The Empire Effect: Country Risk in the First Age of Globalization, 1880-1913
AbstractWould the movement of capital from to poor countries greatly increase, if the commitment to protecting property and allowing capital to move freely were more credible? This paper asks whether the British Empire provided global public goods that supported large-scale development finance before 1914. We reassess the importance of colonial status to investors by means of multivariable regression analysis. We show that British colonies were able to borrow in London at significantly lower rates of interest than non-colonies precisely because of their colonial status, which overruled economic factors. We conclude that these findings have important implications for the current globalization debate: lacking jurisdictional integration is a major impediment to capital flows from rich to poor.
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Bibliographic InfoPaper provided by EconWPA in its series Economic History with number 0509002.
Length: 40 pages
Date of creation: 06 Sep 2005
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sovereign risk; development finance; economic history; imperialism; globalization; bond spreads; capital market integration;
Find related papers by JEL classification:
- E - Macroeconomics and Monetary Economics
- F3 - International Economics - - International Finance
- K - Law and Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-09 (All new papers)
- NEP-FMK-2005-11-09 (Financial Markets)
- NEP-HIS-2005-11-09 (Business, Economic & Financial History)
- NEP-MAC-2005-11-09 (Macroeconomics)
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