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The dynamics of inequality in a newly settled, pre-industrial society: The case of the Cape Colony

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  • Johan Fourie

    () (Department of Economics, University of Stellenbosch)

  • Dieter von Fintel

    () (Department of Economics, University of Stellenbosch)

Abstract

One reason for the relatively poor development performance of many countries around the world today may be the high levels of inequality during and after colonisation. Evidence from colonies in the Americas suggests that skewed initial factor endowments could create small elites that owned a disproportionate share of wealth, human capital and political power. The Cape Colony, founded in 1652 at the southern tip of Africa, presents a case where a mercantilist company (the Dutch East India Company) settles the land and establishes a unique set of institutions within which inequality and development evolve. This paper provides a long-run quantitative analysis of trends in asset-based inequality (using Principle Components' Analysis on tax inventories) during the seventeenth and eighteenth century, allowing, for the first time, a dynamic rather than static analysis of inequality trends in a newly settled and pre-industrial society over this period. While theory testing in other societies has been severely limited because of a scarcity of quantitative evidence, this study presents a history with evidence, enabling an evaluation of the Engerman-Sokoloff and other hypotheses.

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File URL: http://www.ekon.sun.ac.za/wpapers/2009/wp172009/wp-17-2009.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 17/2009.

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Date of creation: 2009
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Handle: RePEc:sza:wpaper:wpapers90

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Keywords: South Africa; settler societies; Kuznets; income distribution; asset index; institutions; mercantilism; Dutch East India Company;

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References

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  1. Jeffrey G. Williamson & Branko Milanovic & Peter H. Lindert, 2008. "Measuring Ancient Inequality," Working Papers 08-06, Association Française de Cliométrie (AFC).
  2. Feinstein, Charles, 1988. "The Rise and Fall of the Williamson Curve," The Journal of Economic History, Cambridge University Press, vol. 48(03), pages 699-729, September.
  3. Ewout Frankema, 2010. "The colonial roots of land inequality: geography, factor endowments, or institutions?," Economic History Review, Economic History Society, vol. 63(2), pages 418-451, 05.
  4. Willem Boshoff & Johan Fourie, 2008. "Explaining ship traffic fluctuations in the early Cape settlement: 1652–1793," Working Papers 01/2008, Stellenbosch University, Department of Economics.
  5. Jane Fry & Tim Fry & Keith McLaren, 2000. "Compositional data analysis and zeros in micro data," Applied Economics, Taylor and Francis Journals, vol. 32(8), pages 953-959.
  6. Champernowne, D G, 1974. "A Comparison of Measures of Inequality of Income Distribution," Economic Journal, Royal Economic Society, vol. 84(336), pages 787-816, December.
  7. Kuznets, Simon, 1971. "Modern Economic Growth: Findings and Reflections," Nobel Prize in Economics documents 1971-2, Nobel Prize Committee.
  8. Chen, Chau-Nan & Tsaur, Tien-Wang & Rhai, Tong-Shieng, 1982. "The Gini Coefficient and Negative Income," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 473-78, November.
  9. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer, vol. 18(2), pages 229-260, 06.
  10. Keen, Michael, 1986. "Zero Expenditures and the Estimation of Engel Curves," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 277-86, July.
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Cited by:
  1. Jerven, Morten & Austin, Gareth & Green, Erik & Uche, Chibuike & Frankema, Ewout & Fourie, Johan & Inikori, Joseph & Moradi, Alexander & Hillbom, Ellen, 2012. "Moving Forward in African Economic History. Bridging the Gap Between Methods and Sources," Lund Papers in Economic History 124, Department of Economic History, Lund University.
  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. 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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