Was Empire Still Worth It? The Economics of Retreat

After 1945 European governments asked whether colonies were still worth the cost. Britain at first tried to make empire pay: colonies such as Malaya earned scarce US dollars from rubber and tin, and the sterling area pooled colonial earnings in London. Governments also launched development schemes, sometimes called a 'second colonial occupation' because they sent more officials and experts than ever before. Some failed badly, like the Tanganyika groundnut scheme of 1947–51.

Over time, rising costs of security, welfare and development, combined with growing trade with Europe and America, made formal rule look less valuable. In 1957 British Prime Minister Harold Macmillan asked officials for an audit of the profit and loss of each colony. Historians disagree about how much economics drove retreat: some stress calculation in London, others argue that economic reasoning followed political pressure from nationalists rather than causing it.