Deindustrialization in 18th and 19th century India: Mughal decline, climate shocks and British industrial ascent

India was a major player in the world export market for textiles in the early 18th century, but by the middle of the 19th century it had lost all of its export market and much of its domestic market, primarily to Britain. The ensuing deindustrialization was greatest c1750-c1860. We ask how much of India's deindustrialization was due to local supply-side forces-such as political fragmentation and a rising incidence of drought, and how much to world price shocks. An open, three-sector neo-Ricardian model organizes our thinking and a new relative price database implements the empirical analysis. We find local supply side forces were important from as early as 1700. We then assess the size of Indian deindustrialization in comparison with other parts of the periphery. (C) 2007 Elsevier Inc. All rights reserved.