Dearth of Investment Opportunities Can Deter Borrowers

The urbanization of the population alone created massive investment opportunities as rural workers needed accommodation when they migrated to the cities to work in factories. In terms of the availability of investment opportunities, it may be useful to divide the industrialization process into three...

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Bibliographic Details
Published inThe Other Half of Macroeconomics and the Fate of Globalization pp. 53 - 81
Main Author Koo, Richard C
Format Book Chapter
LanguageEnglish
Published United Kingdom John Wiley & Sons, Incorporated 2018
John Wiley & Sons, Ltd
Subjects
borrower availability
economic development
economic stagnation
Industrial Revolution
investment opportunities
Japanese industrialization
Post‐LTP China
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Summary:The urbanization of the population alone created massive investment opportunities as rural workers needed accommodation when they migrated to the cities to work in factories. In terms of the availability of investment opportunities, it may be useful to divide the industrialization process into three stages. These stages include urbanizing economies, which have yet to reach the Lewis Turning Point (LTP), maturing economies, which have already passed the LTP, and pursued economies, where the return on capital is higher abroad than at home. This chapter discusses these stages in more detail. It then discusses borrower availability. If there are no borrowers because businesses cannot find attractive investment opportunities, which were why the world experienced centuries of economic stagnation before the Industrial Revolution, a very different mindset is needed to address the problem. To begin with, there can be various reasons for this problem in the various stages of economic development, and each requires a different policy response.
ISBN:1119482151
9781119482154
DOI:10.1002/9781119482123.ch3