nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒07‒11
seventeen papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. Understanding China?s historical development: The profit and the risk that China?s stock market provides investors By Ronald Jean Degen
  2. Gross Prefectural Domestic Product and Industrial Structure in Pre-war Japan [in Japanese] By Tangjun Yuan; Tokihiko Settsu; Jean-Pascal Bassino; Kyoji Fukao
  3. Splendid Associations of Favored Individuals: Federal and State Commercial Banking Policy in the Federalist Era By Howard Bodenhorn
  4. Between the Wokshop and the State: Training Human Capital in Railroad Companies in Mexico and Chile, 1850-1930 By Guajardo, Guillermo
  5. Workers Made Idle by Company Strikes and the ‘British Disease' By Hart, Robert A.
  6. The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment By Nathan Nunn; Nancy Qian
  7. The Slide to Protectionism in the Great Depression: Who Succumbed and Why? By Barry Eichengreen; Douglas A. Irwin
  8. Contested Cornerstones of Nonviolent National Self-Perception in Costa Rica: A Historical Approach By Sebastian Huhn
  9. Revenue or Reciprocity? Founding Feuds over Early U.S. Trade Policy By Douglas A. Irwin
  10. The Contribution of Railways to Economic Growth in Latin America before 1914: the cases of Mexico, Brazil and Argentina By Alfonso Herranz-Loncán
  11. Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000 By Albrecht, James; Björklund, Anders; Vroman, Susan
  12. Structural Change out of Agriculture: Labor Push versus Labor Pull By Alvarez-Cuadrado, Francisco; Poschke, Markus
  13. Transportation and development: insights from the U.S., 1840-1860 By Berthold Herrendorf; James A. Schmitz; Arilton Teixeira
  14. The New Technologies: An Integrated view, July, 1986 By Carlota Perez
  15. He Who Counts Elects: Determinants of Fraud in the 1922 Colombian Presidential Election By Isaías N. Chaves; Leopoldo Fergusson; James A. Robinson
  16. The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815-2007 By Marc Flandreau; Juan H. Flores; Norbert Gaillard; Sebastián Nieto-Parra
  17. Regulating Networks in the New Economy By Jean-Michel Glachant

  1. By: Ronald Jean Degen (International School of Management Paris)
    Abstract: The purpose of this paper is to describe China?s unique historical development that transformed the Celestial Empire into the largest economy in the world in the beginning of the nineteenth century, with a GDP that exceeded that of Western Europe, Japan, the US and Russia combined, and the decline during the ?Century of Humiliation?, and Mao Zedong?s communism that culminated in the ?Three Bitter Years? from 1958 to 1961 that produced the large famine with an estimated death of 20 to 30 million people. After this disaster, aggravated by the ?Cultural Revolution? that followed, came the amazing growth started by Deng Xiaoping?s economic reforms in 1978, that is only comparable to the United States emergence as an economic giant during the nineteenth century. China?s sustained growth, at an astounding 10 percent per year over the last 30 years, is without precedent. Many economists predict this growth rate will continue at 7 to 8 percent per year for several decades. This extraordinary sustained growth was partially fueled by the formation of its rapidly expanding financial market, and the profit and risks that its stock marked provides investors.
    Keywords: China?s historical development, China?s social-capitalism, China?s economic growth, Risks to China?s growth, China?s remaining poverty, China?s bureaucracy and corruption, China?s stock market, China?s mutual funds China?s unsustainable growth
    JEL: M0 M1 M2
    Date: 2009–07–05
  2. By: Tangjun Yuan; Tokihiko Settsu; Jean-Pascal Bassino; Kyoji Fukao
    Abstract: Studies comparing regional income in Japan before and after World War II have frequently drawn a picture of radical change from an economy characterized by large regional disparities to one characterized by small regional disparities. This paper comes to a very different conclusion. Based on estimates of prefecture-level value added for five benchmark years from 1890 to 1940 (a detailed description of our estimation methodology is provided), we examine trends in the gap of economic development between prefectures during the pre-war period and find that this gap was much smaller than claimed in preceding studies and, in fact, not much greater than during the post-war period. Observing, moreover, a decline in inter-prefectural differences in terms of per-capita gross value added during the pre-war period, we conduct a factor analysis and find that a major reason for this decline was a decline in inter-prefectural differences in same-industry labor productivity. Thus, the picture of modern Japan's economic development presented here is very different from the one painted by preceding studies.
    JEL: N15 O18 O47
    Date: 2009–05
  3. By: Howard Bodenhorn
    Abstract: Early American firms were shaped by contemporary social conceptions of appropriate horizontal power relations inside the firm and the Federalist era bank was shaped by these conceptions. The Federalist era debate on the corporation was much broader than how shareholders would treat with one another. Contemporary Americans who had no direct stake in the business corporation took great interest in its internal governance because rules for how the elite shared power within the corporation spoke to their attitudes toward sharing power in the wider civic polity. Was governance to be plutocratic or democratic? It was within this debate that the first banks were established. This debate influenced how banks were governed, which ultimately influenced how banks did their business. The political debates surrounding the establishment of the Bank of North America (1782) and the Bank of the United States (1791) defined these banks and nearly every bank chartered thereafter up to the mid-1830s and beyond. Specifically, the liberal Bank of North American charter that imposed few meaningful restrictions on the bank’s operation, accountability or governance gave way to the Bank of the United States’s more restrictive charter that sharply limited its operations, made it accountable to government, and defined many of its internal governance procedures. Subsequent state charters were more closely modeled on the Bank of the United States model than the Bank of North America charter.
    JEL: N2 N21
    Date: 2009–07
  4. By: Guajardo, Guillermo
    Abstract: This paper analyzes the human capital training strategies adopted between the 1850s and 1930s by railroad companies in Mexico and Chile. These two countries enable one to contrast the different routes taken by the same type of firm, technology and labor force. A propos of this, we suggest that because of its complexity, capital intensity and new work methods, railway technology had a positive impact on human capital training in the cases studied. During the period when railways were the main form of land transport studied -covered by this study- they combined the labor force with foreign workers and modern technology and it was not until well into the 20th century that a formal system of technical schools was established. Instead, informal and formal learning cycles and routes tended to be followed. That is why this paper considers three aspects: I) the institutional and social factors that helped or hindered industrial operations, maintenance and production training; II) the way learning, training and talent retention cycles were shaped and talent migrated towards other activities or was dispersed or lost; and lastly, III) how training was institutionalized through what were known as “firm schools” responsible for training human capital as an internalization response to coping with shortages in the labor market.
    Keywords: human capital; technology; railways; México; Chile
    JEL: L32 L92 N76
    Date: 2009–06–26
  5. By: Hart, Robert A.
    Abstract: The strikes' literature is dominated by the causes and effects of strike action as they relate directly to strikers themselves. This paper considers another important group of affected workers - those individuals incidentally made idle as a result of the strike action of others. Using a unique data set of the British Engineering Employers' Federation (EEF), it examines the years 1960 to 1970, a critical period in Britain's postwar strikes' history. The mid-point of this decade marked the start of the era of the ‘British Disease', a universally adopted title given to Britain's perceived international leadership in strikes incidence and industrial unrest. Workers made idle were an important symptom of the disease. In the study here, they accounted for 72% of days lost in disputes in which they were involved and 44% of total days lost in all disputes. Consideration is given to the likely causes of these incidental layoffs within 7130 strikes of EEF federated firms covering engineering, automotive and metal industries. Particular attention is given to the British car industry, accounting for 22% of total EEF strikes during the period of study. The regression analysis examines the causes of workers being made idle with explanatory variables covering labour market conditions, strikes durations, pay issues, non-pay issues. The regressions also control for company, union, geographical districts, annual and seasonal fixed effects.
    Keywords: non-pay disputes; pay disputes; workers made idle; Strikes
    Date: 2009–06
  6. By: Nathan Nunn; Nancy Qian
    Abstract: We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the 18th and 19th centuries.
    JEL: J1 N1 N5 O13 O14
    Date: 2009–07
  7. By: Barry Eichengreen; Douglas A. Irwin
    Abstract: The Great Depression was marked by protectionist trade policies and the breakdown of the multilateral trading system. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Just as the gold standard constraint on monetary policy is critical to understanding macroeconomic developments in this period, national policies toward the exchange rate help explain changes in trade policy. This suggests that trade protection in the 1930s was less an instance of special interest politics run amok than second-best macroeconomic policy management when monetary and fiscal policies were constrained.
    JEL: F02 F13 F31 F42 N70
    Date: 2009–07
  8. By: Sebastian Huhn (GIGA Institute of Latin American Studies)
    Abstract: Crime, violence, and insecurity are perceived as society’s biggest problems in contemporary Costa Rica. This degree of priority is especially remarkable because the country has always been considered the peaceful exception in the violent Central American region. In this paper I analyze four cornerstones of the nonviolent national self-perception in the 1940s and 1980s as the fundamental basis for the current talk of crime: the civil war, the abolition of the military, the proclamation of neutrality, and the peace plan for Central America and the subsequent granting of the Nobel Peace Prize. The result of the analysis is the determination that these historical cornerstones were not publicly discussed as expressions of the nonviolent identity for which they are today cited as evidence.
    Keywords: Costa Rica, violence, crime, social order, national identity, public discourse
    Date: 2009–05
  9. By: Douglas A. Irwin
    Abstract: The Constitution of 1787 was designed to give Congress powers over trade policy that it lacked under the Articles of Confederation. The Washington administration was split over whether to use these powers to raise revenue or to retaliate against Britain’s discriminatory trade policies. Obsessed with funding the national debt, Alexander Hamilton sought to avoid any conflict with Britain that might disrupt imports and diminish the customs revenue flowing into the Treasury coffers. By contrast, Thomas Jefferson and James Madison advocated a policy of “aggressive reciprocity†to force Britain to open its home and colonial markets to American goods and shipping services. This paper examines how the nation’s founding policymakers confronted this dilemma and evaluates the merits of different trade policy options. The main conclusion is that the Federalist policy of moderate tariffs, non-discrimination, and conflict avoidance provided much needed stability during the critical first decade of the new government.
    JEL: F13 N11 N71
    Date: 2009–07
  10. By: Alfonso Herranz-Loncán (Departament d’Història i Institucions Econòmiques, Universitat de Barcelona)
    Abstract: This paper presents preliminary estimates of the contribution of the railway technology to GDP growth in Argentina, Brazil and Mexico before 1914, and compares them with the available figures for two European economies (Britain and Spain). The results of the estimation indicate that the growth contribution of railways was substantially higher in those three Latin American economies than in Britain or Spain, although in Argentina and Mexico that high contribution was disguised behind the fast growth of the aggregate economy. This result is interpreted as a sign of the central role that the railways performed in the export-led growth episode of those three economies.
    Keywords: railways, Latin America, Growth Contribution, Internal Transport, Export-Led Growth
    JEL: N76 H54 L92
    Date: 2009–07
  11. By: Albrecht, James (Georgetown University); Björklund, Anders (SOFI, Stockholm University); Vroman, Susan (Georgetown University)
    Abstract: We examine the evolution of the Swedish wage distribution over the periods 1968-1981 and 1981-2000. The first period was the heyday of the Swedish solidarity wage policy with strongly equalization clauses in the central wage agreements. During the second period, there was more scope for firm-specific factors to affect wages. We find a remarkable compression of wages across the distribution in the first period, but in the second period, wage growth was quite uniform across the distribution. We decompose these changes across the distribution into two components – those due to changes in the distribution of characteristics such as education and experience and those due to changes in the distribution of returns to those characteristics. The wage compression between 1968 and 1981 was driven by changes in the distribution of returns, but between 1981 and 2000, the change in the distribution of returns was neutral with respect to inequality.
    Keywords: wage compression, unionization, quantile regression
    JEL: J31 J51
    Date: 2009–06
  12. By: Alvarez-Cuadrado, Francisco (McGill University); Poschke, Markus (McGill University)
    Abstract: The process of economic development is characterized by substantial rural-urban migrations and a decreasing share of agriculture in output and employment. The literature highlights two main engines behind this process of structural change: (i) improvements in agricultural technology combined with the effect of Engel's law of demand push resources out of the agricultural sector (the "labor push" hypothesis), and (ii) improvements in industrial technology attract labor into this sector (the "labor pull" hypothesis). We present a simple model that features both channels and use it to explore their relative importance. We evaluate the U.S. time series since 1800 and a sample of 13 industrialized countries starting in the 19th century. Our results suggest that, on average, the "labor pull" channel dominates. This contrasts with popular modeling choices in the recent literature.
    Keywords: growth, structural change
    JEL: O11 O41
    Date: 2009–06
  13. By: Berthold Herrendorf; James A. Schmitz; Arilton Teixeira
    Abstract: We study the effects of large transportation costs on economic development. We argue that the Midwest and the Northeast of the U.S. is a natural case because starting from 1840 decent data is available showing that the two regions shared key characteristics with today’s developing countries and that transportation costs were large and then came way down. To disentangle the effects of the large reduction in transportation costs from those of other changes that happened during 1840?1860, we build a model that speaks to the distribution of people across regions and across the sectors of production. We find that the large reduction in transportation costs was a quantitatively important force behind the settlement of the Midwest and the regional specialization that concentrated agriculture in the Midwest and industry in the Northeast. Moreover, we find that it led to the convergence of the regional per capita incomes measured in current regional prices and that it increased real GDP per capita. However, the increase in real GDP per capita is considerably smaller than that resulting from the productivity growth in the nontransportation sectors.
    Keywords: Transportation ; Middle West ; Developing countries
    Date: 2009
  14. By: Carlota Perez
    Abstract: This paper is an English translation, by the author herself, of a paper that until now has only been published in Spanish. The editors of this working paper series are of the opinion that the paper - although written 24 years ago - represents such an important element in the writings of Carlota Perez that it should be made available also to the English-speaking research community. The paper presents an early notion of a techno-economic paradigm and - although internet was years away from being available - it is indeed an outline of the paradigm we presently live in. Many of the issues raised here, like alternative sources of energy and biotechnology, are still with us today, and many of the predictions have proved to be based on accurate perceptions.
    Date: 2009–01
  15. By: Isaías N. Chaves; Leopoldo Fergusson; James A. Robinson
    Abstract: This paper constructs measures of the extent of ballot stuffing (fraudulent votes) and electoral coercion at the municipal level using data from Colombia.s 1922 Presidential elections. Our main findings are that the presence of the state reduced the extent of ballot stuffing, but that of the clergy, which was closely imbricated in partisan politics, increased coercion. We also show that landed elites to some extent substituted for the absence of the state and managed to reduce the extent of fraud where they were strong. At the same time, in places which were completely out of the sphere of the state, and thus partisan politics, both ballot stuffing and coercion were relatively low. Thus the relationship between state presence and fraud is not monotonic.
    JEL: H0
    Date: 2009–07
  16. By: Marc Flandreau; Juan H. Flores; Norbert Gaillard; Sebastián Nieto-Parra
    Abstract: We provide a comparison of salient organizational features of primary markets for foreign government debt over the very long run. We focus on output, quality control, information provision, competition, pricing, charging and signaling. We find that the market set up experienced a radical transformation in the recent period and interpret this as resulting from the rise of liability insurance provided by rating agencies. Underwriters have given up their former role as gatekeepers of liquidity and certification agencies to become aggressive competitors in a new speculative grade market.
    JEL: F34 G14 G15 N00
    Date: 2009–07
  17. By: Jean-Michel Glachant
    Abstract: The regulation of network industries has undergone profound transformation in the past twenty years. The regulated industry is no longer the same, being exposed to new competitive dynamics having revolutionized their industrial framework, technology and interactions with users. There also have been fundamental changes in what regulation is feasible. In an information society a model devised in the 19th century to set prices for monopoly infrastructures such as bridges, roads and railways no longer captures the essential: the interactive dynamics created by technologies, uses, and markets.
    Keywords: energy policy; regulation
    Date: 2009–02–15

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