Wealth bias in the first global capital market boom, 1870-1913

Why do rich countries receive the lion's share of international investment flows? Although this wealth bias is strong today, it was even stronger during the first global capital market boom before 1913. Very little of British capital exports went to poor countries, whether colonies or not. This...

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Bibliographic Details
Published in:The Economic journal (London) 2004-04, Vol.114 (495), p.304-337
Main Authors: Clemens, Michael A., Williamson, Jeffrey G.
Format: Article
Language:English
Subjects:
Bias
Capital inflows
Capital investments
Capital markets
Capital mobility
Demography
Developing countries
Economic history
Economic statistics
Economic theory
Economics
Financial investments
Foreign direct investment
Foreign investment
Gold standard
Gross domestic product
International capital market
International investment
Manycountries
Natural resources
Schools
Stock shares
Studies
United Kingdom
Wealth
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Summary:Why do rich countries receive the lion's share of international investment flows? Although this wealth bias is strong today, it was even stronger during the first global capital market boom before 1913. Very little of British capital exports went to poor countries, whether colonies or not. This paper constructs panel data for 34 countries that as a group received 92% of British capital. It concludes that international capital market failure had only second-order effects on the geographical distribution of British capital. The three local fundamentals that mattered most were schooling, natural resources and demography.
ISSN:0013-0133
1468-0297
DOI:10.1111/j.1468-0297.2004.00211.x