The successful late industrializing countries (the rest) followed a ‘low road’ to industrial development between 1850 and 1950 for lack of proprietary technology and related know‐how and skills. Although manufacturing experience accumulated, and the growth rate of output may even have increased, the rest could not industrialize fast enough just to keep pace with the North Atlantic. Few firms had been able to make the ‘three‐pronged investment’ to which the success of the modern business enterprise has been attributed: in up‐to‐date machinery and plants of optimal scale (large‐scale production units and capital investment); in managerial hierarchies and technological skills, as exemplified by the railroad industry; and in distribution networks. This chapter examines each of these qualifications in turn to try to understand why progress in the rest was so halting, covering high bankruptcy rates and low rates of return, imprudent financial practices, cheating, and fraud, and the role of North Atlantic emigration in the accumulation of manufacturing experience and skills. The final part of the chapter looks at finance in particular—investment, supply of capital, economic surpluses and fattening profits, speculation, and the ‘little push’ into heavy industry, as exemplified by the iron and steel industry.
Keywords: bankruptcy, capital investment, cheating, distribution networks, economic surpluses, emigration, finance, fraud, heavy industry, investment, iron and steel industry, late industrialization, management, manufacturing, manufacturing experience, newly industrialized countries, profits, speculation
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