IDEAS home Printed from https://ideas.repec.org/a/bla/sajeco/v88y2020i3p341-367.html
   My bibliography  Save this article

Public Sector Growth in the British Cape Colony: Evidence From New Data on Expenditure and Foreign Debt, 1830‐1910

Author

Listed:
  • Abel Gwaindepi
  • Johan Fourie

Abstract

The public expenditure shifts that took place following the discovery of diamonds and gold during the second half of the nineteenth century had far‐reaching consequences for southern Africa’s development. Using new data for public expenditure and foreign debt in the Cape Colony and evidence from Cape parliamentary budget debates, we trace and explain the growth of the public sector. We find that the coincidence of mineral discovery in 1867 and the granting of responsible government status rapidly accelerated the growth of the public sector. Owing to strong mining interests, railways accounted for more than 70% of the public works expenditure from the 1880s onwards. Spending on human capital and welfare enhancement remained limited. Both the quantitative and qualitative evidence suggests that the mining elites managed to build coalitions that swayed public expenditure decisions towards self‐serving ends.

Suggested Citation

  • Abel Gwaindepi & Johan Fourie, 2020. "Public Sector Growth in the British Cape Colony: Evidence From New Data on Expenditure and Foreign Debt, 1830‐1910," South African Journal of Economics, Economic Society of South Africa, vol. 88(3), pages 341-367, September.
  • Handle: RePEc:bla:sajeco:v:88:y:2020:i:3:p:341-367
    DOI: 10.1111/saje.12257
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/saje.12257
    Download Restriction: no

    File URL: https://libkey.io/10.1111/saje.12257?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stelios Michalopoulos & Elias Papaioannou, 2020. "Historical Legacies and African Development," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 53-128, March.
    2. Remi Jedwab & Edward Kerby & Alexander Moradi, 2017. "History, Path Dependence and Development: Evidence from Colonial Railways, Settlers and Cities in Kenya," Economic Journal, Royal Economic Society, vol. 127(603), pages 1467-1494, August.
    3. Johan Fourie & Jan Luiten Zanden, 2013. "GDP in the Dutch Cape Colony: The National Accounts of a Slave-Based Society," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 467-490, December.
    4. Fintel, Dieter von & Fourie, Johan, 2019. "The great divergence in South Africa: Population and wealth dynamics over two centuries," Journal of Comparative Economics, Elsevier, vol. 47(4), pages 759-773.
    5. Alan T. Peacock & Jack Wiseman, 1961. "The Growth of Public Expenditure in the United Kingdom," NBER Books, National Bureau of Economic Research, Inc, number peac61-1, November.
    6. Jeanne Cilliers & Johan Fourie, 2016. "Social mobility during South Africa’s industrial take-off," Working Papers 617, Economic Research Southern Africa.
    7. Leigh Gardner, 2017. "Colonialism or supersanctions: sovereignty and debt in West Africa, 1871–1914," European Review of Economic History, Oxford University Press, vol. 21(2), pages 236-257.
    8. Alfonso Herranz-Loncán & Johan Fourie, 2018. "“For the public benefit”? Railways in the British Cape Colony," European Review of Economic History, Oxford University Press, vol. 22(1), pages 73-100.
    9. Olivier Accominotti & Marc Flandreau & Riad Rezzik, 2011. "The spread of empire: Clio and the measurement of colonial borrowing costs," Economic History Review, Economic History Society, vol. 64(2), pages 385-407, May.
    10. David Greasley & Les Oxley, 1998. "A Tale of Two Dominions: Comparing the Macroeconomic Records of Australia and Canada Since 1870," Economic History Review, Economic History Society, vol. 51(2), pages 294-318, May.
    11. Peacock, Alan & Scott, Alex, 2000. "The Curious Attraction of Wagner's Law," Public Choice, Springer, vol. 102(1-2), pages 1-17, January.
    12. Rowley, Charles K & Tollison, Robert D, 1994. "Peacock and Wiseman on the Growth of Public Expenditure: Editor's Note," Public Choice, Springer, vol. 78(2), pages 125-128, February.
    13. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    14. Samuel Kwabena Obeng Author-Name: Daniel Sakyi, 2017. "Explaining the Growth of Government Spending in Ghana," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(1), pages 103-128, January-M.
    15. Abel Gwaindepi, 2019. "Serving God and Mammon: the ‘minerals-railway complex’ and its effects on colonial public finances in the British Cape Colony, 1810-1910," Working Papers 07/2019, Stellenbosch University, Department of Economics.
    16. Gary B. Magee & Lorraine Greyling & Grietjie Verhoef, 2016. "South Africa in the Australian mirror: per capita real GDP in the Cape Colony, Natal, Victoria, and New South Wales, 1861–1909," Economic History Review, Economic History Society, vol. 69(3), pages 893-914, August.
    17. Jeanne Cilliers & Johan Fourie, 2018. "Occupational Mobility during South Africa's Industrial Take‐Off," South African Journal of Economics, Economic Society of South Africa, vol. 86(1), pages 3-22, March.
    18. Vicente Pinilla & Henry Willebald, 2018. "Agricultural Development in the World Periphery: A General Overview," Palgrave Studies in Economic History, in: Vicente Pinilla & Henry Willebald (ed.), Agricultural Development in the World Periphery, chapter 1, pages 3-27, Palgrave Macmillan.
    19. Boshoff, Willem H. & Fourie, Johan, 2010. "The significance of the Cape trade route to economic activity in the Cape Colony: a medium-term business cycle analysis," European Review of Economic History, Cambridge University Press, vol. 14(3), pages 469-503, December.
    20. Kenneth L. Sokoloff & Eric M. Zolt, 2007. "Inequality and the Evolution of Institutions of Taxation: Evidence from the Economic History of the Americas," NBER Chapters, in: The Decline of Latin American Economies: Growth, Institutions, and Crises, pages 83-138, National Bureau of Economic Research, Inc.
    21. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    22. Kenneth L. Sokoloff & Stanley L. Engerman, 2000. "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 217-232, Summer.
    23. Lorraine Greyling & Grietjie Verhoef, 2015. "Slow growth, supply shocks and structural change: The GDP of the Cape Colony in the late nineteenth century," Economic History of Developing Regions, Taylor & Francis Journals, vol. 30(1), pages 23-43, June.
    24. Lorraine Greyling & Grietjie Verhoef, 2017. "Savings and economic growth: a historical analysis of the Cape Colony economy, 1850–1909," Economic History of Developing Regions, Taylor & Francis Journals, vol. 32(2), pages 127-176, May.
    25. Ferguson, Niall & Schularick, Moritz, 2006. "The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880–1913," The Journal of Economic History, Cambridge University Press, vol. 66(2), pages 283-312, June.
    26. Johan Fourie, 2013. "The remarkable wealth of the Dutch Cape Colony: measurements from eighteenth-century probate inventories," Economic History Review, Economic History Society, vol. 66(2), pages 419-448, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abel Gwaindepi, 2021. "Domestic revenue mobilisation in developing countries: An exploratory analysis of sub‐Saharan Africa and Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(2), pages 396-421, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gwaindepi, Abel, 2019. "Serving God and Mammon: The ‘Minerals-Railway Complex’ and its effects on colonial public finances in the British Cape Colony, 1810-1910," African Economic History Working Paper 44/2019, African Economic History Network.
    2. Johan Fourie & Nonso Obikili, 2019. "Decolonizing with data: The cliometric turn in African economic history," Working Papers 02/2019, Stellenbosch University, Department of Economics.
    3. J. Fourie, 2018. "Cliometrics in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 42(2), pages 1-14, August.
    4. Jeanne Cilliers & Johan Fourie, 2017. "Social mobility during South Africa’s industrial take-off," Working Papers 04/2017, Stellenbosch University, Department of Economics.
    5. Stephen Broadberry & Leigh Gardner, 2019. "Economic Growth In Sub-Saharan Africa, 1885-2008," Oxford Economic and Social History Working Papers _169, University of Oxford, Department of Economics.
    6. Johan Fourie & Dieter Fintel, 2014. "Settler skills and colonial development: the Huguenot wine-makers in eighteenth-century Dutch South Africa," Economic History Review, Economic History Society, vol. 67(4), pages 932-963, November.
    7. Stephen Broadberry & Leigh Gardner, 2019. "Economic Growth In Sub-Saharan Africa, 1885-2008," Oxford Economic and Social History Working Papers _169, University of Oxford, Department of Economics.
    8. Davis, Lewis S., 2018. "Political economy of growth with a taste for status," Journal of Public Economics, Elsevier, vol. 168(C), pages 35-46.
    9. Fintel, Dieter von & Fourie, Johan, 2019. "The great divergence in South Africa: Population and wealth dynamics over two centuries," Journal of Comparative Economics, Elsevier, vol. 47(4), pages 759-773.
    10. Bluhm, Richard & Hodler, Roland & Schaudt, Paul, 2021. "Local majorities: How administrative divisions shape comparative development," Economics Working Paper Series 2110, University of St. Gallen, School of Economics and Political Science.
    11. Jeanne Cilliers & Martine Mariotti, 2019. "The shaping of a settler fertility transition: eighteenth- and nineteenth-century South African demographic history reconsidered," European Review of Economic History, Oxford University Press, vol. 23(4), pages 421-445.
    12. Ali, Merima & Fjeldstad, Odd‐Helge & Shifa, Abdulaziz B., 2020. "European colonization and the corruption of local elites: The case of chiefs in Africa," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 80-100.
    13. Francois Facchini, 2018. "What Are the Determinants of Public Spending? An Overview of the Literature," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(4), pages 419-439, December.
    14. Johan Fourie, 2020. "The settlers of South Africa and the expanding frontier," Working Papers 14/2020, Stellenbosch University, Department of Economics.
    15. Ekama, Kate & Fourie, Johan & Heese, Hans & Martin, Lisa-Cheree, 2021. "When Cape slavery ended: Introducing a new slave emancipation dataset," Explorations in Economic History, Elsevier, vol. 81(C).
    16. Yoshito Funashima & Kazuki Hiraga, 2017. "Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(4), pages 652-677, August.
    17. Silvia Fedeli, 2015. "The Impact of GDP on Health Care Expenditure: The Case of Italy (1982–2009)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(2), pages 347-370, June.
    18. Philip Roessler & Yannick I. Pengl & Robert Marty & Kyle Sorlie Titlow & Nicolas van de Walle, 2020. "The Cash Crop Revolution, Colonialism and Legacies of Spatial Inequality: Evidence from Africa," CSAE Working Paper Series 2020-12, Centre for the Study of African Economies, University of Oxford.
    19. Okoye, Dozie, 2021. "Things fall apart? Missions, institutions, and interpersonal trust," Journal of Development Economics, Elsevier, vol. 148(C).
    20. Jörg Baten & Johan Fourie, 2015. "Numeracy of Africans, Asians, and Europeans during the early modern period: new evidence from Cape Colony court registers," Economic History Review, Economic History Society, vol. 68(2), pages 632-656, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:sajeco:v:88:y:2020:i:3:p:341-367. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/essaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.