The imperfections of the capital market

The classical theory of capital is based on an ideal functioning of markets and assumes that economies have a great capacity for adjustment, goods being easily substitutable, supplies relatively elastic, prices flexible and markets composed of a large number of individuals. Nevertheless, most underdeveloped economies exhibit traits far removed from such assumptions. Are these traits important enough to modify the results of the classical model and explain the imperfections of the capital market? The author answers this question on the basis of a number of central concepts and the experience of the Colombian economy.