Chapter 4 traces how the German firms, big business and bazaar exporters alike, reentered India after World War I. It shows how the postwar situation triggered a joint sense of victimhood among Germans and Indians who both felt mistreated and exploited by the British, laying the groundwork for a mental map of nationalism that highlighted their parallel history. Both Germans and Indians experimented with new sensemaking offers, among them the bold idea of an Indo-German “Aryan” community that claimed a joint heritage of both people. However, this “identity work” required constant effort and investment. And, many of the Indian suggestions seemed too audacious for most German businesspeople to approve. While they often advocated political neutrality towards the goals of the Indian Independence movement and other independence movements around the world, they also took notice of the similar national aspirations of countries, which otherwise had little in common and started discussing them as a cluster.

Despite its increasingly repressive institutions, Liberia enjoyed rapid economic growth in the 1950s and 1960s. This was due in large part to the expansion of exports produced by foreign companies granted generous concessions by the Liberian government. The first major concession was in 1926 to the Firestone Rubber Company. Rubber exports were the main source of economic growth in the 1930s. This was followed after 1945 with numerous concessions in mining, forestry, and agriculture. This chapter compares Liberia’s economic history during this period with that of Mexico under the presidency of Porfirio Diaz (1876–1911), which also grew rapidly through the attraction of foreign capital. While research on institutions and economic development has often stressed the importance of limited government, periods of economic growth haven often occurred under authoritarian governments through various means to create substitutes for limited government. Histories of Porfirio Diaz’s government have argued that a system of elite coordination and rent-seeking made contracts with foreign companies credible even in the absence of representative institutions. Ultimately, however, this system fractured with the beginning of the Mexican civil war. This chapter argues that a similar system operated in Liberia, and that the inability of the elite to integrate new members resulted in the overthrow of the Americo-Liberian regime in 1980 and, ultimately, the beginning Liberia’s devastating civil wars.

Shortly after the declaration of independence, the Liberian government established the Liberian dollar as its national currency. According to President Joseph J. Roberts, it was intended to both promote commerce and demonstrate the sovereignty of the Liberian state. The first coins were minted in England, with the financial backing of a British banker and abolitionist, as the Liberian state did not then have the means to fund their minting itself. These token coins were later supplemented with paper money printed in Monrovia. The Liberian dollar was an unbacked paper currency. It was initially valued at par with the US dollar but quickly depreciated as the Liberian government turned to the printing press during repeated fiscal crises in the decades after 1847. This chapter chronicles the Liberian government’s efforts to sustain the value of its currency, the adoption by the turn of the century of British sterling as the primary medium of exchange, followed by the replacement of British currency by the US dollar in 1943. The case of Liberia illustrates that formal monetary sovereignty may have little significance for governments lacking the resources and capacity to sustain the value of their currency, which may force them to adopt others to sustain their trade and public finances.

During the second half of the twentieth century, the collapse of European Empires increased the number of sovereign states. At the same time, higher taxation and more aggressive regulations by governments of wealthy countries left companies and wealthy individuals seeking offshore homes for capital. In 1948, the Liberian government passed legislation to bring it into this market for offshore services, creating a new channel by which to monetize its sovereignty. The three laws passed in that year established the Liberian shipping registry and created loose corporation and tax laws intending to attract foreign investment.This chapter examines the success of the Liberian shipping registry, which by the 1960s was the largest in the world in terms of tonnage and remained one of the largest in the world even through the collapse of the Liberian state during the civil wars. It contrasts this with the failure of Liberia’s efforts to become a tax haven. This contrast allows for a broader exploration of the "market" for sovereignty and its limits since the middle of the twentieth century. It shows that while, in theory, any state with formal recognition might try to attract capital by committing to lower levels of regulation, this commitment alone is not enough to generate investment and economic development.

This concluding chapter begins with comparisons between Liberia and Ghana made on the occasion of Ghana’s independence in 1957. It then uses Liberia’s economic history to reassess conclusions about the impact of formal and informal colonialism on economic development, and draws out lessons from Liberia’s history for our understanding of postindependence developments in the rest of Africa.

Formal recognition of Liberia’s sovereignty offered the government the opportunity to borrow on international markets that were growing rapidly during the second half of the nineteenth century. However, like other independent countries, Liberia would often find the terms on which it was able to borrow excessively costly, particularly as compared with colonized countries – a gap described in literature on sovereign debt as the "empire effect." Literature on the "empire effect" has thus far neglected any region of Africa outside of South Africa. This chapter focuses on Liberia’s efforts to borrow, beginning with the first loan the government raised in London in 1871. The terms of this loan were such that the government had little choice but to go into default. After renegotiating with its creditors, the Liberian government tried to return to the market but could only do so under what are described in the literature on sovereign debt as “supersanctions,” or infringements on the sovereignty of the borrowing country as a condition of borrowing. Literature on supersanctions has speculated that they replicated formal colonial rule. By comparing Liberia’s experience to that of British colonies in West Africa, this chapter shows that this was not the case: despite supersanctions which eventually extended the reach of foreign officials to include control over Liberia’s finances and its military, investors overseas neverregarded Liberia as a sound investment.

Liberia’s declaration of independence in 1847 was motivated in part by the Liberian government’s dependence on revenue from trade. Previous histories of Liberia have argued that there was a dramatic shift from protectionist policies in the nineteenth century to a policy of "open door" from the interwar period onward. This conclusion was based on the restriction of foreign trade to specific ports through so-called ports of entry laws dating back to the 1830s, and not abolished until 1931. There were also active debates among the Liberian elite about how protectionist Liberia should be in contemporary political discourse. This chapter uses new data on Liberian tariff rates to compare its trade policy to that of countries in Latin America and Asia. It finds that Liberia’s tariffs were somewhere between the protectionism of Latin America and the free trade policies of Asia, but closer to the latter. Despite rhetoric about the "closed door," trade was too important to the incomes of Liberian elites to restrict it.

Chapter 8 follows the Indo-German collaborations to the 1980s. Indias primary development goal was rapid industrialization and it invested heavily in imports from abroad, including from Germany, which turned into one of its most important trading partners. However, India also struggled with a chronic foreign exchange crisis, requiring development aid from abroad. The underlying mental map of nationalism changed during this period, stressing a policy direction focused on a predetermined path to growth and development. Grappling with the relationship between nations was less a matter of interpreting ideas derived from politics and ideologies and more an exercise of mastering development science. In this framework, nation states with a unique history and identity increasingly turned into building blocks of a worldview that prioritized countries development stage over its unique national features. While top-level strategy of German multinationals reflected these abstract and universal models of the world, strategy on the ground in India was shaped not by predictable categories but by one-off and specific negotiations with Indian officials, especially since the mid-1970s in the context of changes to the Foreign Exchange Regulation Act and anti-monopoly legislation.

German business in India advanced not only in the business-to-business sector, as seen in the previous chapter, but also in the Indian bazaar, and many observers testified to the universally available and very visible products “Made in Germany.” Chapter 2 shows how German exporters entered the Indian bazaar by tracing two of the most competitive export industries in detail: cutlery and gramophones/recorded music. In both, German and British manufacturers went head to head, with competition unfolding over price, distribution channels, product specifications and (legal battles over) trademarks. The label “Made in Germany,” forcefully introduced by the British in the 1880s to stigmatize German low-quality products, eventually turned into a political advantage when anticolonial protests increased the perceived value of “non-British” products in some areas of India, most notably in Bengal during the anti-partition protests. While short-lived and with limited immediate impact on business, the nationalist upheaval in the bazaars taught German firms that presenting themselves as “outsiders” of the British-Indian colonial economy had advantages for them and inspired first debates about a strategy that leveraged the Indian nation’s history, aspirations and relationship to Britain.

Chapter 5 follows German business strategy and Indo-German collaboration through the Great Depression and its aftermath. The depression ended India’s open-door policy and introduced preferential tariff treatment for British goods. At the same time, the German political landscape changed significantly with the Nazi Regime (1933–1945), re-shaping both German economic policies but also MNE’s export strategies. There was widespread antipathy in India towards the lawlessness and anti-Semitism of Hitler’s government, including some boycotts against German goods. But German businessmen also became savvier in understanding the fine-grained differences of economic nationalism in India and developed more targeted strategies to exploit them. It was at this time that they invested heavily in business intelligence as a basis for strategic decision-making. Moreover, the German Reichsbank started a system of subsidizing German exporters, which helped them to regain some competitiveness despite Germany staying on the gold standard. Giving up much of the bazaar business, German business in India focused more than ever before on the industries that were seen as complementary to Indian activists’ agenda, most notably chemicals, electrical goods and machinery.