COLONIALISM AND LONG-RUN GROWTH IN AUSTRALIA: AN EXAMINATION OF INSTITUTIONAL CHANGE IN VICTORIA'S WATER SECTOR DURING THE NINETEENTH CENTURY

Institutional change in water rights in the nineteenth century Australian colony of Victoria raised institutional efficiency, which contributed to long-run economic growth. High-quality human capital and the extension of voting rights (franchise) were crucial for efficient institutional change in the water sector. Quality human capital (literacy) appeared to increase the rural population's awareness of the economic impact of the existing structure of water rights that may have constrained growth in the agricultural sector and reduced investment incentives. Extension of the franchise allowed the rural population to exert political pressure for enactment of change in water rights, which resulted in efficiency-enhancing policies and efficient institutions. The findings show these two factors were more important than Victoria's British colonial heritage in determining whether growth-enhancing institutional change took place. Copyright 2008 The Author. Journal compilation Blackwell Publishing Asia Pty Ltd and the Economic History Society of Australia and New Zealand 2008.