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The long-run determinants of British capital exports, 1870–1913

Published online by Cambridge University Press:  22 November 2010

Mauro Rota  and
Francesco Schettino
Mauro Rota
Affiliation:
Sapienza, University of Rome, mauro.rota@uniroma1.it
Francesco Schettino
Affiliation:
Università Politecnica delle Marche, francesco.schettino@uniroma1.it
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Abstract

Unlike recent contributions in the field, which discuss the geography of British overseas investments, this article focuses on the growth of capital exports from Great Britain during the period 1870–1913. Using a broader concept of foreign investments, which includes foreign direct investments (FDIs), and refocusing on the push and pull factors emphasised in earlier literature, we propose a framework able to capture the long-run determinants of British capital exports. Moreover, the framework includes elements suggested by early and recent works such as the institutional setup of the international economy and the evolution of world trade. The most relevant result, in an error correction model environment, is that the timing of British overseas investments in the long run seems to be related to the evolution of world trade, domestic growth and to the role of India as a colony. On the other hand, the attraction elements of the borrowing countries, captured by the risk-adjusted realised rates of return abroad, have been proven to matter in the short run.

Keywords

British overseas investmentpush theorymonetary systemserror correction model

JEL classification

N13: Europe: Pre-1913 E44: Financial Markets and the Macroeconomy F22: International Migration N23: Europe: Pre-1913
Type
Articles
Information
Financial History Review , Volume 18 , Issue 1 , April 2011 , pp. 47 - 69
Copyright
Copyright © European Association for Banking and Financial History e.V. 2010

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