World History 2 132 - 9.1.3 Obstacles to Industrialization

As the United States and European nations industrialized, African, Latin American, and Asian nations, with the exception of Japan, did not. This left them at an economic, technological, and military disadvantage compared to the countries of the industrialized world. Historians disagree about the reasons for this Great Divergence. Some point to the fact that these nations lacked natural resources, such as abundant coal, that European nations possessed. Many note that establishing colonies in the Americas and Asia helped nations like Britain and France acquire capital, resources, and markets that assisted their industrial development. Thus Africa, Asia, and Latin America became parties to unequal treaties forced on them by Europeans bearing deadlier weapons.

A contrasting argument is that countries such as Egypt and the Latin American nations realized their strengths lay in producing raw materials for the industrializing nations. Factors such as history, geography, climate, and the nature of their labor forces better suited them to producing agricultural goods or other types of raw materials than to pursuing widespread industrialization. In each nation, a unique set of circumstances influenced the path taken.


India’s industrial endeavors were greatly affected by its relationship with Britain, which had begun trading in India in the 1600s. The Seven Years’ War and the subsequent Treaty of Paris, signed in 1763, effectively brought French power in India to an end, paving the way for Britain’s eventual control of the subcontinent. At this time, India possessed characteristics that seemed to make it an ideal candidate for industrialization. It had large merchant and artisan classes, which produced beautiful textiles highly valued in sixteenth- and seventeenth-century England. India was, in fact, the largest exporter of cotton cloth in the world by the middle of the eighteenth century. It was also wealthy, and the country’s Mughal rulers had maintained ports, roads, and bridges that helped manufacturers and merchants bring goods to market.

Britain, however, had no intention of allowing its colony to become its economic rival. Like all colonies, India was meant to enrich Britain, not compete with it. Thus began a process often referred to as deindustrialization, a reduction in a nation’s or region’s industrial activity. In the early eighteenth century, even before Britain had forced the French from India, the British Parliament passed the Calico Acts, prohibiting the importation of finished cotton textiles that could compete with the products of English weavers. India thus lost an important market for its goods and a source of revenue. Many weavers lost their jobs, reducing the number of workshops that could be mechanized later in the century. The destruction of the Indian textile industry only accelerated once British textile production became mechanized. Inexpensive mass-produced British cloth flooded Indian markets, underpricing local weavers and driving them out of business.

India’s economy was not completely destroyed by the British presence, however, and Indian entrepreneurs invested in industrial development. For example, Dwarkanath Tagore, a member of a wealthy Hindu family, founded a bank and purchased hand-manufacturing operations (Figure 9.10). Eager to work with the British, he pooled his money with that of British investors to open India’s first coal mine in 1834 and to build sugar refineries and textile factories. Other Indians also invested in such ventures, especially cloth production. Indeed, at the time Britain entered the Second Industrial Revolution, Indian textile factories were successfully competing with British ones selling cloth in China.

A drawing of a man with a moustache and big oval eyes. He wears a large brimmed hat on his head that is coiled and striped with hair behind his ears. His dark shirt has white detailed designs around the neck and down the front and part of a white cloth covers his left shoulder.
Figure 9.10 Indian industrialist Dwarkanath Tagore invested in coal mines and textile factories. He was also a partner in a company that traded opium to China. (credit: “Dwarkanath Tagore” by Unknown/Wikimedia Commons, Public Domain)

Ultimately, though, Indian textiles could not compete with British products on price. One part of the Indian economy that Britain did encourage was cash-crop agriculture. Small farmers unable to pay British taxes were evicted from their lands, which were combined with others and transformed into cotton plantations. The loss of food-producing land in the late eighteenth century led to devastating famines that killed some thirty million people. Thus India was transformed from a manufacturing nation into an export economy, producing primarily raw materials such as cotton but also tea and sugar for use by the British and opium for the British to sell in China.


A similar process of deindustrialization took place in Egypt, but there British influence was only one of the reasons. In 1805, Muhammad Ali, an Albanian army commander in the service of the Ottoman Empire, gained control of Egypt with the assistance of Egyptian political and religious leaders and replaced the viceroy who had governed on behalf of the Ottoman sultan Selim III. In 1811, Muhammad Ali won Egypt’s effective (although not formal) independence from the Ottoman Empire by defeating the Mamluks, the ruling dynasty of formerly enslaved soldiers who had guarded the country for the Ottomans. To reinforce his authority, he adopted the title khedive of Egypt, a designation above a viceroy and only one step below the reigning sultan.

As Egypt’s new ruler, Muhammad Ali set out to modernize it. He encouraged the peasantry to grow cotton during the winter months, when they were not growing food crops, and sold the cotton to Britain. He used the profits to modernize Egypt’s army, purchase ships for a modern navy, build irrigation systems to grow more cotton, and establish a weapons foundry. He reformed Egypt’s educational system, built a military college, and founded a medical college for women. He built paper mills, sugar refineries, and textile factories using imported European machinery and technicians. Under Muhammad Ali’s rule, Egyptian landowners prospered. Peasants, however, resented both the forced labor system employed in many construction projects and conscription into the army. Many ran away or deliberately crippled themselves to avoid them.

Muhammad Ali also used his army to expand his domains. He seized the western part of the Arabian Peninsula and most of Sudan as well as Crete and Syria (Figure 9.11). Alarmed by his military success, the Ottoman sultan called upon the European powers for assistance. Faced with a blockade of the Nile by the British and Austrians, Muhammad Ali was forced at the Convention of London in 1840 to reduce his army, dissolve his navy, and give up all the territory he had claimed except Egypt and Sudan. In exchange he won the right to establish hereditary rule for his family in Egypt.

A map of the northeast portion of Africa is shown, the Mediterranean Sea to the north, and to the east the Red Sea, the Gulf of Aden and Middle East are shown. The map is labeled “Egypt under Muhammed Ali Dynasty 1805–1914.” A semicircular area labeled “Egypt 1805” is highlighted dark green in the northeast extending from the cities of Alexandra and Cairo at the north down to the city of Arwan. An area highlighted light green and labeled “Acquisition under Muhammed Ali until 1840” is shown as a rounded rectangular shape that extends from the dark green portion south, including Khartoum and ending just above Fashada. The peninsula separating the Mediterranean Sea and the Red Sea is also labeled “Acquisition under Muhammed Ali until 1840.” A yellow-green ‘U’ shaped area is highlighted around the light green area that is labeled “Acquisition until 1880.” It includes the cities of Al Fashir to the west, Fashada and Lado to the south and Massawa on the Red Sea. A small portion on the Horn of Africa is also highlighted yellow-green and includes the cities of Harar and Berbera as well as an area in the south around the city of Kismayo. An island to the northeast of Africa and a portion of the country of Greece are shown in vertical stripes and labeled “Ruled during Greek Campaign.” A large, long, oval area in Arabia running along the eastern coast of the Red Sea and extending inland is highlighted with slanted stripes and labeled ”Lost in 1841.” It includes the cities of Damascus, Diriyah, Medina, Mecca, and Ta’izz. A black dashed line runs around all of the dark green, light green, and yellow-green land running from the city of Alexandria in the north down to the city of Lado in the south, extending a bit out in to the west indicating “Egypt and Sudan in 1914.” Red arrowed lines on the map indicate “Campaign with year.” A red arrow is shown from the city of Alexandria going north to Greece with the years “1824–1830.” A red arrow from Cairo runs north up to Konya in Turkey in “1831.” A red arrow from Cairo heads south along the Red Sea to just south of Mecca in “1813.” A red arrow runs from Medina east to Diriyah in “1818, 1838.” A red arrow runs from Aswan south to southwest of Khartoum in “1820–1822.” A red arrow runs from east of Al Fashir to just west of it in “1874.”
Figure 9.11 Under the rule of Muhammad Ali’s family, Egypt temporarily extended its power into the Sudan and what are now Saudi Arabia and Syria. (credit: modification of work “Map of Egypt under Muhammad Ali Dynasty in English” by Don-kun, Eric Gaba/Wikimedia Commons, CC BY 3.0)

The European powers also interfered with Muhammad Ali’s efforts to industrialize. In the 1838 Treaty of Balta Liman with Britain, the Ottoman Empire agreed to abolish monopolies and reduce import taxes on British- and French-made goods, making them cheaper than those produced in Egypt. Lacking coal to power steam engines, Egypt’s factories also could not rapidly produce enough goods to satisfy Egyptian demand. Although Egypt’s manufacturing sector faltered, agriculture boomed, with ready buyers for its sugar and cotton. Needing tax revenues to pay for its military and for foreign imports, the government promoted the growing of cash crops for sale to Europe, and Egypt found itself locked into the role of an export economy.

Latin America

The nations of Latin America also became export economies. Now freed from Spanish and Portuguese control, they were eager to industrialize but faced a variety of obstacles. At the beginning of the nineteenth century, Brazil had imported steam engines and developed facilities for sugar refining, coffee processing, and textile production. Paraguay built an iron foundry and established a steamship line. Chile opened coal mines and built sawmills and flour mills. Many countries also built rail lines. However, they did not become heavily industrialized; consequently, their development took another path.

Ironically, independence was part of the problem. When Spain and Portugal regulated their economies, Latin American merchants had chafed at restrictions, but these regulations had also heavily taxed foreign-made goods, which protected local handicraft industries. Now that merchants could trade with any countries they wished, however, goods made in Europe and the United States flooded in. Like India and Egypt, Latin American countries quickly found their own manufactured goods could not be made or sold as cheaply as imports. They also could not make enough to supply internal demand. As Brazilians and Chileans watched, their silver flowed overseas instead of being spent at home.

Latin Americans quickly realized that they would be more successful at continuing to grow sugar and coffee, products that had been the bases of the colonial economy and were still in high demand, than they would be at attempting to compete with foreign manufacturers. Later in the nineteenth century, Brazil produced rubber for the same reasons, using its abundant land and large agricultural workforce to supply raw materials for industrialized nations. Although these decisions made sense to planters and politicians, they nevertheless locked Spain’s and Portugal’s former colonies into providing raw materials that did not command as high a price as the finished products made from them.

Thus, though Latin Americans sold large amounts of cash crops to the United States and Europe, enriching the planter class, their earnings never exceeded (or even equaled) what they paid for imports. This disparity had a negative effect on Latin American society. Wealthy plantation owners and urban professionals could afford the factory-made products of other continents, but agricultural laborers could not, accentuating the class divide. Furthermore, many of the industrial improvements that Latin American countries did make, like the construction of mines and railroads, were funded by European and U.S. banks, and much necessary equipment, like steam engines and other machinery, was imported from Europe, leaving little money at home for domestic projects like building roads and telegraph lines. Regional wars in the nineteenth century also destabilized South America and interfered with industrialization. For example, from 1864 to 1870, Paraguay battled the united forces of Uruguay, Brazil, and Argentina in the War of the Triple Alliance. By the time the war ended, it and infectious diseases had killed much of Paraguay’s population.

Thus a variety of forces combined to make Latin America’s attempts to industrialize largely unsuccessful, and the region remained primarily an exporter of cash crops. Although railroads were built, they tended to be short lines linking the interior to the coast, enabling the export of raw materials. No national rail networks developed like they did in the United States and Europe, and electrification took place only in major cities.


China also did not become an industrial power in the nineteenth century, despite its population, wealth, natural resources, and tradition of innovation and invention. Historians have offered a variety of reasons.

First, no challengers in East Asia could match China in size, wealth, and military strength, so it had no need to compete with anyone. Second, because China’s population was large and often poor, labor was abundant and employers did not have to offer high wages to attract employees or replace workers with labor-saving machinery. Also, unlike in Europe, most coal deposits in China were located far from population and manufacturing centers. Coal provided the most efficient means of powering steam engines in factories and was crucial to the development of railroads.

China had also been weakened by military defeats and internal rebellion. Britain won the First Opium War (1839–1842), gaining control over Hong Kong and five other ports: Guangzhou, Shanghai, Ningbo, Fuzhou, and Xiamen. In 1844, China also signed treaties with France and the United States, giving them the right to trade in the five open ports and build Christian churches in and send missionaries to China. China’s loss to Britain in the Second Opium War (1856–1860) led to the signing of the Treaty of Tianjin, which gave Britain, France, the United States, and Russia further rights to trade and establish diplomatic posts in the capital of Beijing. China refused to honor the treaty, however, and British and French troops invaded Beijing in 1860, looting and burning the imperial Old Summer Palace (Figure 9.12). The subsequent Convention of Beijing affirmed the Treaty of Tianjin.

A photograph shows a very detailed white stone archway surrounded by collapsed and broken archway pieces. In the back left of the picture are five tall broken columns that are richly engraved. Trees run along the background.
Figure 9.12 Most of the Old Summer Palace, the residence of the Qing emperors, was looted and destroyed by British and French soldiers in October 1860. Treasures they carried off are now in museums around the world. (credit: “Old summer palace ruin” by “Clee7903”/Wikimedia Commons, Public Domain)

China’s defeat in the Opium Wars began what the Chinese have called “the century of humiliation.” In accord with the Treaty of Tianjin, six million taels (a unit of currency) of Chinese silver that might otherwise have been invested in business enterprises flowed to the victorious foreigners as compensation for damages sustained. This demonstration of the Qing ’s military weakness plus other grievances such as high unemployment and failure to maintain the crucially important Grand Canal, which transported food stuffs from south to north, led to numerous uprisings and outbreaks of violence directed at the reigning dynasty.

Internal rebellion also weakened China. In December 1850, the Taiping Rebellion began when Qing troops tried to force the followers of a man named Hong Xiuquan from their stronghold in Guangxi province in the south. Hong, a village schoolteacher, had come to believe he was the son of the Christian God and the brother of Jesus. Rejecting both Qing authority and Confucian tradition, he spread his religious teachings throughout southern China and gained a sizable following. In early 1851, after defeating some Qing forces, Hong Xiuquan proclaimed the Taiping Tianguo (Heavenly Kingdom of Great Peace) with himself as king. He urged his followers to give up alcohol and opium and called for the overthrow of the Qing government. His promises of land and wealth for all attracted impoverished peasants, tribal minority groups, bandit gangs, and members of Chinese secret societies, some originally formed to restore the Ming dynasty.

Hong Xiuquan’s forces raged through southern China, seizing towns and cities and confiscating food, money, and weapons. (Figure 9.13). In 1853, the populous southern city of Nanjing fell to the Taiping army and became Hong Xiuquan’s capital. Many died in the fighting, and the confiscation of foodstuffs led to famine. By the time the Taiping Rebellion ended after Hong’s death in 1864, an estimated twenty to thirty million Chinese had died, and the south, China’s most populous region, had been devastated.

A map of eastern China, Mongolia, and Russia is shown. Japan, Japanese Korea, Taipei Formosa, the Sea of Okhotsk, the Sea of Japan (East Sea), the Yellow Sea, the East China Sea, the Taiwan Strait, and the Philippine Sea are also shown. Inland in eastern China, a triangular portion is highlighted orange indicating “Taiping rebel-controlled areas, 1853–1857.” A light green long thin area along the Taiwan Strait is highlighted light green indicating “Taiping rebel-controlled areas, 1857–1863.” Between the two areas in a kidney shaped area where both colors overlap. At the top of the overlap is the city of Nanjing. Just east, along the coast of the sea is Shanghai.
Figure 9.13 The shading shows the area controlled by the Taiping rebels. Note how close they were to the major port of Shanghai. (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

The content of this course has been taken from the free World History, Volume 2: from 1400 textbook by Openstax