Foreign States in Domestic Markets

2021 ◽  
Author(s):  
Mark Thatcher ◽  
Tim Vlandas
Keyword(s):  
Political Economy ◽  
Financial Markets ◽  
Domestic Politics ◽  
National Policy ◽  
Sovereign Wealth Funds ◽  
Policy Makers ◽  
Domestic Markets ◽  
The Us ◽  
The Uk ◽  
Domestic Economies

Political economy debates have focused on the internationalization of private capital. But foreign states increasingly enter domestic markets as financial investors. How do policy makers in recipient countries react? Do they treat purchases as a threat and impose restrictions or see them as beneficial and welcome them? What are the wider implications for debates about state capacities to govern domestic economies in the face of internationalization of financial markets? In response, the book develops the concept of ‘internationalized statism’—governments welcoming and using foreign state investments to govern their domestic economies—and applies it to the most prominent overseas state investors: Sovereign Wealth Funds (SWFs). Many SWFs are from Asia and the Middle East and their number and size have greatly expanded, reaching $9 trillion by 2020. The book examines policies towards non-Western SWFs buying company shares in four countries: the US, the UK, France, and Germany. Although the US has imposed significant legal restrictions, the others have pursued internationalized statism in ways that are surprising given both popular and political economy classifications. The book argues that the policy patterns found are related to domestic politics, notably the preferences and capacities of the political executive and legislature, rather than solely economic needs or national security risks. The phenomenon of internationalized statism underlines that overseas state investment provides policy makers in recipient states with new allies and resources. The study of SWFs shows how and why internationalization and liberalization of financial markets offer national policy makers opportunities to govern their domestic economies.

Foreign States in Domestic Markets

2021 ◽  
pp. 132-150
Author(s):  
Mark Thatcher ◽  
Tim Vlandas
Keyword(s):  
Financial Markets ◽  
The State ◽  
Political Strategies ◽  
Sovereign Wealth Funds ◽  
Policy Makers ◽  
Domestic Markets ◽  
National Differences ◽  
Role Of The State ◽  
The Uk ◽  
Domestic Economies

Comparison of the four countries shows that internationalized statism has developed in the UK, France, and Germany in ways that appear surprising given both popular and academic writings, although there are important cross-national differences in its forms. The US has seen the lowest level of internationalized statism, whereas the UK has pursued extensive and undirected internationalized statism. France and Germany occupy intermediate and more directed forms of internationalized statism. The findings cannot be fully explained by the Sovereign Wealth Funds’ (SWFs’) countries of origin and their choice of investments and also run counter to several expectations about the role of the state and general economic openness. Instead, the chapter offers a political and statist analysis of the growth of internationalized statism by looking within the state, notably at its structure, and the political strategies of policy makers. It also develops wider implications for political economy debates. The findings add to new statist arguments that the state is an active participant in internationalized and liberalized financial markets. Policy makers can use overseas state investors to pursue their domestic political strategies and adapt traditional forms of ‘industrial policies’. Internationalized statism shows that states can use developments in financial markets to find new resources and allies from overseas states to govern their domestic economies. By bringing in the state as an international investor, it shows how liberalization and internationalization can offer novel opportunities for states.

Multilateral governance of financial markets: the case of sovereign wealth funds

2020 ◽  
Vol 61 (4) ◽  
pp. 391-410
Author(s):  
George Gilligan
Keyword(s):  
Financial Markets ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Sovereign Wealth Funds ◽  
Investment Activity ◽  
Fund Managers ◽  
The Great Depression ◽  
The Us ◽  
The Uk

The glaring deficiencies of the US sub-prime market in 2007 evolved through 2008 and 2009 into a fully blown global financial crisis (GFC), the worst since the Great Depression of the 1930s. That in turn has spawned sovereign debt crises in a number of European countries in 2010, most dramatically in Greece and Ireland. These events have prompted not only national responses, such as the austerity budgets that have been handed down by a large number of European governments including Greece, Spain and the UK, but also multilateral regulatory initiatives under the auspices of organisations such as the G202 and the International Monetary Fund (IMF). Governments across the world have felt compelled to hurl billions ofdollars into saving financial institutions from collapse, in some jurisdictions effectively the nationalisation of some banks. The regulatory landscape of the financial sector both nationally and internationally is being dramatically reshaped. This increasing regulatory activism of the state is clearly recognised and has received widespread support. What is less widely known is the increasing number of jurisdictions in recent years that are ramping up their levels of investment activity and the potential regulatory repercussions of larger staterelated pools of capital in international financial markets. This paper considers the issue of multilateral regulation of financial markets through the lens of Sovereign Wealth Funds (SWFs),3 discussing their evolution, especially the implications of their increasing size and prevalence in relation to developments in multilateral governance of the financial sector. The paper incorporates the findings of a number of semistructured interviews (n = 42) with SWF stakeholders in Australia, China, Norway, the UK and the US. Those interviewed include: SWF personnel, regulators (both national and international), analysts, bankers, brokers, fund managers, governance professionals, academics and financial journalists.

Internationalized Statism

2021 ◽  
pp. 12-31
Author(s):  
Mark Thatcher ◽  
Tim Vlandas
Keyword(s):  
Capital Flows ◽  
National Policy ◽  
Analytical Framework ◽  
The West ◽  
Sovereign Wealth Funds ◽  
Policy Makers ◽  
Explanatory Factors ◽  
Role Of The State ◽  
Domestic Economies

This chapter sets out the analytical framework of ‘internationalized statism’ developed and applied in the book. Although the West is said to be living in an age of internationalized ‘economic (neo-)liberalism’, where capital flows have been liberalized, a ‘new statist’ literature argues that the role of the state has not declined as it adapts and finds novel instruments and forms of action to govern economies. Building on new statist studies, the chapter introduces the concept of ‘internationalized statism’: policies to use foreign states to govern domestic economies. It develops the concept, notably by distinguishing between the extent and form of internationalized statism. It underlines that whilst most political economy studies have focused on private international capital flows, states themselves can use liberalization of financial markets to cross borders, offering new opportunities for policy makers in recipient states to find allies and resources for economic governance Policies towards equity investments bynon-Western Sovereign Wealth Funds (SWFs) offer an empirically and theoretically important example of internationalized statism: SWFs are large and growing; most SWFs are in non-democratic countries; equity purchases offer the potential for overseas influence or control over companies. The chapter then sets out the book’s research design: four country case studies are chosen because of variations in different relevant explanatory factors. It concludes that the concept of internationalized statism contributes to understanding how national policy makers use state economic internationalization to govern their domestic economies.

Introduction

2021 ◽  
pp. 1-11
Author(s):  
Mark Thatcher ◽  
Tim Vlandas
Keyword(s):  
Political Economy ◽  
Middle East ◽  
The State ◽  
Private Capital ◽  
Economic Openness ◽  
Sovereign Wealth Funds ◽  
Cross Border ◽  
Economic Actor ◽  
Domestic Economies

This introductory chapter offers an overview of the book. It identifies the growing size and importance of overseas state investors and how they challenge current political economy analyses of the state. The phenomenon is well illustrated by Sovereign Wealth Funds (SWFs): state-owned investment bodies, often from Asia and the Middle East, that have bought shares in major firms in strategic sectors ranging from finance to communications and transport, as well as landmark buildings. The chapter presents the puzzle of the widespread acceptance of SWF investments: national responses to SWF purchases might have been expected to be hostile, especially as they represent entry into Western stock markets by non-Western overseas states. Yet many Western governments have accepted and often actively encouraged SWF investments, seeing them as an additional means to govern their domestic economies and pursue their political strategies. The chapter then situates this puzzle in the wider political economy literature on the role and power of the state in an increasingly internationalized economy. It argues that recent political economy works focus on the internationalization of private capital, ignoring the capacity of the state itself to become a cross-border economic actor. It summarizes the book’s findings that several Western governments have engaged in internationalized statism, underlining that the patterns of policy differ sharply from those that might be expected given popular and academic views of economic openness.

Comparative and International Political Economy and the Global Financial Crisis

2017 ◽  
Author(s):  
Alison Johnston
Keyword(s):  
International Economic ◽  
Political Economy ◽  
Financial Crisis ◽  
Financial Markets ◽  
Domestic Politics ◽  
Global Financial Crisis ◽  
International Political Economy ◽  
Debt Crisis ◽  
European Debt Crisis ◽  
Foreign Credit

The 2008 Global Financial Crisis (GFC) and subsequent European Debt Crisis had wide-sweeping consequences for global economic and political stability. Yet while these twin crises have prompted soul searching within the economics profession, international political economy (IPE) has been relatively ineffective in accounting for variation in crisis exposure across the developed world. The GFC and European Debt Crisis present the opportunity to link IPE and comparative political economy (CPE) together in the study of international economic and financial turmoil. While the GFC was prompted by the inter-connectedness of global financial markets, its instigators were largely domestic in nature and were reflective of negative externalities that stemmed from unsustainable national policies, especially those related to financial regulation and household debt accumulation. Many in IPE take an “outward looking in” approach to the examination of international economic developments and domestic politics; analysis rests on how the former impacts the latter. The GFC and European Debt Crisis, however, demonstrate the importance of a (CPE-based) “inward looking out” approach, analyzing how unique policy and political features (and failures) of individual nation states can unleash economic and financial instability at the global level amidst deepened economic and financial integration. IPE not only needs to grant greater attention to variation in domestic politics and policies in a time of closely integrated financial markets, but also should acknowledge the impact of a wider array of actors beyond banks and financial institutions (specifically more domestically rooted actors like households) on cross-national variation in the consumption of foreign credit.

Another Look at the Tuesday Effect in Australia

2004 ◽  
Vol 07 (01) ◽  
pp. 77-89 ◽  
Author(s):  
Chien-Ting Lin ◽  
Lee-Kian Lim
Keyword(s):  
Financial Markets ◽  
Weekend Effect ◽  
The Us ◽  
The Uk

Weekend effects have been well known in many financial markets. Australia however displays its effect on Tuesdays rather than on Mondays. In this study, we investigate on the possible linkage between the US Monday and Australian Tuesday returns. We document that the Tuesday effect in Australia is one-way Granger caused by the weekend effect in the US conditional on the weekend effects in the UK and Japanese markets. Furthermore, in the post-1987 period where the US Monday returns are positively significant, the Australian Tuesday return also turns out to be positive. This latter finding provides further evidence that the anomaly in Australia is induced by the weekend effect in the US.

The Impact of the Chinese Sovereign Wealth Funds (SWFs) On Sino-EU Relations: The Leverage between Investment and Human Rights

2016 ◽  
Vol 7 (2) ◽  
Author(s):  
Qingxiu Bu
Keyword(s):  
Human Rights ◽  
Financial Markets ◽  
Regulatory Framework ◽  
Capital Investments ◽  
Host Countries ◽  
Sovereign Wealth Funds ◽  
Policy Makers ◽  
Protection Of Human Rights ◽  
The Impact

AbstractSovereign wealth funds (SWFs) have been rapidly redefining the traditional paradigms, providing both much-needed capitals as well as posing particular challenges for policy makers. The role of SWFs, which are becoming increasingly involved in the global financial markets, has often been underestimated in the discourse of the protection of human rights. The tâtonnement processes of bargaining between home and host countries of SWFs indicate that the concern regarding human rights has maintained a sensible balance between protecting the rights of individuals and the benefits that large capital investments offer for both host and home countries. The challenge still remains as to whether the presumption that the promotion of SWFs investment is going to retard the promotion of human rights would not be rebutted even in terms of the new global regulatory framework.

scholarly journals FINANCIAL CONTAGION BETWEEN THE US AND EMERGING MARKETS: COVID-19 PANDEMIC CASE

2020 ◽  
Author(s):  
Paula Heliodoro ◽  
◽  
Rui Dias ◽  
Paulo Alexandre ◽  
◽  
...  
Keyword(s):  
Financial Markets ◽  
Latin American ◽  
Stock Markets ◽  
Null Hypothesis ◽  
Sustainable Growth ◽  
Financial Contagion ◽  
Policy Makers ◽  
Global Pandemic ◽  
The Us ◽  
Bds Test

To realise how crises are disseminated is relevant for policy makers and regulators in order to take appropriate measures to prevent or contain the propagation of crises. This study aims to analysis the financial contagion in the six main markets of Latin America (Argentina, Brazil, Chile, Colombia, Mexico and Peru) and the USA, in the period 2015-2020. Different approaches have been undertaken to carry out this analysis in order to consider the following research question, namely whether: (i) the global pandemic covid19 has accentuated the contagion between Latin American financial markets and the US? The results of the autocorrelation tests are totally coincident with those obtained by the BDS test. The rejection of the null hypothesis, i.i.d., can be explained, among other factors, by the existence of autocorrelation or by the existence of heteroscedasticity in the stock market index series, in which case the rejection of the null hypothesis is explained by non-linear dependence on data, with the exception of the Argentine market. However, significant levels of contagion were expected to occur between these regional markets and the US as a result of the global pandemic (Covid-19), which did not happen. These results may indicate the implementation of efficient diversification strategies. The authors consider that the results achieved are relevance for investors who seek opportunities in these stock markets, as well as for policy makers to carry out institutional reforms in order to increase the efficiency of stock markets and promote the sustainable growth of financial markets.

Factors for Global Diffusion of the Internet

2011 ◽  
pp. 1522-1526
Author(s):  
Ravi Nath ◽  
Vasudeva N.R. Murthy
Keyword(s):  
The Internet ◽  
Key Factors ◽  
Political Leaders ◽  
Policy Makers ◽  
Overwhelming Evidence ◽  
Internet Diffusion ◽  
The Us ◽  
The World ◽  
Diffusion Rates ◽  
The Uk

There is overwhelming evidence that the use of the Internetenabled applications and solutions provide unprecedented economic growth opportunities. However, the Internet diffusion rates remain low in many countries. According to the International Telecommunications Union (ITU), in 2004, less than 3% of the Africans used the Internet, whereas the average Internet subscription rate for G8 countries (Canada, France, Germany, Italy, Japan, Russia, the UK, and the US) is about 50%. Also, in nearly 30 countries the Internet penetration rates still remain below 1% (ITU, 2006). So, what are the key factors that explain this wide variation in Internet subscription rates in countries around the world? An understanding of these factors will be highly useful for policy makers, economic developmental agencies and political leaders in establishing and implementing suitable national developmental strategies and policies.

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