VoxDev Development Economics

Eighty years after Indian independence, the economic fingerprint of British colonial rule is still visible at the district level. Two institutions in particular left scars: whether a district was governed directly by British administrators or by one of India's roughly 680 Indian princes, and what kind of land tax arrangement the British put in place. For example, by 1991, directly ruled districts had nine percentage points fewer middle schools and a 20-percentage-point lower probability of having a road than areas under indirect rule. The question was whether those gaps would eventually close.
Lakshmi Iyer of the University of Notre Dame tells Tim Phillips that by 2011 infrastructure gaps had closed completely. Targeted post-independence programmes, including the Minimum Needs Program of the 1970s and the Sarva Shiksha Abhiyan of 2001, pushed schools, health centres, and roads towards underserved districts. The picture for land tenure is mixed. Areas that historically had landlord-based systems are still 17% behind non-landlord areas in wheat yields, and the gap in fertiliser use has widened rather than narrowed. One reason, the policy response was a universal subsidy rather than being specifically aimed at places that had fallen behind.
So colonial legacies can be erased, but only by policies designed to reach the places that were left behind. When policies have equalisation built in, historical gaps disappear. When they do not, the gaps persist.
The research behind this episode:
Iyer, Lakshmi and Coleson Weir. 2025. "The colonial legacy in India: How persistent are the effects of historical institutions?" Journal of Development Economics 177.
To cite this episode:
Phillips, Tim and Lakshmi Iyer. 2026. "The colonial legacy in India: How persistent are the effects of historical institutions?" VoxDev Talk (podcast).

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About Lakshmi Iyer

Lakshmi Iyer is Professor of Economics at the University of Notre Dame and a Research Fellow at CEPR. Her research focuses on political economy, governance, and the long-run effects of historical institutions in developing countries. The paper discussed in this episode extends two of her earlier papers, one co-authored with Abhijit Banerjee and one sole-authored, both of which are listed in the research cited section below. 
Research cited in this episode

Iyer, Lakshmi. 2010. "Direct versus Indirect Colonial Rule in India: Long-Term Consequences." Review of Economics and Statistics 92 (4). The original paper documenting that areas brought under direct British rule had significantly lower access to schools, health centres, and roads in the post-colonial period, using Lord Dalhousie's Doctrine of Lapse as an instrument for the selectivity of British annexation.
Banerjee, Abhijit V. and Lakshmi Iyer. 2005. "History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India." American Economic Review 95 (4). Finds that districts where the British assigned proprietary rights in land to landlords have significantly lower agricultural investment and productivity in the post-independence period than areas where rights went to individual cultivators.
Nunn, Nathan. 2007. "Historical Legacies: A Model Linking Africa's Past to its Current Underdevelopment." Journal of Development Economics 83 (1). Develops the theoretical case for why economies displaced into a low-production equilibrium by extraction or oppression can remain there long after the original impetus disappears.
More VoxDev Talks on this topic

India's economic development since independence: Devesh Kapur and Arvind Subramanian discuss how India's transformation across eight decades of independence has defied conventional models of development, and what it reveals about the relationship between political economy and growth.
Related reading on VoxDev

Drawing the line: The short- and long-term consequences of partitioning India: examines the economic and political legacy of the 1947 partition of the Indian subcontinent, and how a boundary drawn in the final weeks of empire continues to shape outcomes on both sides.
Historical legacies and African development: surveys the evidence on how pre-colonial political organisation, colonial-era institutions, and the slave trade have shaped the long-run economic geography of sub-Saharan Africa.

This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find the entire AI series.
Apple Podcasts: https://podcasts.apple.com/us/podcast/ideas-in-development/id1866874059
Spotify: https://open.spotify.com/show/6sIdIKctE8frdWaz9iyfl2
Everywhere else: https://audioboom.com/channels/5165629-ideas-in-development
YouTube: https://www.youtube.com/playlist?list=PLcqy-QRDq-vD3YJ2t1rMUwx8BN1WTEA9A
Substack: https://ideasindevelopment.substack.com/
What happens to a growth model built on services when AI can do some of those services itself?
Raghuram Rajan joins Oliver Hanney and Deena Mousa to discuss how India's economy grew through services exports, why that model may be more resilient to AI than critics assume, and what policymakers need to get right on human capital, universities, and digital access to stay ahead.

China became the world's largest bilateral creditor to developing countries over two decades, and for most of that time the scale of what it was doing was effectively a state secret. Its state-owned banks lent close to $1 trillion to developing-country governments, structured roughly half those loans against commodity export revenues held in offshore accounts, and concentrated the riskiest lending in countries such as Venezuela, Angola, and Russia. Net financial flows turned negative in 2019, and the countries that borrowed now repay more to China than they receive in new lending.
Sebastian Horn of the Kiel Institute tells Tim Phillips that despite the opacity and the distinctive collateral structures, we’ve seen this movie before, in the 1920s and 1980s: in the bust, serial short-term extensions of grace periods that defer payments without resolving the underlying debt, while affected countries cut spending to stay current. What Horn calls a "silent crisis" is underway in a cluster of highly indebted developing countries, too small to trigger global contagion but large enough to matter profoundly for the people living through it.
The challenge is whether China's lenders, debtor governments, and the broader international financial architecture can coordinate the kind of relief that will make a difference.
The research behind this episode:
Horn, Sebastian, Carmen M. Reinhart, and Christoph Trebesch. 2025. "China's Lending to Developing Countries: From Boom to Bust." Journal of Economic Perspectives 39 (4).
To cite this episode:
Phillips, Tim, and Sebastian Horn. 2026. "China's Lending to Developing Countries: From Boom to Bust." VoxDev Talk (podcast).

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About Sebastian Horn

Sebastian Horn is a professor of economics at the Kiel Institute for the World Economy and at the University of Hamburg, where his research focuses on international finance, sovereign debt, and China's role as a global creditor. 
Research cited in this episode

AidData. 2021. AidData's Global Chinese Development Finance Dataset, Version 3.0. AidData, William & Mary. A comprehensive public dataset tracing Chinese government-backed lending and grants to 165 countries between 2000 and 2017, built from embassy records, parliamentary gazettes, central bank reports, and news sources. Much of the quantitative evidence in the episode depends on it, since China has never published a consolidated balance sheet of its overseas lending.
More VoxDev Talks on this topic

Is debt leading to the unsustainable exploitation of natural resources?: Tim Phillips speaks with Pushpam Kumar about how sovereign debt obligations shape governments' incentives to extract natural resources more intensively, and what that means for the long-run sustainability of resource-dependent developing economies.
Related reading on VoxDev

Navigating Senegal's unexpected debt crisis: how a country widely regarded as a model of fiscal prudence found itself in acute debt distress, and what the episode reveals about the vulnerabilities facing developing-country borrowers in the current environment.
Chinese development finance and public opinion: evidence on how Chinese-funded infrastructure projects affect attitudes towards China in recipient countries, with implications for understanding the political economy of China's overseas lending strategy.

Between 2019 and 2023, the number of electronic transactions tripled in six Latin American economies. The share of adults using digital wallets, mobile money, and mobile bank accounts went from 3% in 2011 to 40% by 2021. A region that not long ago was defined by financial disasters, hyperinflation, and deep mistrust of banks has become one of the world's leading examples of how digital payments can transform an economy.
Diego Vera-Cossio edited Beyond Cash, The Digital Payments Revolution in Latin America and the Caribbean, the Inter-American Development Bank's new regional microeconomic report on digital payments. He tells Tim Phillips how the effects of this revolution are more profound that freeing people from the need to carry cash. In Santiago, bus robberies fell when drivers stopped handling cash. In Brazil, firms in the most cash-intensive sectors grew substantially after the instant payment system Pix launched. In Colombia, people without any credit history started borrowing formally after being nudged to receive their social program payments digitally. And in Bolivia, where 80% of the workforce is informal, people are scanning QR codes at street market stalls. 
The question Diego, his colleagues, and policymakers int he region and beyond, are now trying to answer is how to build on all of that, and how to make it stick.
The research behind this episode:
Vera-Cossio, Diego A., ed. 2025. Beyond Cash: The Digital Payments Revolution in Latin America and the Caribbean. Latin American and Caribbean Microeconomic Report. Washington, D.C.: Inter-American Development Bank.
To cite this episode:
Phillips, Tim and Vera-Cossio, Diego A. 2026. "Beyond Cash: The Digital Payments Revolution in Latin America and the Caribbean." VoxDev Talk (podcast). 

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About Diego Vera-Cossio

Diego A. Vera-Cossio is a senior economist in the Research Department of the Inter-American Development Bank, where he works on social protection, financial inclusion, digital payments, and the design of public programmes in Latin America. He holds a PhD in Economics from the University of California, San Diego. 
Research cited in this episode

Dominguez, Patricio. 2022. "Victim Incentives and Criminal Activity: Evidence from Bus Driver Robberies in Chile." Review of Economics and Statistics 104 (5). Exploits the reform that removed cash from Santiago buses to show that eliminating the cash target reduces robbery rates. The bus driver no longer carries anything worth taking.
Vera-Cossio, Diego A., Bridget Hoffman, Camilo Pecha, and Carla Hernandez. 2024. "Does Adopting Digital Payment for Cash Transfers Improve the Financial Inclusion and Financial Well-Being of Low-Income Households?" IDB Research Insights. A randomised experiment in Colombia: unbanked beneficiaries of a social transfer programme were randomly encouraged to receive payments into digital wallets. Those who switched had fewer failed payment attempts, could check their balance without internet access via SIM, and were more likely to take out a formal loan for the first time.
Inter-American Development Bank. 2024. Fintech Ecosystem in Latin America and the Caribbean Exceeds 3,000 Startups. Survey counts of fintech companies in Latin America and the Caribbean. Found roughly 700 fintechs in the region in 2017 and more than 3,000 by 2023, with 20% of them offering payment-related products.
More VoxDev Talks on this topic

Mobile money in Ghana: Lessons for boosting financial inclusion: Tim Phillips speaks with Francis Annan about what the Ghanaian mobile money experience reveals about reducing fraud and misconduct in rural financial systems, and what that means for how mobile money can serve the very poor.
Mobile money markets and financial inclusion in Africa: Nicola Limodio discusses what happened when mobile money operators in Africa were required to make their platforms interoperable, lowering fees but also reducing rural coverage. A direct parallel to the interoperability debate in Latin America.
Related reading on VoxDev

Digital financial services go a long way: Evidence from Mexico: evidence on how expanding digital payments and digital financial services affects spending, savings, and economic outcomes in a large middle-income country.
The wide-ranging benefits of fostering financial inclusion in Mexico: on how policies that bring people into the formal financial system in Mexico produce benefits that extend well beyond the financial sector itself.
VoxDevLit: Mobile Money: a curated literature review covering what research has established about mobile money, financial inclusion, and economic outcomes, useful for anyone who wants a broader picture of the evidence base behind the episode.

This is an episode from VoxDev's new podcast series, Ideas in Development. This series has a separate podcast feed, where you can find the entire AI series.
Apple Podcasts: https://podcasts.apple.com/us/podcast/ideas-in-development/id1866874059
Spotify: https://open.spotify.com/show/6sIdIKctE8frdWaz9iyfl2
Everywhere else: https://audioboom.com/channels/5165629-ideas-in-development
YouTube: https://www.youtube.com/playlist?list=PLcqy-QRDq-vD3YJ2t1rMUwx8BN1WTEA9A
Substack: https://ideasindevelopment.substack.com/
In this episode, Josh Lerner joined Oliver Hanney and Deena Mousa to discuss how technology diffuses around the world, touching on the role of venture capital, universities and China.
We then cover what this means for the diffusion of AI, and what can be done to speed up diffusion.