Abstract
This paper explores the relationship between international financial integration (IFI), external vulnerability and economic growth. It proposes a taxonomy of typical IFI profiles and applies it to a sample of 90 developing and emerging economies (DEEs) for the 1992–2016 period using a dynamic panel data model. Drawing from a Post Keynesian and Structuralist analytical framework, it argues that what matters for economic growth is less the degree of IFI per se and more the profile, or “quality,” of this integration. The results suggest that DEEs which succeed in integrating into global financial markets under a more balanced and autonomous profile may experience, at best, negligible benefits for economic growth, while a more financially dependent and vulnerable profile exacerbates the risks of financial globalization, undermining growth in the long run. Moreover, the growth path in the latter tends to be more affected by external financial shocks, even though systemic shocks also impact the former.
Abstract
Investment in capital, new technology, and agricultural techniques has not been considered an endeavor worthwhile in a medieval economy because of a lack of strong property rights and no incentive on the part of lords and barons to lend money to or grant rights to peasant farmers. Therefore, the medieval economy and standards of living at that time often have been characterized as non-dynamic and static due to insufficient investment in innovative techniques and technology. Paul Baran’s concept of the economic surplus is applied to investment patterns during the late medieval, mercantile, and early capitalist stages of economic growth in England and the UK. This paper uses Zhun Xu’s Baran Ratio concept to try to develop general trends to demonstrate and reinforce other historical accounts of these times that a productive and sufficient level of public and private investment out of accumulated capital income, taxation, and rents does not have a real impact on economic per capita growth until around the 1600 s in Britain. This would also be about the time of capitalism’s ascent as the dominant economic system in England. Even then, dramatic increases in investment and economic growth do not appear until the late 18th Century when investment more consistently becomes more than one hundred percent of the level of the domestic economic surplus and takes in government spending. The types of investment, threshold amounts of investment out of profits and rents along with government spending seem to matter when it comes to a growth path raising GDP per capita and national income per capita to higher levels. Although much of this knowledge perhaps is embodied in current historical accounts, the Baran Ratio nicely summarizes and illustrates the importance of levels of investment to economic growth.
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