... economy. According to Davis and Huttenback, investment funds flowed to the projects paying the highest returns, allowing for risk. In the period 1860-1912, higher safe returns could be gained from investment in other parts of the British Empire such as Australia or in foreign countries such as the USA than in the UK. Moreover, McCloskey claims that there was no unemployment in the UK, which means domestic investment could not have increased output. So given the UK's surplus savings, overseas investment arguably maximised national income and therefore welfare derived from spending the income, since there was no better use of funds possible. However, Crafts and Kennedy argue that the UK's economic growth could have been higher with more domestic investment. Contrary to McCloskey's claim, up to 7% of all workers may have been unemployed, and more domestic investment could have eliminated this unemployment, especially in the building trade according to Clapham. ...

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