Economic History

A detailed Summary of Economic History

During the nineteenth century Great Britain was one the major foreign lenders of capital to countries in Europe, Asia, and Americas. While in the late 1820s most of the British investments were concentrated in the North America, in 1860-1870 Empire countries became the major recipient of British capital. India was the most absorbing region of British funds, there Britain invested L95m. in railways between 1845 and 1875. After 1870 about one half of British investments concentrated in Empire countries. However, the United States also kept on receiving British capital outward flow, which was mostly invested in railroad companies. Why did the British lend so much money abroad during the period of 1870-1914?

First of all, it was unprofitable for Britain to invest money at home for the British economy was depressed at that period of time; that's why Britain kept earning a higher rate of return by investing the capital in foreign countries. Various foreign transportation and industrial investment projects with high

All in all, while some economists argue that Britain tended to invest a lot of capital everywhere but at home due to its weakened economy and the slowdown in its productivity growth, others say that British distribution of income and wealth led to tendencies to oversave, with the excess carried off abroad. Institutional factors are also said to have influenced the capital export (Michael Edelstein, 173).

A.G. Kenwood and A.L. Lougheed, The Growth of the International Economy 1920-1990, chapter 2, pp25-38.

It is quite difficult to give a straightforward answer to the question whether Britain's export of capital caused problems (economic slowdown) for British economy. While some economists believe that Britain's excessive investment in foreign countries affected British economy tremendously by limiting the availability of capital funds to domestic industry and thus preventing Britain from exploiting new at that time techniques, many economists argue that it was not restrictions or overseas capital embargoe

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Approximate Word count = 692
Approximate Pages = 3 (250 words per page double spaced)

Category: History

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