The seminar will be held fortnightly on Mondays, 5pm, in Room V112 (1st floor of Tower 2). Access is through Tower 1 for those without an LSE swipe-card.
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Monday May 10
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Speaker: Florian Ploeckl (Nuffield, University of Oxford)
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Title: Baden and the Zollverein, the internal impact of a customs union,
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Abstract: External changes, like tariff changes, can have geographically differential internal effects. Baden joined the Zollverein, a customs union of German states, in 1836, dropping all barriers towards its German neighbours, while raising them toward its foreign ones. These changes had an impact on the strength and shape of economic growth as well as the development of the industrial sector. Based on new archival data about Baden's commercial tax the paper documents regional growth paths based on a tax-based proxy. There is no general regional convergence during the 1830s and 1840s. In the direct aftermath of the Zollverein however, the poorer southern regions grew significantly faster than their richer northern counterparts for half a decade. Additionally the roles of urbanization and occupational shifts as mechanisms to transmit the effect of the Zollverein are investigated. The second part of the paper demonstrates that the Zollverein also affected the manufacturing sector, leading to statewide expansion as well as regionally differentiated structural change. This is combined with a discussion about the Zollverein's effect on foreign direct investment, which shaped the regional effects of the customs union's impact.
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Monday 24 May
Speaker: Stefano Battilossi (Universidad Carlos III de Madrid)
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Title: Banks’ FDIs in Emerging Markets during the First Globalization. Internal Advantages VS Gravity Forces
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Abstract: During the first globalization era, the number of banks from financially advanced Western countries with branches and subsidiaries in emerging peripheries of the world almost tripled, from 56 to 146. What drove their expansion abroad and determined their foreign location choice? The paper empirically explores this issue thanks to a unique data set that allows a global quantitative assessment of the magnitude, scope and spatial pattern of multinational banking (MNB) before 1914. The predictions of competing explanatory theories are tested on the base of an augmented gravity-like specification, comparable to the approach of recent studies of foreign direct investment and international trade of financial assets. The paper suggests that levels of economic development and bilateral trade integration, together with colonial relations, were the key determinants of banks’ entry decisions; these in turn were negatively affected by distance. Once entry decisions were taken, three main factors emerge as pulling forces of expansion overseas: the exploitation of rents created by trade dependence and colonial relationships. Distance had a positive impact, suggesting an attempt to overcome high information and monitoring costs due to geographical distance and low informational development. Also macroeconomic instability provided incentives to expansion. The results suggest that gravity forces were important for entry decisions in pre-1914 MNB, but lost relevance once the entry decision was taken. Beyond the entry thresholds, banks expanded relatively less into rich neighbouring markets than into distant and relatively poor locations. Their decisions were influenced less by proximity (geographical, social, institutional) than diversity. Forces of spatial dependence also contributed to shape the financial geography of the globalizing economy.