Jutta Bolt

The Maddison Project: Collaborative Research on Historical National Accounts

The Maddison Project, initiated in March 2010 by a group of close colleagues of Angus Maddison, aims to develop an effective system of cooperation between scholars to continue Maddisons work on measuring economic performance in the world economy. This article is a first product of the project. Its goal is to explain the aims and approach of the project, and, as a first result of this ‘collaboratory’, to inventory recent research on historical national accounts. We also briefly discuss some of the problems related to these historical statistics and we extend and where necessary revise the estimates published by Maddison in his latest overviews. Most new work relates to the period before 1820; it leads to a reassessment of levels of GDP per capita in western Europe in the early modern period, and to a confirmation of Maddisons previous estimates of Asian levels of real income.

Understanding Long-Run African Growth: Colonial Institutions or Colonial Education?

Abstract Long-term growth in developing countries has been explained in four frameworks: ‘extractive colonial institutions’ (Acemoglu et al., 2001), ‘colonial legal origin’ (La Porta et al., 2004), ‘geography’ (Gallup et al., 1998) and ‘colonial human capital’ (Glaeser et al., 2004). In this paper we test the ‘colonial human capital’ explanation for sub-Saharan Africa, controlling for legal origin and geography. Utilising data on colonial era education, we find that instrumented human capital explains long-term growth better, and shows greater stability over time, than instrumented measures for extractive institutions. We suggest that the impact of the disease environment on African long-term growth runs through a human capital channel rather than an extractive-institutions channel. The effect of education is robust to including variables capturing legal origin and geography, which have additional explanatory power.

Potential for Diversification? The Role of the Formal Sector in Bechuanaland Protectorate's Economy, 1900–65

Abstract While Botswana since independence has experienced impressive economic growth and development this progress has not been accompanied by economic diversification and endogenous growth. In this article we focus on the colonial period and investigate to what extent the formal sector of Bechuanaland Protectorate (colonial Botswana) had the potential to constitute the basis for a diversification of the dominating cattle economy away from its dependency on exporting a single natural resource good – beef. We base our study on colonial archive sources and anthropological evidence which we use to: examine labour market structures; estimate welfare ratios and surplus; and discuss government spending. We find that the demand for skilled labour and human capital development was low throughout the colonial period and that the private sector generally lacked the economic strength and dynamics to develop alternative and/or complementary sectors. Further, we find no evidence of demand driven diversification, neither stemming from private sector consumption and investments, nor from government spending on economic activities outside the cattle sector, infrastructure and human capital development.

Long-term trends in economic inequality: Lessons from colonial Botswana, 1921-74

This article contributes to the growing literature on colonial legacies influencing long-term development. It focuses on Botswana, a case where the post-independence diamond-led economy has been considered an economic success story, despite its high levels of inequality. Here it is argued that this pathway of rapid resource-driven growth combined with increasing socio-economic inequality had already started during the time of the colonial cattle economy, and that this older case is equally relevant for understanding long-term growth-inequality trends in Botswana and other natural-resource-dependent economies. Six social tables, covering the period 1921 to 1974, are constructed using colonial archives, government statistics, and anthropological records. Based on the social tables, income inequality is estimated in the colonial and early post-independence eras, capturing both the formal and informal sectors of the economy. The article demonstrates how the creation of a cattle export sector in the 1930s brought new opportunities to access export incomes, and how this led to a polarization in cattle holdings and increasing income inequalities. Further, with the expansion of colonial administration, government wages forged ahead, increasing income inequality and causing a growing income divide between public and private formal employment.

Was the wage burden too heavy? - Settler farming, profitability, and wage shares of settler agriculture in Nyasaland, c. 1900-60

The historical role of European farming in southern and central Africa has received a great deal of attention among scholars over the years. Going through this vast literature, a striking consensus emerges: the success or failure of European farming in southern Africa was to a large extent dependent upon the colonisers’ access to and control over cheap labour, which they in turn could only access through strong support of the colonial state. Yet, these propositions have so far never been systematically and empirically tested. This paper is a first attempt to do that by analysing the ‘wage-burden’ European settler farmers faced. The wage-burden is identified by measuring wage shares (total amount paid in the form of wages as a share of total profits) on European farms in colonial Africa. Based on archival documents, we construct time-series for value of output, transportation costs, investments in agriculture, and wages paid for the European tobacco and tea sector in colonial Malawi. Our results contradict both with previous research on settler colonialism in Africa and the historiography of Nyasaland. Our estimates show that settler farming did not collapse in the 1930s as commonly assumed. On the contrary, the value of production on both tobacco and tea farms increased significantly. And so did the settler farmers capacity to capture the profits, manifesting itself by a declining wage share over time. In contrast with previous research we argue that the developments cannot be explained by domestic colonial policies but rather through changes in regional migration patterns, and global commodity markets. Migrations patterns had a significant impact on the supply of farm labour and global commodity markets influenced value of production. Market forces rather than colonial policies shaped the development trajectory of settler farming in Nyasaland. (Less)

Precolonial Economy and Society, c. 1850–1930

The Tswana groups occupying present-day Botswana arrived in the mid-nineteenth century. In this chapter Hillbom and Bolt analyse their precolonial agro-pastoral production system of combining subsistence crop farming with amassment of cattle. The chapter starts with explaining how the settlement patterns and allocation of agricultural resources of the Tswana formed the basis for the development of a centralized state. Subsequently, the colonial administration’s focus on turning Bechuanaland into a labour reserve for the Southern African region and establishing a taxation system to secure government revenues is scrutinized. For this early colonial era the authors concur with the perception that Botswana experienced limited colonial influence and they identify the 1930s as the break with precolonial structures.

Inequality of Incomes and Opportunity, c. 1920–Present

Like many other natural resource-rich developing countries, income inequality in Botswana is very high. Commonly, it has been assumed that the exploitation of the high value diamonds has caused inequality to rise, but in this chapter Hillbom and Bolt trace the rise of inequality back to the cattle economy. Using social tables, they estimate income inequality for six consecutive decades starting from 1920. By connecting the colonial inequality estimates to the official inequality estimates for the independence era, they are able to capture changes in inequality over 90 years. This long term trend is related to the distribution of resources and opportunities as underlying factors driving income inequality. Throughout the chapter, the theme guiding the analysis is the search for the relationship between sectorial change and long-term trends in inequality and the argument that high inequality and inclusive sustainable development are incompatible.

Colonial Policies and the Cattle Economy, c. 1930–1975

Hillbom and Bolt challenge the common view that Botswana experienced only limited colonial influence. They argue that the later colonial period from 1930 onwards instead has had significant long-term impact on the economic structures of Bechuanaland and later independent Botswana. They explain how the 1930s saw the development of a so-called gate-keeping state characterized by financial constraints restricting its development strategies forcing it to focus its limited tax capacity on controlling its borders. They conduct an in-depth investigation analysing how this led to colonial efforts to establish a cattle export sector resulting in an economy characterized by natural resource dependency and struggling with diversification and equity. Finally, with the Tswana cattle-holding elite taking over after independence, political and economic continuity cemented existing structures.

Trapped by Diamonds, c. 1975–Present

Botswana’s diamond-led growth period has been described as a miracle and success story. In this chapter, Hillbom and Bolt provide an analysis of the period focusing on changes in the structure of the economy: processes of technological progress, sectorial change, and structural transformation. They discuss how, while diamond resources have been prudently managed, Botswana has not been able to use this window of opportunity to turn economic growth into inclusive sustainable economic development and instead the economy is caught in a natural resource trap. In the midst of social development, the colonial gate-keeping state structures remained in place which resulted in the creation of a dual society and economy. Today wealth and modernity exist side by side with poverty and under-development.

An African Diamond in the Rough

Botswana has received much attention for the outstanding way it has managed its diamond resources while achieving economic growth and political maturity. In this chapter Hillbom and Bolt briefly present Botswana’s success story while also identifying two main challenges for future inclusive sustainable economic development—the lack of alternative high-productive sectors and high levels of inequality. The authors commit to providing a long-term, comprehensive examination of Botswana’s economic history from 1850 onwards, tracing the roots of both the growth miracle and the development challenges. They describe their three cross-cutting analytical approaches—the decompressing of history, the interplay between geographic preconditions and institutional setup, and the role of the state—and how they contribute to the analysis. Finally, they present the structure of the book.