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Growth (and Segregation) by Rail: How the Railways Shaped Colonial South Africa


  • Johan Fourie and Alfonso Herranz-Loncan
  • Alfonso Herranz-Loncan


The railway played a large part in late nineteenth century and early twentieth century globalization since, to benefit from the international economy, peripheral countries needed cheap inland transport. This paper discusses how the railway transformed the economy of South Africa’s Cape Colony during the first era of globalization. A very large share of the Colony’s GDP came from rail transport – its resource saving effect was one of the highest in the world at that time. We estimate that 46 to 51% of the Colony’s increase in labor productivity between 1873 and 1905 came directly from the railway, whether from investment in the rail network or from savings in transport costs. We argue that it was the boom in diamond production, necessitating the building of the railway to connect the Kimberley diamond fields with the international economy, that weighted the Colony’s economy so heavily towards the rail transport sector. The railway not only boosted the Colony’s growth, it also re-shaped its economic geography, organizing it around the railway lines that connected the diamond mines with the ports. Areas not served by the railway missed out on the benefits of globalization. As these areas were mostly populated by blacks, the railway helped to create a dual economy with a racial social divide and was later instrumental in creating black ‘homelands’ and establishing the apartheid institutions.

Suggested Citation

  • Johan Fourie and Alfonso Herranz-Loncan & Alfonso Herranz-Loncan, 2015. "Growth (and Segregation) by Rail: How the Railways Shaped Colonial South Africa," Working Papers 538, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:538

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    Cited by:

    1. Maravall Buckwalter, Laura, 2018. "Build It, and They Will Come? Secondary Railways and Population Density in French Algeria," IFCS - Working Papers in Economic History.WH 26738, Universidad Carlos III de Madrid. Instituto Figuerola.
    2. Laura Maravall Buckwalter, 2018. "Build it and they will come? Secondary railways and population density in French Algeria," Working Papers 18008, Economic History Society.
    3. Akbulut-Yuksel, Mevlude & Okoye, Dozie & Turan, Belgi, 2020. "Expressway to Power: Infrastructure Projects and Political Support," IZA Discussion Papers 13795, Institute of Labor Economics (IZA).
    4. Okoye, Dozie & Pongou, Roland & Yokossi, Tite, 2017. "On the Dispensability of New Transportation Technologies: Evidence from the Heterogeneous Impact of Railroads in Nigeria," MPRA Paper 77293, University Library of Munich, Germany.
    5. Okoye, Dozie & Pongou, Roland & Yokossi, Tite, 2019. "New technology, better economy? The heterogeneous impact of colonial railroads in Nigeria," Journal of Development Economics, Elsevier, vol. 140(C), pages 320-354.
    6. Remi Jedwab & Adam Storeygard, 2019. "Economic and Political Factors in Infrastructure Investment: Evidence from Railroads and Roads in Africa 1960–2015," Economic History of Developing Regions, Taylor & Francis Journals, vol. 34(2), pages 156-208, May.
    7. Dozie Okoye & Roland Pongou & Tite Yokossi, 2016. "On the Dispensability of New Transportation Technologies : Evidence from Colonial Railroads in Nigeria," Working Papers 1620E, University of Ottawa, Department of Economics.

    More about this item


    railways; Cape Colony; South Africa; social savings; economic geography; segregation;
    All these keywords.

    JEL classification:

    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • H4 - Public Economics - - Publicly Provided Goods
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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