Investment Finance In Economic Development

Investment finance in economic development As a result of the liberalisation of the 1980s, the financial system has acquired a prominent role in developing economies. It is now conventional wisdom that ‘financial liberalisation’ is the means to stimulate economic development. Investment Finance in Economic Development challenges this assumption and offers an alternative view. The book presents a postKeynesian approach to the role of banks, financial markets and savings in economic development. It departs from the conventional belief that financial institutions are mere intermediaries between savers and investors, to show that banks have a key, active role in the process of investment finance and growth. Further, financial markets, as the loci of allocation of financial savings, are shown to have an important role in supporting financial stability during the process of growth. Rogério Studart is Associate Professor of Economics and Tutor of Undergraduate Studies at the Federal University of Rio de Janeiro. Investment finance in economic development Rogério Studart London and New York First published 1995 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1995 Rogério Studart All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book has been requested ISBN 0-203-20223-6 Master e-book ISBN ISBN 0-203-26614-5 (Adobe eReader Format) ISBN 0-415-10866-7 (Print Edition) To Christine, Rafaella, Camila and Marlene Contents Foreword Victoria Chick vi Preface ix Acknowledgements xi List of abbreviations xiii 1 Introduction 1 2 Finance and economic development: The dominance of the prior-saving argument 5 3 Departing from the prior-saving argument: Finance in a monetary production economy 26 4 Saving and financial markets in economic growth 47 5 Financial structures, financial development and economic development 63 6 From theory to evidence 78 7 Financial system and industrialisation in Brazil, 1947–66 94