The divergence of the economic fortunes of Hindus and Muslims in British India: A comparative institutional analysis

This work suggests that the underdevelopment of South Asia's Muslims vis-a-vis Hindus of the region stems from differences in the commercial institutions and inheritance laws of the two communities. First, the Hindu joint family was a durable institution that could branch out into long term business ventures. Islamic partnerships were not durable and could not carry into long term business ventures. Because of this difference, Hindus enjoyed a competitive advantage in the adoption of joint stock companies. Second, whereas Hindu inheritance law tended to accumulate capital over time, Islamic inheritance law tended to fragment capital over time. This gave Hindus more access to capital vis-a-vis Muslims in India's capital-scarce economy. As a consequence, India's Hindus came to dominate South Asia's industry, marginalizing its Muslims.