Programme

This paper investigates the empirical basis for perceptions of rising affluence at the Cape of Good Hope during the 18th century. Recent scholarship (for example, Allen 2005) have calculated and compared the levels and evolution of real wages in various European and Asian economies since the early modern period. This paper extends that literature to the Dutch East India Company’s colony at the Cape of Good during the 18th century. We follow Allen (2005) in calculating two measures of real wages in the colony, the first based on a simple relation between nominal wages and the cost of a calorie and the second based on a broader index of goods as an approximation to the cost of living. We are able to perform these calculations for both skilled and unskilled categories of labour, which will allow a comparison to trends observed in European and Asian economies where real wages were either stagnant or on a downward trend in this period.

This papers draws on a number of different data sources, some of which have only recently become available to economic historians. Nominal wages data for various categories is drawn from Muster Rolls (from the National Archive at the Hague) of the VOC’s wage payments at the Cape of Good Hope for a number of dates starting in 1699 and ending in 1790. Production volumes, prices and quantities consumed of agricultural commodities central to the diet of colonists are from Van Duin and Ross (1987) while the prices of cloth and commodities are from the Transcriptions of Estate Papers at the Cape (TEPC). These data are combined to calculate the level and trend of real wages at the Cape of Good Hope over the course of the 18th century.

JEL codes: N3, N9

Bibliography
Allen, R. C. (2005). Real Wages in Europe and Asia: A First Look at the Longterm Patterns. Living Standards in the Past: New Perspectives on Well-Being in Asia and Europe. R. C. Allen, T. Bengtsson and M. Dribe. Oxford, Oxford University Press.

Van Duin, P. and R. Ross (1987). The Economy of the Cape Colony in the eighteenth century. Leidein, Intercontinenta no 7.s

This paper is the first study to conduct an econometric analysis of indigenous slavery in Africa. We distinguish indigenous slavery from export slavery and survey the literature in order to identify the factors that shaped its prevalence and its impact on Africa’s long-term development. We present data collected from anthropological records and utilize these in a statistical analysis. The results show that indigenous slavery was more common in Equatorial and West Africa (specifically the Belgian colonies) and in societies with more developed states. Our analysis also shows that indigenous slavery is robustly and negatively associated with long-term income development. . We find evidence that this effect runs via less political development, especially lower democratic accountability.

Studying the profitability of the Congo companies during the colonization period reveals that this was extremely high. We report the profitability as witnessed by accounting data as well as by stock market data, and compare the stock market data with international data. The colonisation of the Congo proved to be a highly lucrative business.

Belgian investors did invest in the Congo, but a lot of the final capital of their balance sheets in 1960 was from other sources. A considerable part of capital of companies came from reserve funds, build up by retained earnings realised in the Congo itself. Put in another way, an important part of "primitive accumulation" of capital (as far as companies is concerned) in the Congo was realised by internal efforts, not by imports of capital. This was especially the case from the Second World War on. On the contrary, during the 1920s considerable amounts of investments were made, an effort that was not continued during the 1930s. With the Second World War and the boom in raw material prices due to this War and the Cold War the Congo economy produced enormous amounts of profits, making it possible to distribute huge amounts of dividends and bonuses. The bulk of capital increases was realised with incorporating reserved funds and revaluation gains.

In recent decades, mounting evidence of the deleterious effects of excessive fiscal deficits on macroeconomic performance has fueled interest in mechanisms to maintain fiscal sustainability. These include institutional innovations such as numerical fiscal rules, budget-process reforms and transparency frameworks to enhance the accountability of policymakers. Their widespread adoption should not, however, be interpreted as a consensus on the effectiveness of institutional mechanisms for ensuring fiscal discipline. Indeed, the empirical evidence is decidedly mixed – with considerable variation in the effectiveness of fiscal institutions between countries and over time – and consequently the debate about the efficacy of institutional reform continues.

In this paper we study the influence of institutions on fiscal outcomes with a case study of South Africa since the 1960s. The aim is to identify institutions that had a lasting impact on the ability to increase tax compliance and restrain public expenditure within socially acceptable bounds. The fiscal institutions included a dual-budgeting system (revenue and loan accounts) which may be described as a rules-based regime (1960-1976), a discretionary regime (1976-1997) and a discretionary regime underpinned by accountability-enhancing transparency measures (1997 to the present). During the mid-1990s and despite rapidly rising budget deficit-to-GDP and public debt-to-GDP ratios (peaking at 7.3% and 49.5% respectively) and soaring expectations about the extent and quality of public services, the fiscal authorities achieved a significant fiscal consolidation. This occurred amidst a political transition from apartheid to full democracy and was implemented with discretionary measures – an achievement that defied expectations (in terms of economic theory) of rapid growth in government spending and worsening fiscal imbalances. We argue that periods of rising deficits and public debt in South Africa, with particular reference to the above-mentioned episode, have historically been followed by a return to sustainable levels before causing major economic crises, signifying sound fiscal institutions.

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.

Abstract
The health of the African economy is normally measured in terms of rates of growth. This paper suggests that growth figures are to a certain extent deceptive and, even more than that, superficial. In Africa, they largely measure the internationally tradeable indices and their rise and fall tends to reflect the market price of commodities such as coffee or copper or the development of oil deposits. The current, relatively positive picture given comes mainly from the greatly improved commodity prices that have characterised the first years of the twenty-first century rather than some kind of structural ‘take-off’. The broader context of what is happening is posited as being more fundamental for understanding trends. Surveying the literature relevant since 1960, this paper tries to point to some of the factors which have been more critical in change: demographic trends including urbanisation, the scope of so-called deagrarianisation and migration out of Africa entirely. It suggests how to come to terms with the varied phenomena jointly referred to as the informal sector. It looks at changes in the labour market, at how the African bourgeoisie/entrepreneurial class have been considered and the extensive literature on the African state. It finally considers as well the necessity to develop a more nuanced sense of the continent by stressing the range of different trends in different regions.

It has been argued that the fundamental cause of Africa's current relative poverty is a lack of pro-growth institutions deriving either from the colonial system, the period of slavery, or from particular African geographic/population characteristics. This paper takes a fresh look at the African income estimates. It subjects the available datasets to tests of accuracy, reliability and volatility and finds that there is very little to explain in terms of income diversity. Apart from some resource rich enclaves and islands and the exception of South Africa, the income of one African economy is not meaningfully different from another.

Using data compiled from army archives, we test whether the referral system in use in the British colonial army in Ghana served to improve the unobserved quality of new recruits. We find that it did not. If anything, referred recruits were more likely to desert and be dismissed as inefficient or unfit. We find instead evidence of referee opportunism.
Army recruiters may have been aware of this problem by insisting that referred recruits have better observed characteristics.

Abstract
This paper provides a general view of the evolution of banking in the Portuguese Colonial Empire between the founding of the first Portuguese colonial bank in 1864, and the independence of most Portuguese colonies in 1975. The text summarizes the legal background, presents the existing banks, examines their businesses, and discusses their contribution to the economic evolution of the territories under consideration. As the main conclusions it may be said that: (i) Portuguese colonial banking followed the continental model of government initiative and tight control, not the British model of private initiative without much government control; (ii) development of Portuguese colonial banking was always mainly a matter of profiting from the opportunities afforded by the economic evolution than a matter of autonomously fostering economic development of the territories.

Thanks to developments in copper mining during the colonial period Zambia was one of the richest
economies on the African continent at the time of independence. This status eroded in the postcolonial period as Zambia, according to most available estimates, experienced negative GDP per
capita growth over the postcolonial period on average. Meanwhile Botswana, one of the
poorest economies at independence, rose to become one of the richest economies today, largely owing to developments in diamond mining.
Dominant explanations of African economic performance emphasise the role of economic policy
and institutions when explaining differences in growth or income levels. A historian, Meredith,
probably represented popular consensus on when he summarized Kenneth Kaunda, the president of
Zambia for 25 years as having a left “a catastrophic record of mismanagement”. Meanwhile
Botswana’s economic success the economists Acemoglou et. al. summed up the record of
policymakers in Botswana as: “There is almost complete consensus that Botswana achieved rapid
growth because it managed to adopt good policies”. This paper compares the economic performance of Botswana and Zambia in the 20th century. It examines the two economies through the colonial and postcolonial period with the aim of evaluating the relative importance of structural and institutional causes of economic growth and
development. It finds that between 1945 and 1965 Zambia experienced a mineral boom, quite
similar to the boom Botswana experienced between 1975 and 1995. It is the contrast of the
institutional contexts and the timing of these booms that has led scholars to conclude that
underlying growth dynamics of these economies are completely different. Connecting postcolonial
and colonial periods of economic expansion and contraction, this paper emphasises the importance
of vantage point in economic historical evaluation.

How did living standards in Ghana develop in the long run? The obvious constraint for a long-term perspective is the limited amount of good data and a consistent measure of human well-being. This is especially the case for the period of colonial rule. Using anthropometric techniques we explore the evolution of living standards and regional inequality in Ghana from 1880 to 2000.
Ghana provides an extremely interesting case study. Major economic and social changes took place in the late nineteenth and early twentieth centuries. The development of the agricultural export economy, already under way since the decline of the Atlantic slave trade, was consolidated by the adoption of cocoa, of which Ghana became the world’s leading producer. Cocoa farms, and European-owned mines, eventually attracted extensive migrant labour. Railways and lorries revolutionised transport. Medical knowledge spread. Our findings suggest that, overall, living standards improved during colonial times and that a trend reversal only occurred after the economic crisis in the 1970s. This fact is challenging prominent explanations of colonial legacy and allows insights into the institutional argument for growth.

We find with survey data that the increase in height stature experienced by successive cohorts born in Côte d'Ivoire and Ghana during the late colonial period (1925-1960) is almost as high as the increase observed in France and Great-Britain over the 1875-1975 period, even when correcting for the bias arising from old-age shrinking. In contrast, the early post-colonial period (1960-1985) is characterized by stagnation or even reversion, not only in Côte d'Ivoire and Ghana but also in other countries in Western Africa. We argue that the selection effects linked for instance to measuring the height of women rather than of men, then of mothers rather than of women, and most importantly the interactions between height and mortality cannot give account of these figures. We then disaggregate these national trends by parental background and district of birth, and match individual data with district-level historical data on export crop (cocoa) expansion, urban density and colonial investment in health and educations. We provide evidence that a significant share of the increase in height stature may be related to the progresses of urbanization and of cocoa production.

Colonial tax systems have shaped state-economy relationships in the formative stages of many present day nation states. This paper surveys the variety in colonial tax systems across 34 dominions, colonies and protectorates during the heydays of British Imperialism (1870-1940). It compares and discusses per capita tax incidences and the source composition of colonial public revenue and assesses the results on the basis of different views in the literature regarding the function and impact of colonial fiscal regimes: is there a clear distinction between ‘extractive colonies’ and ‘settler colonies’ in relative tax rates and the source composition of taxation? How ‘extractive’ were colonial taxes in the ‘extractive colonies’ of British Africa, Asia and the Caribbean? The main argument of the paper is that there is little evidence for the view that ‘excessive taxation’ or a specific source composition has been a crucial characteristic of ‘extractive institutions’ in non-settler colonies. Moreover, the paper finds a strong positive correlation between colonial tax incidences and long term post-colonial GDP growth rates. This nuances the Acemoglu et al. (2001, 2002) hypothesis and calls for a further decomposition of the term ‘extractive institutions’ as such. The Engerman-Sokoloff-Zolt hypothesis (2000, 2006) that specific distributive relations shape fiscal policies in American settler societies may be extended to some parts of Sub Saharan Africa.

That economic history and institutional economics share common grounds is evidenced by the works of Acemoglu et al (AJR) tracing the roots of underdevelopment, which are identified in terms of institutional inefficiencies, back to early colonial times. Although this should be welcomed by economic historians, who often grumble about the narrow time horizon of economists and their tendency to prescribe universally applicable policy blueprints regardless of historical context, questions may be raised about the explanatory power of this approach for understanding differential growth and poverty reduction paths of today’s developing countries.
The case of Vietnam, represented by the different development paths between Tonkin and Cochin-China, shows the complexity involved in analyses of the impact of colonialism. Population density was not the organizing principle behind the settlement of French colonialists. Nor did it significantly determine the level of extraction as predicted by AJR’s theory. On the contrary, we show that the presence of several agents, local and foreign, with their own vested interests led to very different outcomes in the North as compared to the South. While the North, an extremely densely populated area prior to French colonization, remained in a high level equilibrium trap and sought tax evasion via population under-representation, the South through French investments, extended the land frontier and allowed for commercialization and economic growth, which became the main revenue of the French authorities. However, at the time of independence inequality in land distribution had reached startling proportions and had become not only a burning political issue but also a hindrance to economic transformation. In the Mekong Delta only one fourth of the farming families owned all they land they were cultivating and secure property rights in land were held by a small minority. These results point at the need to reexamine what is meant by extractive institutions versus institutions for private property.
If we were to apply the interpretation of AJR's theory of the development of colonial Vietnam, one would have to argue that the French did just perpetuate extractive institutions in Tonkin, while in the South they established a “wrong type of capitalism”. Such an analysis does not capture the processes of change which are left unexplained. In this paper we redirect attention to the factors and processes that generated inequality in colonial times, and to the interaction of colonial and local institutions as well as to the importance of market mechanisms.

We examine the current pattern of inequality in late 20th century South Africa and then look for its historical roots with a particular focus on the position of the Coloured population. Growing inequity in access to education and labour legislation was informed by a hardening of race-based social categorization during the 19th century. Further institutionalization of racial categories amid the growth of the public sector and regulation during the first half of the 20th century cemented a pattern of inequality that has survived in a modified form to this day. We attempt to monitor the position of the Coloured population through this long-run process using available evidence on social, economic and physical well-being.

We investigate the historical roots of poverty, with particular reference to the experience of Africa during the twentieth century. Like the recent studies by Acemoglu et al (2001, etc) we find that institutional inheritance is an important influence on current underdevelopment;unlike them , however, we find that the influence of policies on institutions is highly significant, and that, in Africa at least, a high representation of European settlers in land ownership and policy-making was a source of weakness, not strength. We argue this thesis, using mortality rates as our main index of well-being, with reference to two settler colonies (Kenya and Zimbabwe) and two peasant export economies(Uganda and Ghana). Our findings suggest that, in Africa, settler-type political systems tended to produce highly inequal income distributions and, as a result, patterns of public expenditure and investment in human capital which were strongly biased against small holder agriculture and thence against poverty reduction. In contrast, we argue that peasant-export type political systems produced more equal income distributions whose policy structures were less biased against the poor. As a consequence, liberalisation during the 1980s and 1990s produced asymmetric results, with poverty falling sharply in the 'peasant export' and rising in the settler economies. These contrasts in the evolution of poverty in the late twentieth and early twenty-first centuries, we argue, can only be understood by reference to differences between the two systems whose roots lie in political decisions taken a hundred years previously.

A long-run view of inter-country inequality in living standards is provided for a large sample of countries in Western Europe, the European Offshoots, Japan –OECD, for short- and Latin America. A long term rise in real per capita income inequality is found. The deepening gap between OECD and Latin America was the major factor beneath this increase. Inequality in non-economic indicators of well-being (longevity, education, and human development) fell in the long run but a gap between OECD and Latin America remained by 2000. Polarization took place in the Western World during the second half of the twentieth century.

The received narrative on the origins of rural poverty in South Asia attributes poverty to the disruptive effects of the nineteenth century globalization, especially the destruction of traditional handicrafts and consequent pressure upon agriculture. Whereas the decline of craft industries is explained in the standard view with reference to cost-competitiveness of Indian production, a non-standard view speculates that fall in agricultural yield in the late eighteenth century due to Mughal decline added to the decline of the crafts by raising the cost of wage goods. These stylized stories predict a fall in real wages in agriculture. In this paper, I consider the evidence on long-term trends in real wage and standard of living of the agricultural worker to shed some light on the historical roots of rural poverty.

The main finding of the paper is that real wages from the last third of the eighteenth century until the mid-twentieth do not show a distinct trend at all, which leads us to conclude that (a) neither de-industrialization nor fall in agricultural yield can sufficiently explain the origins of poverty, and (b) poverty was not created in the eighteenth century but derived from a long-term structural feature of dry-land agriculture, namely, low and variable land yield. Confirming this hypothesis, agricultural wages varied significantly according to regional resource endowments. These patterns began to change from the end of the nineteenth century with increased mobility and migration of agricultural workers.

The aim of the paper is to expand our understanding of Chilean economic long-run growth in two fundamental dimensions. First, it provides a traditional growth accounting view identifying factor contributions and total factor productivity. Second, it offers a framework as an organizing scenario for exploring consistency between opportunities and institutions, on the one hand, and factor contribution to growth on the other.

This paper has three parts. In the first part we present econometric evidence showing that increases in the international demand for enslaved Africans induced a reallocation of resources in Africa towards slave production and away from other economic pursuits. In the second part of the paper we use this econometric evidence to help specify theoretical models of conflict and cooperation in Africa before and after the slave trade. Our goal is to reveal the conditions under which the induced reallocation of resources also produced several negative externalities thought to impede long-term development in Africa. These include constraints on the growth of African states, increases in ethnic and social stratification, and predation. In the third part of the paper we test the predictions of these models against the history of the Asante Empire (present-day Ghana). We find that the models explain Asante’s origins and expansion extremely well, including the Asante Alliance, the causes and timing of territorial expansion, and the “southern problem.” We argue that the models reveal long-term consequences of slave production that apply to many African economies, not just Ghana.