EH.Net Abstracts in Economic History

            EHS Abstract Submission
                    (c) 1997 EH.Net
-----------------------------------------------------------
              Name:  Stephen Haber
               Email:  haber at leland.stanford.edu
         Institution:  History Department, Stanford University  

         Co-author:  None
 
             Title:  The Efficiency Consequences of Institutional
Change: Financial Market Regulation and Industrial Productivity
Growth in Brazil, 1866-1934  

  Internet Address
of abstracted work:  Not available on the Internet  

           By mail:  
                     School of Humanities and Sciences
                     Stanford University
                     Building 1 
                     Stanford, CA 94305-2070
                     USA
 
          Language:  English
 
          Abstract:
   This paper examines one of the central hypotheses of the New
Institutional Economics: that the reform of institutions--the
rules and regulations enforced by the state that both permit and
bound the operation of markets--is crucial for the process of
economic growth. It examines this hypothesis by estimating the
productivity gain afforded to Brazilian textile firms by the
reform of the regulations governing Brazil's security markets in
1890.  This analysis is based on panel data regressions on
eighteen firm-level censuses covering the period 1866-1934, which
permit me to decompose total factor productivity growth.  These
censuses cover both limited liability joint-stock companies and
corporations as well as privately owned firms.	I also analyze
corporate financial statements and stock market data for publicly
held firms covering the period 1895-1940.  The paper argues that
the reform of the regulations pertaining to limited liability and
mandatory disclosure permitted the widespread use of Brazil's
debt and equity markets to mobilize capital for industry.  This
meant that the capital constraints faced by firms prior to the
1890s were relaxed.  The result was an increased rate of
investment, a decline in industrial concentration, and
accelerated rates of growth of productivity.
 
      Bibliography:  Haber, Stephen. "The Efficiency Consequences
of Institutional Change: Financial Market Regulation and
Industrial Productivity Growth in Brazil, 1866-1934,"  NBER,
Series on Historical Factors in Long Run Growth, Historical Paper
no. 94 (November 1996).
 
                  Subject:  D
 Geographical Area:  5
      Country/Region:  Brazil
           Time Period:  8