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Financing China’s cotton textile industry: 1890–1936

Author

Listed:
  • Dong, Baomin
  • Peng, Kaixiang
  • Sun, Jianguo

Abstract

The cotton textile industry was the primary source of Britain’s industrial revolution and Japan’s economic takeoff. The Chinese domestic mechanized cotton textile industry experienced a boom during the interwar period and became the leading industry in the manufacturing sector, although it failed to gain domestic leadership against Japanese funded firms. There is a debate on the role of external finance on firm growth both in the contemporary context and historical cotton textile industry context. The literature offers several competing hypotheses on the relationship between capital and industry growth such as “modernization”, “oppression” and “efficiency” argument. Our empirical results using firm level data between return of capital and the size of the capital indicate a clear positive effect of external finance on firm growth. This supports the “modernization” hypothesis and suggests that the causes of the mediocre performance of the Chinese-owned spinners relative to Japanese mills may have been mismanagement, undercapitalization, lack of reinvestment incentives, and low labor productivity etc.

Suggested Citation

  • Dong, Baomin & Peng, Kaixiang & Sun, Jianguo, 2022. "Financing China’s cotton textile industry: 1890–1936," Journal of Asian Economics, Elsevier, vol. 79(C).
  • Handle: RePEc:eee:asieco:v:79:y:2022:i:c:s1049007822000136
    DOI: 10.1016/j.asieco.2022.101453
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    References listed on IDEAS

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    More about this item

    Keywords

    Cotton textiles; Finance; Industrialization;
    All these keywords.

    JEL classification:

    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
    • N85 - Economic History - - Micro-Business History - - - Asia including Middle East

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