ABSTRACT

There are lessons for the development of emerging market economies in the historical evolution of what has become the global economy. One modest example is dividend policy. Around the turn of the century in the United States and Great Britain, the role of dividends was to build confidence in a corporation. So to convince people who have a relatively high propensity to consume, who have no experience with financial markets, and who have no understanding of financial statements to place their money or to leave their money in securities, the recommendation of the historical record is that new or newly-privatized corporations ought to be paying out generous dividends on their common stock on a regular basis. History also shows some alternative policies corporations could use to build up trust without exacerbating the problems of capital inadequacy that are especially severe during the adaptation to newly-encountered global competition.

Of all kinds of capital, the most productive in business is confidence, and if you do not know that you do not know anything.-Demosthenes 1