Which comes first: good governance or prosperity? A historical experiment from the South African Republic and the Orange Free State
Stellenbosch Working Paper Series No. WP02/2018Publication date: January 2018
Author(s):
[protected email address] (Department of Economics, Stellenbosch University)
Two neighbouring republics, with a common history and culture, followed very different paths of development in the second half of the nineteenth century. Extraordinary mineral wealth was discovered during this period in the South African Republic (ZAR), the neighbour where political and economic stability was fragile compared with the Republic of the Orange Free State (OFS). We connect these divergent development paths to the literature on the resource curse, especially the recent literature on the conditional resource curse where the quality of the institutional structure plays a crucial role in the outcomes of a large resource discovery. By introducing a new objective measure for the quality of institutions, namely the accuracy of boundaries on maps, we provide evidence of the institutional quality in the ZAR prior to the discovery of gold on the Witwatersrand. The statistical technique that we use, Procrustes analysis, is an innovation in economic analysis. The evidence supports Acemoglu and Robinson's account of the development path in the ZAR, and the later Union of South Africa, as compromised by the conditional resource curse.
JEL Classification:N17, B15, O43
Keywords:Resources curse, Institutional Economics, South Africa
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Upcoming Seminars
Monday 28 July 202512:00-13:00
Dr Neil Rankin: Ceo Of Predictive Insights & Stellenbosch University
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Prof Willem Boshoff: Stellenbosch University
Topic: "Two competing approaches in South African competition policy: merger control and anti-cartel enforcement over the past 30 years"
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Professor Johan Fourie: Stellenbosch University
Topic: "Economic History: TBC"
BER Weekly
25 Jul 2025 Budget hurdle cleared, but US tariff implementation remains a riskIt was another big week on the local political front, but with some constructive momentum. On the trade front, ahead of next week’s 1 August deadline, Trump announced another “massive” trade deal with Japan. The upcoming week is busy, with a slew of global and domestic data releases and several monetary policy decisions, including the SARB....
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