Final answer:
Economic stagnation in new states post-independence was due to the central government's lack of authority to regulate trade, states' disruptive tariffs, inflation, and the challenges of nation-building.
Step-by-step explanation:
One cause of economic stagnation that plagued the new states post-independence was the central government's lack of power to impose tariffs on foreign imports and regulate interstate commerce. This inability to regulate trade allowed British merchants to flood the U.S. market with low-priced goods, creating stiff competition for American producers. Furthermore, individual states would often impose tariffs on goods from other states, which further disrupted trade.
The economic difficulties were exacerbated by the states issuing large amounts of paper money, leading to inflation and a devaluation of the currency, including the Continental dollar. Compounding economic challenges was the scarcity of specie (gold and silver) necessary for transactions. Economic stability was thus undermined, and this volatility discouraged spending and inhibited growth.
In response to the challenges of economic development, some new governments, like India's under Nehru, nationalized key industries to take control away from foreign shareholders, aiming for independent economic self-reliance. However, these efforts often faced the complex task of nation-building, particularly in African states where colonial legacies and artificially created national boundaries by foreign powers at the Berlin Conference led to internal strife and hindered cohesive national development.