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Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization

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Author Info
Moritz Schularick ()
Thomas Steger ()

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Abstract

Does international financial integration boost economic growth? The question has been discussed controversially for a long time. As of yet, robust evidence for a positive impact is lacking (Edison et al., 2002). However, there is substantial narrative evidence from economic history that highlights the contribution European capital made to economic growth of peripheral economies before 1914. We have compiled the first comprehensive data set to test this hypothesis. The main finding is that there was indeed a significant and robust growth effect. Our theoretical explanation stresses property rights protection as a prerequisite for the standard neoclassical model to work properly.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1691.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1691

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Related research
Keywords: international financial integration economic growth first era of globalization

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
F30 - International Economics - - International Finance - - - General
N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative
N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hans Gersbach & Markus Müller, 2006. "Elections, Contracts and Markets," Economics working paper series 06/56, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  2. Michael D. Bordo & Christopher M. Meissner, 2007. "Foreign Capital and Economic Growth in the First Era of Globalization," NBER Working Papers 13577, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany. [Downloadable!]
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  4. Ulrich Brandt-Pollmann & Ralph Winkler & Sebastian Sager & Ulf Moslener & Johannes P. Schlöder, 2006. "Numerical solution of optimal control problems with constant control delays," Economics working paper series 06/59, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  5. Theresa Fahrenberger & Hans Gersbach, 2007. "Minority Voting and Long-term Decisions," Economics working paper series 07/70, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  6. Volker Hahn, 2007. "Information Acquisition by Price-Setters and Monetary Policy," Economics working paper series 07/73, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  7. Simone Valente, 2007. "International Status Seeking, Trade, and Growth Leadership," Economics working paper series 07/75, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  8. Simone Valente, 2006. "Intergenerational Transfers, Lifetime Welfare and Resource Preservation," Economics working paper series 06/55, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  9. Karen Pittel, 2006. "A Kuznets Curve for Recycling," Economics working paper series 06/52, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  10. Valente, Simone, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," MPRA Paper 1095, University Library of Munich, Germany. [Downloadable!]
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  11. Theresa Fahrenberger & Hans Gersbach, 2007. "Legislative Process with Open Rules," Economics working paper series 07/64, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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  12. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," Economics working paper series 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  13. Christa N. Brunnschweiler, 2006. "Financing the alternative: renewable energy in developing and transition countries," Economics working paper series 06/49, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  14. Ralph Winkler, 2006. "Now or Never: Environmental Protection under Hyperbolic Discounting," Economics working paper series 06/60, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  15. Urs von Arx & Andreas Schäfer, 2007. "The Influence of Pension Funds on Corporate Governance," Economics working paper series 07/63, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  16. Christoph Heinzel & Ralph Winkler, 2007. "The role of environmental and technology policies in the transition to a low-carbon energy industry," Economics working paper series 07/71, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  17. Hans Gersbach, 2007. "The Global Refunding System and Climate Change," Economics working paper series 07/62, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  18. Hans Gersbach & Ralph Winkler, 2007. "On the Design of Global Refunding and Climate Change," Economics working paper series 07/69, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich, revised Jul 2007. [Downloadable!]
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  19. Ralph Winkler, 2007. "Why do ICDPs fail? The relationship between subsistence farming, poaching and eco- tourism in wildlife and habitat conservation," Economics working paper series 07/76, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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