The significance of the Cape trade route to economic activity in the Cape colony: a medium-term business cycle analysis
Stellenbosch Working Paper Series No. WP23/2008Publication date: 2008
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
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.
JEL Classification:N17, E32, N77
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
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Monday 21 July 202512:00-13:00
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Topic: "Diverging fiscal policies and what it means for markets"
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4 Jul 2025 One Big Beautiful Bill Act passes as tariff pause deadline loomsThis week brought a flurry of data releases alongside a heavy dose of political drama, both locally and globally. Yesterday’s stronger-than-expected US jobs report was the standout global data release. Domestically, tensions persisted in the DA-ANC relationship. On the international stage, headlines were dominated by the passage of the One Big Beautiful...
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