Institutional Barriers to Technology Adoption: The Case of Silk Technology in Colonial India

This paper aims to bring out the complex nature of technological adoption in the colonial era by focusing on the British colonial power's attempt to bring in an Italian technology to Indian silk weaving industry and Indian weaver's reluctance to adopt it. In India (and also in China and Japan) silk was hand reeled making the thread uneven in quality and therefore, unsuitable for export to the European market. British realized that there was a great scope of trading if the problem of thread breakage could be solved. In order to solve the problem, in 1769 they imported a mechanized reeling technology known as filature from Italy -- the then leader of the international silk market. However, this new technology was not well accepted by the Indian artisans and eventually, use of such technology was only limited to a few centers. It is noteworthy that similar technology was also tried in China and Japan in the nineteenth century and met with similar resistance in China. Japan not only successfully adopted the technology, within a hundred years they also captured the market for silk in Europe re-placing Italy. Drawing on the Japanese experience, this paper focuses on the importance of micro-innovation in the successful adoption of a foreign blue print. Using a principal agent framework, we show that because of its dual status of the monopoly merchant and the political ruler, the East India Company could not credibly commit to an incentive scheme that could encourage micro-innovation.

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