Foreign capital in 19th century Spain's investment boom Articles uri icon

publication date

  • October 2018

start page

  • 1

end page

  • 18

International Standard Serial Number (ISSN)

  • 1361-4916

Electronic International Standard Serial Number (EISSN)

  • 1474-0044

abstract

  • Spain's investment boom (1850&-1874) has been largely attributed to capital inflows. Sudrià challenged the consensus on the basis of Moro et al. capital balance estimates. Dishoarding of bullion and previous savings would have catered for an increasing investment demand. I argue that the empirical basis for Sudrià's claim is flawed. Moro et al. underestimated the net capital inflow and biased upwards the change in reserves. The current account deficit resulted from an inflow of capital that allowed investment to raise facilitating imports of capital goods and raw materials. Foreign capital contributed significantly to the investment boom.