The Integration of Product and Capital Markets

Abstract

As we pointed out in Chapter 3, European commodity and capital markets were on their way to an effective integration centuries before 1850, and we believe that we can show that, by the beginning of the twentieth century, Europe was for many purposes a truly integrated economy, possessing the characteristics which a century later are often associated with the word ‘global’. In a way, this theme has marked our study throughout, and this chapter contains some of the most important evidence in support of this view. We have pursued this topic in earlier chapters, having already discussed the real growth of these economies as well as the growing integration of their financial sectors during this period. In this chapter we add an analysis of the integration of exports and imports, investment expenditures and, finally, nominal and real interest rates. Real integration involves more than these topics, to be sure, and so we shall add a discussion of the integrated business cycle in Chapter 9, as well as a general summary, in Chapter 10, to complete the story.