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Financialization and the Slowdown of Accumulation

Engelbert Stockhammer ()

Working Papers from Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness

Abstract: Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for USA, UK, France, and Germany. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found. A revised version of the paper is forthcoming in the Cambridge Journalof Economics. Please contact the author for the revised version.

Keywords: financialization; business investment; class analysis; theory of the firm (search for similar items in EconPapers)
JEL-codes: E2 D2 G2 (search for similar items in EconPapers)
Date: 2000-11
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Journal Article: Financialisation and the slowdown of accumulation (2004) Downloads
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