Introduction

Studies about machinery equipment investment have a long tradition in economics and economic history. Since the analysis of the Industrial Revolution and the growth studies of the twentieth century, there are indications that economic growth of countries has a strong nexus with investment in capital formation and specifically, with the machinery equipment investment. However, in the case of developing countries there is a lack of quantitative studies in the long run about the relationship between growth and machinery equipment investment.

This study about machinery investment and growth addresses three critical elements. First, most studies are for a short period of time, twenty-five years or less. Second, the majority of papers present correlations with a great number of countries without a comparison of the kind of investment. A growth process based on capital formation in construction (dwellings and non-residential structures) differs from growth based on machinery investment. More specific, there is another relevant disaggregation: non electrical machinery, electrical machinery and transport equipment that should be take into consideration.

Third, a developing country, Chile was elected to study its relationship with machinery imports in the long run, in an attempt to give to the debate about capital formation and growth another vision.

The article is organized as follows: in section 2, theory and empirics of growth and capital (machinery equipment) investment is presented; section 3 shows the methodology of the data base of machinery imports in Chile; section 4 presents the econometric model to fit the data with the theoretical approach; section 5 the results of causality tests and section 6 concludes.

Significant interdependency between national economies in the global economy is a neoliberal construct. In forgoing conflicts and tensions, the liberal interpretation argues there is an expected dividend from anticipated trade. The assumption is also based on the rationality of economic entities that in the cost-benefit analysis, benefits from trade will outweigh the costs from conflicts. Economic and trade interdependency is also promoted and advocated to potentially convert adversarial relationships into economically productive ones. Economic expansion of ties enables the stakeholders to create shared values and norms that can mutually enhance interdependency.

Constructivist ideals build upon these economic and often political ties to expand trade bilateralism into a complex and complicated interwoven set of linkages and connections. In such a complex interwoven structures, there may also be a potential for economies to learn from each other, particularly, as models of development for spurring economic improvements and regional upgrading of production structures.

In addition, when economies learn from each other, they may resemble each other more in terms of infrastructural features, such as ports, airports and other transportation facilities. After this bout of development, the infrastructural works in Asia, the Gulf and the US may resemble more of each other as they begin to serve the same purposes, facilitate the mobility and movement of goods, services and people.

Introduction

By 1830 John and Elizabeth seemed to have secured a contented and fulfilling life for themselves. John might, with some justice, have claimed to have at last become that ‘virtuous and active tradesman’ that his mother had wished to see him be. The business of Shaw and Crane was soundly founded on the twin pillars of steady, cautious finances and the warm, sociable amity of the partnership with Henry. Both men had burgeoning families and John in particular, by now in his mid-forties, might have been forgiven for relaxing into the role of presiding paterfamilias, at work as at home. Indeed, it is easy to detect signs of a sort of quiescence in the letters he and Elizabeth exchange in this period. As early as the summer of 1826 John was encouraging Elizabeth to small indulgences: rides out ‘in a chaise. I beg you will think nothing of the expense – maybe a caring physic costs more than a chaise so let me beg you will do as I request and go as often as you feel able’. They probably did not think of themselves as by any means ‘rich’, as yet, but the tone speaks of a financial confidence markedly in contrast to the often harassed, harried and insecure figure John cut in the 1810s and early 1820s. Moreover they we were aware and appreciative of their steadily improving condition.

Efforts to extract wealth from the subsoil began with the earliest colonization of Brazil by Portugal, but they achieved success only in the middle of the twentieth century, with the massive exploitation of iron ore. As entrepreneurs experimented with a range of approaches, they faced shifting definitions of ‘success’. Finally emerging as a mineral producer required significant transformation in Brazilian economic governance. Leveraging extremely rich iron ore deposits into wider economic benefit had unexpected and fundamentally important impact on the Brazilian economy. Mineral extraction is a relatively neglected area of historiography, despite its centrality in production and in the institutions of political economy. Scholarship by Gavin Wright demonstrates the very tight connection between industrialization and mineral endowment in the US. This book, using different methods, a longer time frame and a focus on political economic institutions, examines this connection as it unfolded in Brazil. The book places iron ore mining at the centre of the story, because iron ore is the mineral that brought success. This chapter offers the relevant historical background. In focusing on the general features of Brazilian political and economic structures that have been relevant to the institutional developments necessary for iron ore mining and metallurgy, the chapter gives short shrift to the broader range of individuals, conflict, contention, nuance and non-linearity of Brazilian history.

Introduction

Pyrenean emigration to America in the nineteenth and twentieth centuries has been the object of great attention and extensive research in France and in America, because of the size and length of this movement from a French perspective, and the rich data set available to analyse the trans-continental migration. Documentation indicates that these French Pyreneans envisaged overseas migration in the same way as other French groups (from Alsace, Aveyron etc.) in the same period, but they left in greater numbers and during a longer period of time. The movement did not, however, parallel that of some other European countries, the English, the Germans, the Swiss migrated to America in much greater numbers and proportion. The comparatively small migration which characterized France was actually linked to the French adopting Malthusian demographic practices as early as the eighteenth century, while other Europeans did not start reducing births until the next century. Consequently, in the nineteenth century, the French did not experience a demographic explosion on the scale of other Europeans. Fewer people were forced to envisage overseas migration as a solution to excessive population, shrinking economic opportunities in rural areas, and slowly emerging urban industrial development.

French migration to America was definitely less significant than elsewhere in Europe. The only areas with sizable overseas migration were the border regions of France: the Pyrenees (along the French-Spanish border), the Alps (along the French–Italian border), and Alsace (along the French–German border).

Introduction

Many of the economists drawn into the flexible versus fixed debate had been writing on adjustment and liquidity issues since shortly after the Great Depression and through World War II. Others were young scholars eager to make their mark in the innovative and interdependent areas of international economics and economic policy, tied to theories of comparative advantage, factor-price equalization, trade and welfare, exchange devaluation and forward exchange. Paul Einzig, no enthusiast for flexible exchange rates, considered the focus on flexibility a consequence of the drive for growth at all costs. As previously noted, employment and growth were major issues, as was stability, leading to many different versions for flexible or fixed rate plans.

Chapter 7 examines some of the major arguments for variations in flexible and fixed exchange rate policy options as well as contributions to a theory of payments balance made by the Bellagio Group economists and by their contemporaries. The chapter begins with a brief history of exchange rate choice, moves to a general consideration of floating rates, then considers managed flexibility (slides, glides, crawls, etc.) and a theory of payments balance. The second half of the chapter considers the arguments of economists committed to fixed exchange rates and to an increase or decrease in the price of gold.

When Peter Ochswieser died in 1797, he left behind a widow, Margareth Kühe-bacherin. The couple had no children. In their marriage contract of 1784, they had agreed that if the marriage produced no off spring, the spouse who survived would have a lifelong right of usufruct to the other's assets. The right of usufruct meant that the widow, although not enjoying the status of owner, would be able to manage her deceased husband's property and use its profit for herself. She was not allowed to sell, mortgage or bequeath the house, but for her lifetime she could head the household and make all the decisions that arose in everyday life.

Within a regime of separate property, usufruct was an important balancing mechanism. When one of the spouses died, the wealth brought into the marriage by bride and bridegroom could otherwise be broken up into its original components. This was also true in the area studied in this paper, at least in terms of the formal legal situation. Certain women – women who held property as daughter-heirs, well-off widows or women who had themselves bought a house or a share in a house – remained in a comparatively secure position, but they were far fewer in number than women who had married into the property of their husband.