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The significance of the Cape trade route to economic activity in the Cape Colony: a medium-term business cycle analysis

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  • BOSHOFF, WILLEM H.
  • FOURIE, JOHAN

Abstract

Trade is a critical component of economic growth in newly settled societies. This paper tests the impact of ship traffic on the Cape economy using a time series smoothing technique borrowed from the business cycle literature and employing an econometric procedure to test for long-run relationships. The results suggest a strong systematic co-movement between wheat production and ship traffic, with less evidence for wine production and stock herding activities. While ship traffic created demand for wheat exports, the size of the co-movement provides evidence that ship traffic also stimulated local demand through secondary and tertiary sector activities, supporting the hypothesis that ship traffic acted as a catalyst for growth in the Cape economy.

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Bibliographic Info

Article provided by Cambridge University Press in its journal European Review of Economic History.

Volume (Year): 14 (2010)
Issue (Month): 03 (December)
Pages: 469-503

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Handle: RePEc:cup:ereveh:v:14:y:2010:i:03:p:469-503_00

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Lessons from the Cape Colony
    by Johan Fourie in Johan Fourie's Blog on 2012-03-15 10:30:02
  2. Lessons from the Cape Colony
    by Johan Fourie in Johan Fourie's Blog on 2012-03-15 10:30:02
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Cited by:
  1. Johan Fourie & Dieter von Fintel, 2009. "The dynamics of inequality in a newly settled, preindustrial society: The case of the Cape Colony," Working Papers 134, Economic Research Southern Africa.
  2. Johan Fourie, 2011. "Slaves as capital investment in the Dutch Cape Colony, 1652-1795," Working Papers 21/2011, Stellenbosch University, Department of Economics.
  3. Pim de Zwart, 2011. "Real wages at the Cape of Good Hope: A long-term perspective, 1652-1912," Working Papers 0013, Utrecht University, Centre for Global Economic History.
  4. Johan Fourie & Jolandi Uys, 2011. "A survey and comparison of luxury item ownership in the eighteenth century Dutch Cape Colony," Working Papers 14/2011, Stellenbosch University, Department of Economics.
  5. Johan Fourie & Jan Luiten van Zanden, 2012. "GDP in the Dutch Cape Colony: The national accounts of a slave-based society," Working Papers 04/2012, Stellenbosch University, Department of Economics.

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