The significance of the Cape trade route to economic activity in the Cape colony: a medium-term business cycle analysis

Willem H. Boshoff () and Johan Fourie ()

No 23/2008, Working Papers from Stellenbosch University, Department of Economics

Abstract: Trade is a critical component of economic growth in newly settled societies. This paper tests the impact of ship traffic on the Cape economy using a time series smoothing technique borrowed from the business cycle literature and employing an econometric procedure to test for long-run relationships. The results suggest a strong systematic co-movement between wheat production and ship traffic, with less evidence for wine production and stock herding activities. While ship traffic created demand for wheat exports, the size of the co-movement provides evidence that ship traffic also stimulated local demand through secondary and tertiary sector activities, supporting the hypothesis that ship traffic acted as a catalyst for growth in the Cape economy.

Keywords: Colonial trade; Cape of Good Hope; Dutch East India; Band-pass filter; Medium-term fluctuations; Business cycle; South Africa; Ships; Harvest cycles; Colonial economy (search for similar items in EconPapers)
JEL-codes: N17 E32 N77 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-cwa, nep-his and nep-mac
Date: 2008

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