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on Business, Economic and Financial History |
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Issue of 2011‒04‒30
nineteen papers chosen by |
| By: | François Facchini (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | This article explains the level of economic freedom in Muslim countries through the theory of institutional path dependency. Islamic countries are generally not free and they have a poor record regarding property rights. To explain these realities we use the institutional history of Muslim countries. We define three steps : the Arab and Ottoman Empires when Islamic law was of great importance, European colonisation, and the contemporary era with its movement towards a revival of Islam. Islamic law is not liberal. This explains why, in general, Muslin countries are generally not free. Colonisation radically changed institutional life in the twentieth century. British colonisation proved to be better than did French or Soviet colonisation. This explains why the Persian Gulf countries are freer. The collapse of the Soviet model explains the speed of liberalisation in former socialist countries (such as Albania, Kyrgyz Republic and Kazakhstan). Nevertheless, the twentieth century was not just the century of Westernisation. It was also the century of the revival of Islam. The article concludes that the history of the twentieth century does not explain the way in which Muslim countries are attracted by the ideal of the Muslim city. The revival of Islamic intellectual innovations and the evolution of Muslim opinion sustain this thesis. Therefore, there is a dependency on the past and on an imagined future. Islam acts, like yesterday, on the world of institutional possibilities. |
| Keywords: | Economic freedom, colonisation, institutional imaginary, Islam, property rights. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00587694&r=his |
| By: | Apostolides, Alexander |
| Abstract: | This article presents the major results of the first attempt to create historical national accounts for Cyprus and Malta. It constructs the first detailed estimates of output at aggregate and sector levels, enabling the analysis of economic growth and tracing structural change. The islands’ performance is evaluated within the context of wider economic change in Europe’s South Eastern periphery, suggesting that their economic growth was slow in comparison, despite both Cyprus and Malta being far less exposed to the political upheavals of the First World War. However, the ultimate reasons for their comparatively weak growth performance differed: Cyprus experienced a prolonged agricultural crisis, but participated in the post-depression recovery through the rapid expansion of the copper mining industry. Malta’s growth was slower than Cyprus due to the combination of declining British military expenditure and accelerated demographic growth. These differences notwithstanding, the islands were ultimately affected by common problems. Their small overall size had a negative effect on their performance as global protectionism increased and restricted export opportunities. An important negative determinant for growth during the interwar period was their size, which in combination with the islands’ status as British colonies, made autarkic policies prohibitive. |
| Keywords: | Economic History; Colonial Development; GDP estimation; Sectoral Disaggregation ; Small Economies |
| JEL: | O47 C82 N14 |
| Date: | 2011–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30276&r=his |
| By: | Robert C. Allen |
| Abstract: | The paper measures productivity growth in seventeen countries in the nineteenth and twentieth centuries. GDP per worker and capital per worker in 1985 US dollars were estimated for 1820, 1850, 1880, 1913, 1939 by using historical national accounts to back cast Penn World Table data for 1965 and 1990. Frontier and econometric production functions are used to measure neutral technical change and local technical. The latter includes concurrent increases in capital per worker and output per worker beyond the highest values achieved. These increases were pioneered by the rich countries of the day. An increase in the capital-labour ratio was usually followed by a half century in which rich countries raised output per worker at that higher ratio. Then the rich countries moved on to a higher capital-ratio, and technical progress ceased at the lower ratio they abandoned. Most of the benefits of technical progress accrued to the rich countries that pioneer it. It is remarkable that countries in 1990 with low capital labour ratios achieved an output per worker that was no higher than countries with the same capital labour ratio in 1820. In the course of the last two hundred years, the rich countries created the production function of the world that defines the growth possibilities of poor countries today. |
| Keywords: | Productivity, economic growth, global history |
| JEL: | N10 O11 O47 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:548&r=his |
| By: | Anand Swamy (Williams College) |
| Abstract: | The East India Company’s conquest of various territories in India typically brought one issue to the forefront right away: How would land taxes, the principal source of governmental revenue, be collected? But taxation was not a thing unto itself; it was inextricably linked with “ownership” and indeed with the entire structure of land rights. For this reason, among others, the Company also created/adapted legal systems that would adjudicate the disputes that, inevitably, followed in the wake of its land-rights interventions. The legal and land tenure arrangements chosen also affected credit markets: to the extent land ownership is secure and transferable, land can be used as collateral, or seized in lieu of repayment of debts or other contractual obligations. Land, law, and credit in colonial India generated a huge (and ongoing) discussion: debates preceding policy choices; later commentary within the colonial administration; “nationalist” criticisms from the late 19th century onwards; and current research linking present-day economic outcomes to colonial era choices. In this paper we provide an overview of this literature, focusing on the period 1765-1900. In the interest of brevity and coherence we focus two regions, Bengal, which was first conquered (1757-64), and the Bombay Deccan, which was annexed in 1818, though we make references to other regions as well. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wilcde:2011-01&r=his |
| By: | Haveman, Heather A.; Habinek, Jacob; Goodman, Leo A. |
| Abstract: | We trace the social positions of the men and women who found new enterprises from the earliest years of one industry’s history to a time when the industry was well established. Sociological theory suggests two opposing hypotheses. First, pioneering entrepreneurs are socially prominent individuals from fields adjacent to the new industry and later entrepreneurs are from an increasingly broad swath of society. Second, the earliest entrepreneurs come from the social periphery while later entrepreneurs include more industry insiders and members of the social elite. To test these hypotheses, we study the magazine industry in America over the first 120 years of its history, from 1741 to 1860. We find that magazine publishing was originally restricted to industry insiders, elite professionals, and the highly educated, but by the time the industry became well established, most founders came from outside publishing and more were of middling stature – mostly small-town doctors and clergy without college degrees. We also find that magazines founded by industry insiders remained concentrated in the three biggest cities, while magazines founded by outsiders became geographically dispersed. Finally, we find that entrepreneurship evolved from the pursuit of a lone individual to a more organizationally-sponsored activity; this reflects the modernization of America during this time period. Our analysis demonstrates the importance of grounding studies of entrepreneurship in historical context. Our analysis of this “old†new media industry also offers hints about how the “new†new media industries are likely to evolve. |
| Keywords: | Organizational Behavior and Theory |
| Date: | 2011–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:1952031&r=his |
| By: | Michael D. Bordo; Owen F. Humpage; Anna J. Schwartz |
| Abstract: | By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the official price. This raised uncertainty about the Bretton Woods parity grid, and speculation seemed to grow. In response, the Federal Reserve instituted a series of swap lines to provide central banks with cover for unwanted, but temporary accumulations of dollars and to provide foreign central banks with dollar funds to finance their own interventions. The Treasury also began intervening in the market. The operations often forestalled gold losses, but in so doing, delayed the need to solve Bretton Woods’ fundamental underlying problems. In addition, the institutional arrangements forged between the Federal Reserve and the U.S. Treasury raised important questions bearing on Federal Reserve independence. |
| Keywords: | Banks and banking, Central ; Foreign exchange administration ; Federal Open Market Committee ; Gold ; Bretton Woods Agreements Act |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1108&r=his |
| By: | Braggion, F.; Moore, L. (Tilburg University, Center for Economic Research) |
| Abstract: | The late-Victorian era was characteristed by especially close links between politicians and firms in the UK. Roughly half of all members of Parliament served as company directors, many as directors of multiple firms. We analyze 467 British companies over the period 1895 to 1904 to investigate the interaction of firms and politicians. We find that new-technology firms with politicians serving on their boards were more likely to issue equity finance and had higher Tobin's Q. Our evidence suggests that causality runs from director-politicians to a firm's performance, rather than in the opposite direction. |
| Keywords: | Political Connections;Second Industrial Revolution;External Finance. |
| JEL: | G20 N23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011039&r=his |
| By: | Johan Fourie; Dieter von Fintel |
| Abstract: | The emphasis on location-specific factors, such as climate or disease environment, in the explanation of development outcomes in colonial societies implicitly assumes that settler groups were homogenous. Using tax records, this paper shows that the French Huguenots who immigrated to Dutch South Africa at the end of the 17th century were more productive wine-makers than the already-established non-French farmers. Standard factors of production usually associated with faster growth do not explain the differences between the two groups. We posit that the skills of the Huguenots — the ability to make quality wines — provided a sustainable competitive advantage that not only explains initial but persistent productivity differences. We test this hypothesis by dividing the French settlers into two groups — those originating from wine regions, and those from wheat regions — and comparing them with other settler groups. Potential differences between the French (overall) and the Dutch may be attributable to institutional and cultural differences, while variations within the French group are more likely to be skill-related. This intuitive but important insight — that home-country production determines settler-society productivity, even in later generations — sheds new light on our understanding of how newly settled colonial societies develop, and of the importance of knowledge and skills in economic growth. |
| Keywords: | South Africa, Cape Colony, French Huguenots, VOC, wine, slaves |
| JEL: | N37 D31 D63 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:213&r=his |
| By: | Natalia Kuznetsova (Saint-Petersburg State University - Saint-Petersburg State University); Irina Peaucelle (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This article investigates the relationships between the evolution of Russian social psychology and the transformations of the modes of education in Russia. Social psychology is a science born the last century and also a status of the social conscience of people, forged historically on the basis of proper cultural artifacts. In Russia education is mainly the process of human development and, like wherever, it is the institution of knowledge transmission. We show on the case of Russian history that the scientifically proven educational practice can contribute enriching development of social conscience after ideological and economic shocks. |
| Keywords: | analysis of education ; cultural economics ; Russia |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586750&r=his |
| By: | Larry Sjaastad |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:448&r=his |
| By: | Akhabbar, Amanar; Antille, Gabrielle; Fontela, Emilio; Pulido, Antonio |
| Abstract: | Indubitably born in the USA, input-output analysis has an important European history, from its very beginnings in the Soviet Union to the postwar huge development of I/O techniques in West and North Europe. This paper studies the European experience of input-output analysis by surveying and analyzing some of the national experiences and especially the works in Great Britain of Richard Stone and his team. We show in particular how European economists have taken leadership in I/O research since the 1950s and more recently with the creation in 1989 of the journal of the International Input-Output Association, Economic System Research. In the latter European influence tends to focus works on theoretical and methodological issues more than empirical issues and applications |
| Keywords: | Input-Output Analysis; Leontief; Stone; Applied economics; SAM; Computable General Equilibriun Models |
| JEL: | C6 P11 C68 O21 C67 Y10 B23 C61 A14 |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30208&r=his |
| By: | Daron Acemoglu; Simon Johnson; James A. Robinson |
| Abstract: | David Albouy expresses three main concerns about the results in Acemoglu, Johnson and Robinson (2001) on the relationship between potential settler mortality and institutions. First, there is a general concern that there are high mortality outliers, potentially affecting this relationship, with which we agree. However, limiting the effect of outliers has no impact on our substantive results and if anything significantly strengthens them, in fact making them robust to even extreme versions of his other critiques. His second argument that all the data from Latin America and much of the data from Africa, making up almost 60% of our sample, should be dropped is arbitrary - there is a great deal of well-documented comparable information on the mortality of Europeans in those places during the relevant period. His third argument that a "campaign" dummy should be included in the first stage is at odds with the historical record and is implemented inconsistently; even modest corrections undermine his claims. |
| JEL: | N20 O11 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16966&r=his |
| By: | Roberto Bonfatti |
| Abstract: | I construct a theory of foreign interventions in which the political preferences of the foreign country are determined by its different economic ties with alternative local groups. Stronger economic ties make a group more influenceable from the outside, and thus more willing to grant economic and geopolitical concessions to the foreign country. In the model, foreign interventions in favor of the most influenceable group are counterweighted by a natural tendency of the home country’s political system to bring to power the least influenceable group. While the foreign country can use its economic power to influence the geopolitical alignment of the home country, the outcome of this endeavor may be compromised by regime change. In particular, when concessions to the foreign country cannot be renegotiated efficiently (possibly because of reputational concerns in the foreign country), regime change may lead to a loss of geopolitical alignment, even if all groups are ex-ante identical in terms of their geopolitical preferences. These results may help interpret the pattern of Western interventions in the 20th century, as well as the role of economic nationalism in the political economy of regime change. In particular, they may help understand the role of the Cold War in strengthening the West’s preference for the status quo in many countries. I provide historical evidence in favor of my arguments. |
| Keywords: | Regime change, foreign interventions, economic power, economic nationalism, Cold War, Latin America |
| JEL: | D7 F1 F5 N4 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:549&r=his |
| By: | Herrmann-Pillath, Carsten |
| Abstract: | China's rise drives a growing impact of China on economics. So far, this mainly works via the force of example, but there is also an emerging role of Chinese thinking in economics. This paper raises the question how far Chinese perspectives can affect certain foundational principles in economics, such as the assumptions on individualism and self-interest allegedly originating in Adam Smith. I embark on sketching a 'third culture' in economics, employing a notion from cross-cultural communication theory, which starts out from the observation that the Chinese model was already influential during the European enlightenment, especially on physiocracy, suggesting a particular conceptualization of the relation between good government and a liberal market economy. I relate this observation with the current revisionist view on China's economic history which has revealed the strong role of markets in the context of informal institutions, and thereby explains the strong performance of the Chinese economy in pre-industrial times. I sketch the cultural legacy of this pattern for traditional Chinese conceptions of social interaction and behavior, which are still strong in rural society until today. These different strands of argument are woven together in a comparison between Confucian thinking and Adam Smith, especially with regard to the 'Theory of Moral Sentiments', which ends up in identifying a number of conceptual family resemblances between the two. I conclude with sketching a 'third culture' in economics in which moral aspects of economic action loom large, as well as contextualized thinking in economic policies. -- |
| Keywords: | Confucianism,Adam Smith,physiocracy,collectivism and individualism,social relations in China,morality,economy of Imperial China |
| JEL: | B11 B12 Z1 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:159&r=his |
| By: | Jinho Bae (Department of Economics, Konkuk University, Seoul, South Korea); Chang-Jin Kim (Department of Economics, Korea University, Seoul, South Korea); Dong Heon Kim (Department of Economics, Korea University, Seoul, South Korea) |
| Abstract: | The existing literature on U.S. monetary policy provides no sense of a cnsensus regarding the existence of a monetary policy regime. This paper explores the evolution of U.S. monetary policy regimes via the development of a Markov-switching model predicated on narrative and statistical evidence of a monetary policy regime. We identified five regimes for the period spanning 1956:I - 2005:IV and they roughly corresponded to the Chairman term of the Federal Reserve, except for the Greenspan era. More importantly, we demonstrate that the conflicting results regarding the response to inflation for the pre-Volcker period in the existing literature is not attributable to the different data but due to different samples, and also provided an insight regarding the Great Inflation?namely, that the near non-response to inflation in the early 1960s appears to have constituted the initial seed of the Great Inflation. We also find via analysis of the Markov-switching model for the U.S. real interest rate, that the regime changes in the real interest rate follow the regime changes in monetary policy within two years and that the evolution of real interest rate regimes provides a good explanation for the conflicting results regarding the dynamics of real interest rate. |
| Keywords: | Monetary policy rule; Markov switching; Great Inflation; Real interest rate; Evolution |
| JEL: | E5 C32 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:iek:wpaper:1102&r=his |
| By: | Ahmed, Vaqar; Wahab, Mohammad Abdul |
| Abstract: | This paper examines the relationship between foreign assistance and economic growth for the period 1972 to 2010. Past literature indicates that due to low domestic resource mobilization Pakistan had to resort to various forms of foreign assistance on a regular basis. Using time series data since 1972 and employing Johansen maximum likelihood procedure we show that foreign assistance in the absence of macroeconomic stabilization and structural reforms has a negative relationship with real per capita GDP. However national savings as percentage of GDP show a positive relationship with real per capita GDP. Pakistan has a long history of dependence on multilateral and bilateral development partners. Over the decades the share of grants as percentage of total foreign assistance has declined forcing the country to procure loans at harsh conditionalties. Given the positive impact of national savings on economic growth there is an urgent need for improving the tax base, promoting instruments that encourage savings culture in the private sector and attracting remittances from abroad. These increased savings would then have to be channelized towards productive investments which in turn require pro market reforms. |
| Keywords: | Foreign assistance; Economic Growth; National Savings |
| JEL: | F35 O43 |
| Date: | 2011–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30344&r=his |
| By: | Irina Peaucelle (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris) |
| Abstract: | Despite the multiplicity of research on the surge of the financial industry the world over, little is done to understand the national context shaping the objectives and designs of this economic sector. The overall image that emerges from the literature is that globalisation and liberalisation of economies make the expansion of this sector indispensable for further development. This paper stresses the heterogeneity of the socio-psychological origins of the need for saving and contribution management, as well as the heterogeneity of the sources of savings and loan funding. In particular this paper discusses the following national characteristics: 1) the social belief in trust that smoothes the progress of insurance and pension fund business in the USA, 2) the traditional preference for saving and lending in France that explains the advance of banks and credit institutions for analysis of financial risks, and 3) the natural resources ground rent of Russian State provides the formation of sovereign-wealth funds, which require an up to date knowledge based investment management. This paper serves as a road sign indicating that the path of uniform financial industry formation is a waste of time and may bring about social and economic troubles. |
| Keywords: | history of finance theories ; pension funds ; insurance and private financial institutions ; sovereign-wealth funds ; financial industry: USA ; France ; Russia |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586852&r=his |
| By: | David Matesanz Gomez; Guillermo J. Ortega; Benno Torgler |
| Abstract: | This paper investigates the business cycle co-movement across countries and regions since the middle of the last century as a measure for quantifying the ongoing globalization process of the world economy. Our methodological approach is based on analysis of a correlation matrix and the networks it contains. Such an approach summarizes the interaction and interdependence of all elements and it represents a more accurate measure of the global interdependence involved in the economic system. Our results show (1) that the dynamics of globalization has been more driven by synchronization in regional growth patterns than by the synchronization of the world economy as a whole in contrast with other empirical works and (2) that world crisis periods increase dramatically the global co movement in the world economy. |
| Keywords: | Globalization; regionalism; correlation matrix; clustering; synchronization |
| JEL: | E32 C45 O47 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2011-11&r=his |
| By: | Sam Schulhofer-Wohl; Miguel Garrido |
| Abstract: | The Cincinnati Post published its last edition on New Year’s Eve 2007, leaving the Cincinnati Enquirer as the only daily newspaper in the market. The next year, fewer candidates ran for municipal office in the Kentucky suburbs most reliant on the Post, incumbents became more likely to win reelection, and voter turnout and campaign spending fell. These changes happened even though the Enquirer at least temporarily increased its coverage of the Post’s former strongholds. Voter turnout remained depressed through 2010, nearly three years after the Post closed, but the other effects diminished with time. We exploit a difference-in-differences strategy and the fact that the Post’s closing date was fixed 30 years in advance to rule out some non-causal explanations for our results. Although our findings are statistically imprecise, they demonstrate that newspapers—even underdogs such as the Post, which had a circulation of just 27,000 when it closed—can have a substantial and measurable impact on public life. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:686&r=his |