nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒12‒15
nineteen papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. The Paris Bourse and the international capital flows before 1914 By Quennouëlle-Corre, Laure
  2. Costing, Funding and Budgetary Control in UK Hospitals: An Historical Reflection By Robson, Neil
  3. Lost decades? Independence and latin America’s falling behind, 1820-1870 By Leandro Prados de la Escosura
  4. The Ambassador, Between Light and Shade : The Emergence of Secrecy as the Norm of International Negotiation By Colson, Aurélien
  5. "Supplier Network and Aircraft Production in Japan, 1939-1945: A Case of Mitsubishi Heavy Industries, Ltd."(in Japanese) By Tetsuji Okazaki
  6. The knowledge filter, Entrepreneurship and Economic Growth By Carlsson, Bo; Acs, Zoltan; Audretsch, David; Braunerhjelm, Pontus
  7. History and Industry Location: Evidence from German Airports By Stephen Redding; Daniel M. Sturm; Nikolaus Wolf
  8. Scylla and Charybdis. The European Economy and Polands Adherence to Gold, 1928-1936 By Nikolaus Wolf
  9. Were Modern Capital Structure Theories Valid before World War I? By Deloof M.; Van Overfelt W.
  10. Hanseatic Commerce in Textiles from the Low Countries and England during the Later Middle Ages: By John H. Munro
  11. The Division of Labor, Coordination, and the Demand for Information Processing By Guy Michaels
  12. Money and Overseas Investments in the Relative Fall of British Empire By Rota, Mauro; Schettino, Francesco
  13. Theory, History and Evidence of Economic Convergence in Latin America By Paola Barrientos
  14. "Lessons from the Subprime Meltdown " By Joseph Deutsch; Jacques Silber
  15. Some styilized facts on public finance in Colombia since the first Kemmerer mission (1923) By Mauricio Avella Gómez
  18. Elite Scientists and the Global Brain Drain By Ali, Showkat; Carden, Giles; Culling, Benjamin; Hunter, Rosalind; Oswald, Andrew J; Owen, Nicola; Ralsmark, Hilda; Snodgrass, Natalie

  1. By: Quennouëlle-Corre, Laure
    Abstract: This study wanted to pinpoint the different securities transactions’ channels in France, which are quite specific compared to other countries.As a matter of fact, the Paris Bourse could not be well explained without the free market and the deposit banks'transactions. This organisation leads to a three pillar’s system, a specific feature of the Paris Bourse.Despite their disputes, the three intermediaries succeeded in working together and in maintaining fluent flows between the different channels. By this way, they enhanced the stability and the liquidity of the whole market.
    Keywords: Stock exchange; OTC market; international capital flows; financial regulation;tax policy.
    JEL: N23 N2
    Date: 2007–09
  2. By: Robson, Neil
    Abstract: This historical reflection traces the changes in accounting practice in UK hospitals, focussing on costing, funding and budgetary control. The paper finds that, contrary to many implicit assumptions in academic accounting studies, our accounting ancestors promoted, and sometimes used, accounting data in pursuit of similar objectives to those advocated in the 21st century. For example, cost comparison information, often prepared with the aim of rewarding 'efficient' hospitals, is a particular feature of accounting practice throughout the last hundred years. This cost information 'evolved', within its historical context, although the process of establishing standard costs was slow and controversial, and the use of such information for funding hospital activity was avoided. The paper also argues that information for control, particularly budgetary control, was central to the nationalised service, and achieved its primary aim of limiting expenditure (Lapsley, 2001a). Finally it is suggested that the devolution of financial control to lower level managers, was a slow but significant process often overlooked in the accounting literature.
    Keywords: hospital history; accounting change; costing; budgeting
    Date: 2007–09
  3. By: Leandro Prados de la Escosura
    Abstract: This paper explores the connections between independence and Latin America’s relative decline during the half a century after independence. The release of the fiscal burden was partly offset by higher costs of self-government, while opening up to the international economy represented a handmaiden of growth. Colonial emancipation had a different impact across regions and widened regional disparities. Per capita income grew and though Latin America fell behind to the U.S. and Western Europe, improved or kept its relative position to the rest of the world. ‘Lost decades’ seems an unwarranted depiction of the period 1820-1870.
    Date: 2007–11
  4. By: Colson, Aurélien (ESSEC Business School)
    Abstract: The aim of this research paper is to analyse to what extent secrecy emerged as the uncontested norm for international negotiations after the Renaissance. The first section (1) introduces six key negotiation practitioners in 17th century Europe, including some of the earliest writers on negotiation: Hotman, Mazarini, Wicquefort, Rousseau de Chamoy, Callières, and Pecquet. Through an analysis of their original writings – most of which are no longer available in print – the following sections demonstrate that if an ambassador had to appear in the bright light of royal Court (2), his constant preoccupation was secrecy (3). How to protect his own secrets from third-parties (4) and uncover others’ secrets (5) were central focal points, establishing secrecy as the paradigm for modern international negotiation.
    Keywords: Ambassador; Callières; Hotman; International Relations; Mazarini; Negotiation (history of); Pecquet; Rousseau de Chamoy; Secrecy; Wicquefort
    JEL: F51
    Date: 2007–11
  5. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: During the Second World War, aircraft production in Japan, which had been negligible before that, increased sharply. The rapid expansion of the aircraft industry involved numerous small and medium-sized machinery factories, which were organized to be parts suppliers by aircraft assemblers. Focusing on the case of Mitsubishi Heavy Industries, Ltd., a major aircraft assembler, this paper explores the expansion of the supplier network and its implication on aircraft production.
    Date: 2007–12
  6. By: Carlsson, Bo (Case Western Reserve University); Acs, Zoltan (University of Baltimore); Audretsch, David (Max-Planck Institute); Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the “new growth theory,” investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R&D do not always result in economic growth. What is missing is “the knowledge filter” - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R&D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades.
    Keywords: knowledge; economic growth; entrepreneurship; spillovers; history
    JEL: N90 O14 O17 O30
    Date: 2007–12–11
  7. By: Stephen Redding; Daniel M. Sturm; Nikolaus Wolf
    Abstract: A central prediction of a large class of theoretical models is that industry location is not necessarilyuniquely determined by fundamentals. In these models, historical accident or expectations determinewhich of several steady-state locations is selected. Despite the theoretical prominence of these ideas,there is surprisingly little systematic evidence on their empirical relevance. This paper exploits thecombination of the division of Germany after the Second World War and the reunification of East andWest Germany as an exogenous shock to industry location. We focus on a particular economicactivity and establish that division caused a shift of Germany's air hub from Berlin to Frankfurt andthere is no evidence of a return of the air hub to Berlin after reunification. We develop a body ofevidence that the relocation of the air hub is not driven by a change in economic fundamentals but isinstead a shift between multiple steady-states.
    Keywords: Industry Location, Economic Geography, German Division, German Reunification
    JEL: F14 F15 N74
    Date: 2007–07
  8. By: Nikolaus Wolf
    Abstract: This paper examines the timing of exit from the gold-exchange standard for European countriesbased on a panel of monthly observations 1928-1936 for two purposes: first it aims to understandthe enormous variation in monetary policy choices across Europe. I show that the pattern of exitfrom gold can be understood in terms of variation in factors commonly suggested in thetheoretical literature, which makes it possible to predict with reasonable accuracy the very monthwhen a country will exit gold in the 1930s. Second, I analyse the case of Poland more closelybecause it appears to be an intriguing outlier. Poland did not leave gold until April 1936 andsuffered through one of the worst examples of a depression, with massive deflation and acomplete collapse of industrial production. The estimated model fares worst for Poland, andpredicts an exit even later than April 1936. By closer inspection, the factors that drive thisprediction are the non-democratic character of the regime and a surprisingly high degree of tradeintegration with France. I argue that Poland's monetary policy was determined by attempts of thePilsudski regime to defend Poland against foreign (esp. German) aggression. I provide evidencethat strongly supports this view until about mid-1933. Ironically, just when Poland had joined thegold-bloc there were signs of a broad strategic reorientation, which paved the way for an exit in1936.
    Keywords: Gold-Exchange Standard, Interwar Period, Europe, Poland
    JEL: E42 E44 N14
    Date: 2007–11
  9. By: Deloof M.; Van Overfelt W.
    Abstract: This study investigates whether capital structure theory can explain debt ratios in an historical environment which was characterized by poor investor protection, booming stock markets and strong banks, and in which corporate income tax did not affect capital structure. Our results, based on a unique, hand-collected sample of 556 firm-year observations for 129 listed companies in pre-World War I Belgium, are remarkably similar to findings for present-day samples. Leverage was positively related to asset tangibility, firm size and firm age, and it was negatively related to profitability and prior stock returns. Bank relationships were associated with lower leverage.
    Date: 2007–11
  10. By: John H. Munro
    Abstract: This paper analyses the major changes in textile products, production costs, prices, and market orientations during the era when the ‘draperies’ or cloth industries of the late-medieval Low Countries and England had become increasingly dependent upon northern markets and the German Hanseatic League as the major vehicle in marketing their textiles. In several previous articles, I had examined the major factors that had led to the industrial and commercial reorientations of the these cloth industries during the 14th and 15th centuries. In brief, the spreading stain of widespread warfare, piracy, and general insecurity, especially in the Mediterranean basin, from the 1290s (to the 1460s), led to a rise in transport and transaction costs that, in turn, had three major consequences for the Low Countries’ and England’s textile-based economies: (1) to cripple the export-oriented production of the very cheap and light fabrics, most of which had been sent to Mediterranean markets and had comprised the bulk of northern textile shipments to this region; (2) to encourage most draperies in the Low Countries and England to re-orient their export-oriented cloth production more and more towards high-priced ultra-luxury quality woollens, woven almost exclusively from the finer English wools, but wools that came to be burdened with high export taxes; and (3) to force these northern cloth industries, facing increasing difficulties in Mediterranean commerce, to become far more dependent on Hanseatic merchants and German towns for their cloth sales, certainly by the mid-14th century. But in effecting these industrial and commercial orientations, the Low Countries’ draperies encountered a new and even more dangerous challenge from expanding English competition in textiles, which enjoyed the signal advantage of control over high quality wools, which, for the domestic cloth industry, were tax-free and much cheaper. Nevertheless, for reasons outlined in this and earlier papers, the English took well more than a century to achieve final victory in the woollen broadcloth trade, though one that came to be fundamentally based upon German commercial forces, along with other commercial, monetary, and industrial factors outlined in this paper. Obeying the law of comparative advantage, the textile industries of the Low Countries responded to this English victory by once more re-orienting production to cheaper cloths, especially cheap, light worsted-says; but they were able to do so only when structural changes in European markets and trading networks, with falling transaction costs, from the later 15th century, once more favoured the export-oriented production of such cheap textiles. The major contributions of this paper, however, also lie in analysing production, product, cost, and prices changes in textiles, both cheap worsted and luxury woollens, in terms of 15 tables: (1) English wool and broadcloth exports, 1281-1550; (2) Production indices for the woollen cloth industries of the southern Low Countries, 1316-1575; (3) Production indices for the Hondschoote sayetterie and Leiden woollen industry, 1376-1570; (4 - 7) Prices and relative values of Ghent woollens: in terms of values of commodity baskets and a mason’s daily wage: 1331-1570 (no. of days’ wages to buy one cloth); (8) Prices of English woollen cloths at Cambridge and Winchester: and values in terms of a mason’s daily wage; and mean values of English cloth exports in pounds sterling, groot Flemish, and florins; (9) Prices of various Flemish woollen broadcloths, compared to the Flemish composite price index: 1351-1550; (10) Prices of various Brabantine woollen cloths, compared to the Brabant composite price index; and the no. of days’ wages for a master mason to buy one Mechelen broadcloth, 1351-1520; (11) Prices of Hondschoote Says and Ghent Dickedinnen Woollens, in pounds groot Flemish, compared with the purchasing power an Antwerp master mason's daily wages; (12) Purchase prices of Ghent woollens: by rank order of values, 1360-69: in pounds groot Flemish, units of Commodity Baskets of equivalent value, and the number of a master mason’s day’s wages required to purchase each cloth (from the cheapest to highest priced); (13) Dimensions, composition, and weights of selected Flemish and English textiles, 1456-1579; (14) Prices of and taxes on exported English wools (sacks), 1211-1500: (15) Prices of English Wools (48 grades) sold at the Calais Staple, in 1475 and 1499.
    Keywords: Germany, the Low Countries, England, Hanseatic League, woollens, worsteds, wools, dyestuffs, prices, wages, inflation, deflation, monetary changes
    JEL: J3 L1 L2 L6 N4 N6 N7
    Date: 2007–12–13
  11. By: Guy Michaels
    Abstract: Since Adam Smith's time, the division of labor in production has increased significantly, whileinformation processing has become an important part of work. This paper examines whether the needto coordinate an increasingly complex division of labor has raised the demand for clerical office workers, who process information that is used to coordinate production. In order to examine this question empirically, I introduce a measure of the complexity of an industry's division of labor that uses the Herfindahl index of occupations it employs, excluding clerks and managers. Using US data I find that throughout the 20th century more complex industries employed relatively more clerks, andrecent Mexican data shows a similar relationship. The relative complexity of industries is persistent over time and correlated across these two countries. I further document the relationship between complexity and the employment of clerks using an early information technology (IT) revolution that took place around 1900, when telephones, typewriters, and improved filing techniques were introduced. This IT revolution raised the demand for clerks in all manufacturing industries, but significantly more so in industries with a more complex division of labor. Interestingly, recent reductions in the price of IT have enabled firms to substitute computers for clerks, and I find that more complex industries have substituted clerks more rapidly.
    Keywords: information processing, division of labor, technological change, organization of production
    JEL: J44 M54 D73 O33
    Date: 2007–07
  12. By: Rota, Mauro; Schettino, Francesco
    Abstract: Investigating on the reasons of British overseas investments (1850-1913) we analyze two different approaches on data and we conclude that they are not different from a stochastic view. Inquiring on ‘push’ approach, we find that exists a negative correlation between GDP and overseas investments where the former cause the latter. The link between monetary events and colonialism highlights India’s role as a reserve of bullions. In this way, British capital was able to complete its natural cycle, draining money for future foreign investments. This improve the theory by introducing the monetary element in ‘push’ and ‘pull’ hypothesis as well.
    Keywords: overseas Investments; Bimetallism; Gold Standard
    JEL: N1
    Date: 2007–12
  13. By: Paola Barrientos (Department of Economics, University of Aarhus)
    Abstract: Economic convergence exists when two or more economies tend to reach a similar level of development and wealth. The study of convergence is an important topic because besides being useful for the debate between different theories, it can respond several inquiries such as if the distribution of income between economies has become more equal over time and if poor economies are catching up with the rich. Latin American countries are characterized by having few language barriers, similar culture, religion and common history. So convergence could be expected. However, literature about convergence in Latin America is scarce and preliminary analysis shows that divergence exists in the region. The thesis tries to fill in the gap by covering theoretical, historical and statistical evidence of convergence in the region during 106 years, from 1900 to 2005. The thesis uses a neoclassical growth model based on Solow and Ramsey models. After revising the economic history of 32 countries, several groups were identified and convergence was expected to occur. Different concepts of convergence are tested inside each group through graphs, single cross section regressions and panel data estimations. In general, the results show a success with the grouping. However, the groups that converged under all concepts are those composed by countries that have succeeded in industrializing and/or were able to build strong institutions that could promote welfare and economic growth in a globalization context. The speed of convergence for those countries is around 2%. It is also found that integration processes have not helped to accelerate convergence.
    Keywords: Convergence, Latin America
    JEL: O47 O54
    Date: 2007–12
  14. By: Joseph Deutsch; Jacques Silber
    Abstract: This paper uses Hyman P. Minsky's approach to analyze the current international financial crisis, which was initiated by problems in the U.S. real estate market. In a 1987 manuscript, Minsky had already recognized the importance of the trend toward securitization of home mortgages. This paper identifies the causes and consequences of the financial innovations that created the real estate boom and bust. It examines the role played by each of the key players—including brokers, appraisers, borrowers, securitizers, insurers, and regulators—in creating the crisis. Finally, it proposes short-run solutions to the current crisis, as well as longer-run policy to prevent "it" (a debt deflation) from happening again.
    Date: 2007–12
  15. By: Mauricio Avella Gómez
    Abstract: This paper surveys some facts relevant for the understanding of the Colombian experience with public finance and debt since 1923. The stylized facts are classified in three groups as follows: first, facts associated with the dependence of the economy on the external sector; second, facts which reveal empirical regularities in the evolution of the fiscal sector; and third, facts which illustrate the close association between the development of the financial sector and the cycles of external and internal debt. Historical macroeconomic time series are used to illustrate episodes and empirical regularities. The presence of major events (external shocks, institutional changes) generates permanent effects on the path of those series, and produces shifts in the intercept and / or slope of their corresponding trend functions. Recent empirical methods are applied for the dating of those breaks.
    Date: 2007–12–04
  16. By: Mauro Boianovsky
    Date: 2007
  17. By: Mustata, Razvan V.; Matis, Dumitru; Bodea, Gabriela
    Abstract: In this study we concentrate our efforts on the consequences that the existence and manifestation of globalization have on various domains of human activity. The impact of globalization will be analyzed from the perspective of the cause-effect relationship, with a special emphasis on the consequences of the phenomenon. A special part of our scientific demarche is reserved to the accounting sphere. We try to create a new dimension on the basement of relations between globalization and accounting systems. Globalization represents a new dimension of our world. The accounting domain is today into real connections with phenomenon of globalization. In this context, our main objectives are represented by the research demarche to create a model of quantification the impact of globalization on regulations and accounting systems. We believe that such a model of quantification could be real and its contributions to scientific development will be considerable.
    Keywords: Globalization; International Accounting; Impact; Quantification
    JEL: O1 M41 F5 F2
    Date: 2007–12–11
  18. By: Ali, Showkat; Carden, Giles; Culling, Benjamin; Hunter, Rosalind; Oswald, Andrew J (Department of Economics, University of Warwick); Owen, Nicola; Ralsmark, Hilda; Snodgrass, Natalie
    Abstract: There are signs – one is world university league tables – that people increasingly think globally when choosing the university in which they wish to work and study. This paper is an exploration of data on the international brain drain. We study highly-cited physicists, highly-cited bio-scientists, and assistant professors of economics. First, we demonstrate that talented researchers are being systematically funnelled into a small number of countries. Among young economists in the top American universities, for example, 75% did their undergraduate degree outside the United States. Second, the extent of the elite brain drain is considerable. Among the world’s top physicists, nearly half no longer work in the country in which they were born. Third, the USA and Switzerland are per capita the largest net-importers of elite scientists. Fourth, we estimate the migration ‘funnelling coefficient’ at approximately 0.2 (meaning that 20% of top researchers tend to leave their country at each professional stage). Fifth, and against our prior expectations, the productivity of top scientists, as measured by the Hirsch h-index, is similar between the elite movers and stayers. Thus it is apparently not true that it is disproportionately the very best people who emigrate. Sixth, there is extreme clustering of ISI Highly Cited Researchers into particular fields in different universities. Seventh, we debate the questions: are the brain drain and this kind of funnelling good or bad for the world, and how should universities and governments respond?
    Date: 2007
  19. By: Anne G. Hanley; Renato Leite Marcondes
    Date: 2007

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