Capital Flows to the New World as an Intergenerational Transfer
Why did international capital flows rise to such heights in the late 19th century, the years between 1907 and 1913 in particular? Britain placed half of her annual savings abroad during those seven years, and 76 percent of it went to the New World countries of Canada, Australia, the USA, Argentina and the rest of Latin America. The resource abundant New World was endowed with dual scarcity, labor and capital. The labor supply response to labor scarcity took the form of both immigration and high fertility. This served to create much higher child dependency burdens in the New World than in the Old. Econometric analysis shows that these dependency burdens served to choke off domestic savings in the New World, thus creating an external demand for savings. The influence was very large. Indeed, it appears that the vast majority of those international capital flows from Old World to New can be explained by those dependency rate gaps. As a consequence, it is appropriate to view those large international capital flows as an intergenerational transfer.
|Date of creation:||Dec 1991|
|Date of revision:|
|Publication status:||published as Journal of Political Economy, Volume 102, No.2 (April 1994), pp.348-71|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- C.B. Schedvin, 1990. "Staples and regions of Pax Britannica," Economic History Review, Economic History Society, vol. 43(4), pages 533-559, November.
- Williamson,Jeffrey G., 1990. "Coping with City Growth during the British Industrial Revolution," Cambridge Books, Cambridge University Press, number 9780521364805.
- McLean Ian W., 1994.
"Saving in Settler Economies: Australian and North American Comparisons,"
Explorations in Economic History,
Elsevier, vol. 31(4), pages 432-452, October.
- Ian W. McLean, 1991. "Saving in Settler Economies: Australian and North American Comparisons," School of Economics Working Papers 1991-07, University of Adelaide, School of Economics.
- Hammer, Jeffrey S., 1986. "Population growth and savings in LDCs: A survey article," World Development, Elsevier, vol. 14(5), pages 579-591, May.
- Neal, Larry, 1985. "Integration of International Capital Markets: Quantitative Evidence from the Eighteenth to Twentieth Centuries," The Journal of Economic History, Cambridge University Press, vol. 45(02), pages 219-226, June.
- M.C. Urquhart, 1988. "Canadian Economic Growth 1870-1980," Working Papers 734, Queen's University, Department of Economics.
- Ronald D Lee & Andrew Mason & Tim Miller, 1998. "Saving, Wealth, and Population," Working Papers 199805, University of Hawaii at Manoa, Department of Economics.
- Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-96, December.
- David, Paul A., 1977. "Invention and accumulation in america's economic growth: A nineteenth-century parable," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 6(1), pages 179-228, January.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberhi:0032. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.