Concessions, Violence, and Indirect Rule: Evidence from the Congo Free State

All colonial powers granted concessions to private companies to extract natural resources during the colonial era. In Africa, these concessions were characterized by indirect rule and violence. We use the arbitrarily defined borders of rubber concessions granted in the north of the Congo Free State to examine the causal effects of this form of economic organization on development. We find that historical exposure to the concessions causes significantly worse education, wealth, and health outcomes. To examine mechanisms, we collect survey and experimental data from individuals near a former concession boundary. We find that village chiefs inside the former concessions provide fewer public goods, are less likely to be elected, and are more likely to be hereditary. However, individuals in the concessions are more trusting, more cohesive, and more supportive of sharing income. We interpret our results as reflecting how institutions and culture may act as substitutes in the context of the widespread colonial concession system.