for local economic development. We exploit that France imposed a particular administrative structure on its Sub-Saharan African possessions in the early 20th century. The French government had little interest in pre-colonial political units. As a result, their colonial districts cut across ethnic homelands in a way that led to plausibly exogenous variation in an ethnic group's population share across colonial districts. We find that ethnic groups who were a local majority in most colonial districts, in which they were present, are more economically developed today. Furthermore, we show that the parts of ethnic homelands with a higher district-level population share are more economically developed today than other parts of the same homeland. We also provide evidence that the effects are persistent for various reasons, including the stickiness of subnational borders and higher infrastructure investments during colonial times.