The dynamics of inequality in a newly settled, pre-industrial society: the case of the Cape Colony

Johan Fourie and Dieter von Fintel

Cliometrica, Journal of Historical Economics and Econometric History, 2010, vol. 4, issue 3, 229-267

Abstract: 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 own 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) settled on the land and established a unique set of institutions, within which inequality evolved. This paper provides a long-run quantitative analysis of trends in asset-based inequality (using principal 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.

Keywords: Settler societies; Wealth distribution; Inequality; Asset index; Institutions; Mercantilism; Dutch East India Company; South Africa (search for similar items in EconPapers)
JEL-codes: D31 D63 N37 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (21)

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