A colonial cash cow: the return on investments in British Malaya, 1889–1969

Historical rates of return on investments have received increasing scholarly attention in recent years. Much literature has focused especially on colonies, where institutions have been argued to facilitate severe exploitation. In the present study, we examine the return on investments in an Asian colony, British Malaya, from 1889 to 1969 for a large sample of companies. Our results suggest that the return on investments in Malaya might have been among the highest in the world during the period studied. Nevertheless, this finding fits badly with theories of imperial exploitation and can only to a limited extent be explained by a higher risk premium. Instead, we argue that the main driver of the very high return on investments in Malaya was rather the substantial rise in global market prices of the output of the two main sectors of the Malayan economy, rubber and tin. The way that the process of decolonization unfolded in Malaya did, furthermore, not lead to any major nationalization of foreign-held assets, and did thereby not disrupt the return on investment in the region in the same way as decolonization did to the return on investment in some other colonies.