- New Horizons in International Business series
Edited by Gavin Boyd, Alan M. Rugman and Pier Carlo Padoan
Chapter 1: The role of financial markets in economic performance: the EU and the USA
1. The role of financial markets in economic performance: the EU and the USA Stefano Manzocchi, Pier Carlo Padoan INTRODUCTION Over the 1990s, the US economy grew at an average rate of 3.7 per cent per year against an average yearly rate of more than a percentage point lower for the EU.1 Ample evidence points to the role of new information technologies as the main determinants of US performance and to the limited role that innovation has played in explaining the more disappointing performance in the larger continental EU countries. Less attention has been devoted to the role of ﬁnancial factors in explaining such differences. After a fall at the end of the 1970s, the capital income share of the private sector in major EU countries, from the mid-1980s, was very much on the rise and indeed larger than the share in the USA, which, while constantly rising, remained well below that of the other EU countries. In principle such an evolution in income distribution would suggest that conditions for sustained accumulation were present in the EU, also given the widespread view that labour market rigidities in Europe were pushing European ﬁrms to shed labour and increase capital accumulation, which, in turn, should have been associated with a higher rate of growth. However capital accumulation has been higher and more sustained in the USA. From 1992 to 2000, private investment in the USA grew at an annual rate of 10 per cent, well above the secular trend of the previous...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.