Endogenous Financial Development and Industrial Takeoff
There is a large and growing literature on the relationship between financial development and economic growth. It suggests a positive causal link running from finance to growth. We consider, in broad terms, the existing historical evidence on this connection. We demonstrate that constraints on investment finance occur primarily in the presence of fixed costs. Investments in physical transport infrastructures are prime examples of projects in which financial constraints can retard industrial growth. Furthermore, an appreciation of spatial and dynamic elements is central: Infrastructure development was privately financed by spatially concentrated coalitions of modest investors. We contrast the institutional environment in Britain with that in continental Europe. We develop a theory of finance and growth that can account for the disaggregated and dynamic nature of the finance and development of infrastructure.
|Date of creation:||15 Jan 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 01334 462420
Fax: 01334 462444
Web page: http://www.st-andrews.ac.uk/cdma
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.:
- Ross Levine, 2004.
"Finance and Growth: Theory and Evidence,"
NBER Working Papers
10766, National Bureau of Economic Research, Inc.
- Crafts, N. F. R., 1995. "Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered," The Journal of Economic History, Cambridge University Press, vol. 55(04), pages 745-772, December.
- Rebelo, Sergio, 1991.
"Long-Run Policy Analysis and Long-Run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 500-521, June.
- Parente, Stephen L. & Prescott, Edward C., 2005.
"A Unified Theory of the Evolution of International Income Levels,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 21, pages 1371-1416
- Stephen L Parente & Edward C Prescott, 2004. "A Unified Theory of the Evolution of International Income Levels," Levine's Working Paper Archive 122247000000000300, David K. Levine.
- Stephen L. Parente & Edward C. Prescott, 2004. "A unified theory of the evolution of international income levels," Staff Report 333, Federal Reserve Bank of Minneapolis.
- Richard Sylla & Jack Wilson & Robert Wright, 2006. "Integration of Trans-Atlantic Capital Markets, 1790-1845," Review of Finance, European Finance Association, vol. 10(4), pages 613-644, December.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988.
"Industrialization and the Big Push,"
NBER Working Papers
2708, National Bureau of Economic Research, Inc.
- Enrico Spolaore & Alberto Alesina & Romain Wacziarg, 2000.
"Economic Integration and Political Disintegration,"
American Economic Review,
American Economic Association, vol. 90(5), pages 1276-1296, December.
- Wacziarg, Romain & Spolaore, Enrico & Alesina, Alberto, 2000. "Economic Integration and Political Disintegration," Scholarly Articles 4553029, Harvard University Department of Economics.
- Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 1997. "Economic Integration and Political Disintegration," NBER Working Papers 6163, National Bureau of Economic Research, Inc.
- Bogart, Dan, 2005. "Turnpike trusts and the transportation revolution in 18th century England," Explorations in Economic History, Elsevier, vol. 42(4), pages 479-508, October.
- B. J. Buchanan, 1986. "The Evolution of the English Turnpike Trusts: Lessons from a Case Study," Economic History Review, Economic History Society, vol. 39(2), pages 223-243, 05.
- Charles R. Hulten, 1996. "Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have," NBER Working Papers 5847, National Bureau of Economic Research, Inc.
- César Calderón & Luis Servén, 2005.
"The Effects of Infrastructure Development on Growth and Income Distribution,"
DEGIT Conference Papers
c010_056, DEGIT, Dynamics, Economic Growth, and International Trade.
- Calderon, Cesar & Serven, Luis, 2004. "The effects of infrastructure development on growth and income distribution," Policy Research Working Paper Series 3400, The World Bank.
- César Calderón & Luis Servén, 2004. "The Effects of Infrastructure Development on Growth and Income Distribution," Working Papers Central Bank of Chile 270, Central Bank of Chile.
- Bogart, Dan, 2007. "Neighbors, networks, and the development of transport systems: Explaining the diffusion of turnpike trusts in eighteenth-century England," Journal of Urban Economics, Elsevier, vol. 61(2), pages 238-262, March.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1996.
"Was Prometheus Unbound by Chance? Risk, Diversification and Growth,"
CEPR Discussion Papers
1426, C.E.P.R. Discussion Papers.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1997. "Was Prometheus Unbound by Chance? Risk, Diversification, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 709-51, August.
- Daron Acemoglu & Fabrizio Zilibotti, 1994. "Was Prometheus unbound by chance? Risk, diversification and growth," Economics Working Papers 98, Department of Economics and Business, Universitat Pompeu Fabra.
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- Luis A. Rivera-Batiz & Paul M. Romer, 1990.
"Economic Integration and Endogenous Growth,"
NBER Working Papers
3528, National Bureau of Economic Research, Inc.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Alex Trew, 2006.
"Finance and Growth: A Critical Survey,"
The Economic Record,
The Economic Society of Australia, vol. 82(259), pages 481-490, December.
- repec:kap:eurfin:v:10:y:2006:i:4:p:613-644 is not listed on IDEAS
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
- McDermott, John, 2002. " Development Dynamics: Economic Integration and the Demographic Transition," Journal of Economic Growth, Springer, vol. 7(4), pages 371-409, December.
When requesting a correction, please mention this item's handle: RePEc:san:cdmawp:0702. 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: (Bram Boskamp)
If references are entirely missing, you can add them using this form.