Settler skills and colonial development

The emphasis on location-specific factors, such as climate or disease environment, in the explanation of development outcomes in colonial societies implicitly assumes that settler groups were homogenous. Using tax records, this paper shows that the French Huguenots who immigrated to Dutch South Africa at the end of the 17th century were more productive wine-makers than the already-established non-French farmers. Standard factors of production usually associated with faster growth do not explain the differences between the two groups. We posit that the skills of the Huguenots — the ability to make quality wines — provided a sustainable competitive advantage that not only explains initial but persistent productivity differences. We test this hypothesis by dividing the French settlers into two groups — those originating from wine regions, and those from wheat regions — and comparing them with other settler groups. Potential differences between the French (overall) and the Dutch may be attributable to institutional and cultural differences, while variations within the French group are more likely to be skill-related. This intuitive but important insight — that home-country production determines settler-society productivity, even in later generations — sheds new light on our understanding of how newly settled colonial societies develop, and of the importance of knowledge and skills in economic growth.