Abstract: Changing and Persisting Patterns of International Investment: French and German Capital in Nineteenth- and Twentieth-Century Spain

Núria Puig and Rafael Castro


In this paper, we address the long-term evolution of international investment, examining patterns in two major home economies (France and Germany) and a major host economy (Spain) over 150 years. We look at French and German investment models, the ways they related to the wide institutional context, cultural background, and technological and organizational abilities of French and German firms, and how they have changed in response to challenges. We pay particular attention to the predominantly "political" versus "technical" nature of French and German investment, as well as to business and economic diplomacy in each country. We conclude that, although both models show a considerable degree of inertia over time, the French pattern underwent significant changes that helped French capital and expertise to overcome a long period of decline and play a leading role in Spain's late industrialization and ongoing transformation into a service economy. In contrast, the German pattern was strikingly stable, closely linked to German firms' original focus and capabilities as they overcame major exogenous shocks in the central decades of the twentieth century.

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