The Investment Market, 1870–1914: The Evolution of a National Market

Lance E. Davis

The Journal of Economic History, 1965, vol. 25, issue 3, 355-399

Abstract: It is necessary not only that capital be accumulated, but also that it be mobilized for productive use, if an economy is to benefit from an increase in capital per person. The classical model of resource allocation assumes that within any economy capital is perfectly mobile. It implies, therefore, that once allowance is made for uncertainty and risk, returns on investment are equal in all industries in all regions. Such a model, while logically consistent, is not very useful for analyzing the process of economic growth. In the early stages of development, because the uncertainty discounts are high, capital is not very mobile. As a result, rates of return vary widely between industries and between regions; and growth in high-interest regions is retarded. Development, in part then, takes the form of a reduction in uncertainty discounts—a reduction that makes it possible for capital to move more freely between regions and industries.

Date: 1965
References: Add references at CitEc
Citations: View citations in EconPapers (35)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:jechis:v:25:y:1965:i:03:p:355-399_05

Access Statistics for this article

More articles in The Journal of Economic History from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().