SWFsEUROPE

Publications

Dixon, A.D., Schena, P., Capapé, J. (2022) Sovereign Wealth Funds: Between the State and Markets. Agenda

What constitutes a sovereign wealth fund is contested. In general, however, it is a state-sponsored institutional investor that is answerable only to the state and makes investments according to the interests and mandate of that state. Different types of funds have emerged in the context of particular economic conjunctures, and over the last decade the number of sovereign wealth funds has grown substantially, with total assets exceeding $7 trillion. This trend is set to continue, as more and more countries look to establish an SWF. The place of SWFs in global financial markets may appear settled, but this does not mean that concerns about “state capital” and its place in financial markets has gone away. This short book offers an incisive discussion of the development of this class of investor, how they have become legitimate actors in global financial markets, and their role as providers of capital and in economic development at home and abroad.

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Babić, M., Dixon, A.D., and Fichtner, J. (2022) Varieties of state capital: What does foreign state-led investment do in a globalized world? Competition and Change.

Existing studies have scrutinized the rise of states as global owners and investors, yet we still lack a good understanding of what state investment does in a globalized economy, especially in host states. Comparative capitalisms research has analyzed foreign state investment as a potential source of patient capital for coordinated and mixed-market economies. However, this patient capital framework cannot explain the recent surge of protectionist sentiments, even among the “good hosts” of state-led investment. Therefore, we go beyond the patient capital argument and develop a novel framework centered on the globalized nature of foreign state investment. We create and empirically illustrate a novel typology based on different modes of cross-border state investment—from financial to strategic—and different categories of host states. Our results provide a new pathway to study the rise and effects of cross-border state investment in the 21st century.

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Babić, M., Dixon, A.D., and Liu I. (eds.) (2022) The Political Economy of Geoeconomics: Europe in a Changing World. Palgrave

This book brings together researchers from different analytical perspectives for the study of contemporary geoeconomics to create a broader and more useful catalogue of conceptual tools, empirical entry points, and case studies around the subject. The distinctive contribution this book offers is its firm rooting in International Political Economy and the hitherto under-researched geoeconomics dynamics of Europe. Many existing accounts of geoeconomics have been developed in International Relations and often reproduce some of the state-centric and static assumptions of the discipline. Recent scholarship furthermore tends to focus on the US-China rivalry, thus discounting the role of other global powers in shaping geoeconomics. As a first collective contribution to the topic in the field of International Political Economy, the book stands to become a major reference point in the field for the coming years. Interest in geoeconomics as well as in related concepts like weaponized interdependence or emerging new rivalries has been on the rise in recent years and will be one of the key research areas in the coming decade of transition and change in Europe and beyond.

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Liu, I., and Dixon, A.D. (2022) What does the state do in China’s state-led infrastructure financialisation? Journal of Economic Geography. 

China’s state-led financialisation of infrastructure is an alternative narrative to prevailing accounts of neoliberal financialisation in the advanced capitalist core, where the expansion of private market-based finance-led growth is theorised to transform traditional forms of public infrastructure development and production-based growth. Drawing on the case of Chinese state capital investment in Europe, we demonstrate empirically how the imperative to financialise infrastructure development is emergent from and contingent upon a productivist mode of capitalist development. We articulate two key transformations in which Chinese state capital is being used to leverage financial best practice and its network properties in service of the real economy.

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Babić, M., and Dixon, A.D. (2022) Is the China Effect Real? Ideational Change and the Political Contestation of Chinese State-Led Investment in Europe. The Chinese Journal of International Politics.

Chinese outward investment is increasing in its relevance for the global economy, and its effects on host states are increasingly being scrutinized globally. While European policy-making was ambiguous about the question of hosting Chinese state-led investment (CSLI) in the early 2010s, we can observe a recent surge of protectionist legal measures across Europe. What explains this trend among different European countries? Through the lens of incremental ideational change, we hypothesize that the rise of China as a global investor shifts the perceptions of policy-makers away from being a source of investment toward a potential threat to national security. We argue that this China effect affects advanced European economies similarly. We provide evidence by studying the shift in perceptions among policy-makers in a coordinated and a liberal market economy, Germany and the UK. By drawing on document analysis and expert interviews, we unpack the policy processes in both countries in the last decade. Despite being two dissimilar cases, both show a similar outcome in increasingly curbing CSLI on the grounds of national security reasons. Our results add important insights to recent International Political Economy discussions on the “geopoliticization” of European trade and investment rules in the face of a rising China.

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Alami, I., and Dixon, A.D. (2022) “Expropriation of Capitalist by State Capitalist:” Organizational Change and the Centralization of Capital as State Property. Economic Geography

State enterprises, sovereign funds, and other state–capital hybrids have become major engines of global capitalism. How can we explain their global rise and organizational transformation into increasingly sophisticated and globally competitive forms? Why do they increasingly emulate the practices and organizational goals of comparable private-sector entities, adopt the techniques of modern finance, resort to mixed ownership, and extend their operations across geographic space? After critically engaging with arguments that emphasize the role of firm strategies, developmentalist logics, financialized norms, and Polanyian double movements, we develop an explanatory model of organizational change grounded in historic–geographic materialism and economic geographies of the firm. We locate the expansion of state ownership (the role of states as owners) in the historic development and geographic remaking of global capitalism and, in particular, the emergence of a new constellation of international divisions of labor. This created the conditions for a massive round of centralization of capital as state property (the mass of capital controlled by states) since the early 2000s. The modern, marketized, globally spread state–capital hybrid emerged as an organizational fix to mediate the geographic contradictions and imperatives associated with this process. Purposive organizational adaption consisted in developing new skills, operational capabilities, and mixed-ownership structures in order to leverage the financial system, allow for the development of liquid forms of state property, and facilitate the expansion of the latter into global circuits of capital. As such, the article contributes to debates on the role of the state in global value chains, the firm-state nexus, and state capitalism.

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Alami, I., Babić, M., Dixon, A.D., Liu, I. (2022) Special issue introduction: what is the new state capitalism? Contemporary Politics

This article introduces and lays the groundwork for this Contemporary Politics special issue on the ‘new’ state capitalism. We start by noting that the rubric state capitalism tends to elicit paradoxical responses, from uncritically embracing the term and overstretching its realms of application, to rejecting its validity altogether. We argue that the source of such ambivalence resides in issues of conceptual definition, which have led to a number of analytical impasses. We propose instead to construe state capitalism as a set of critical interrogations concerning the changing role of the state, thereby introducing a degree of plasticity in the use of the category. We call this the problématique of state capitalism. We subsequently identify three major themes that are explored in this dedicated issue, and that warrant further research in light of the COVID-19 pandemic, namely (1) its class underpinnings, (2) its global nature, and (3) its relational character.

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Babić, M. (2021) State capital in a geoeconomic world: mapping state-led foreign investment in the global political economy. Review of International Political Economy.

What are the consequences of the rise of foreign state-led investment for international politics? Existing research oscillates between a ‘geopolitical’ and a ‘commercial’ logic driving this type of investment and remains inconclusive about its wider international reverberations. In this paper, I suggest going beyond this dichotomy by analyzing its systemic consequences. To do so, I conceptually delineate a geoeconomic approach that emphasizes the globalized nature of foreign state investment. I argue that foreign state investment creates system-level patterns, which can be studied by observing similar sectoral and geographic investment behavior. I map this phenomenon globally for the first time, drawing on the largest dataset on foreign state investment. Empirically, I show how foreign state investment is highly concentrated in Europe, North America and East Asia, and is owned by a handful of dominant states. It is especially European geo-industrial clusters that represent the hotspots of such concentration. The findings also suggest that three global industries – energy production, high-tech manufacturing, and transportation and logistics – form the key areas for current and future state-led investment concentration. With these contributions, the paper illuminates the increasing presence of states as owners in the global political economy, and facilitates its study as a geoeconomic phenomenon.
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Increasing Chinese investment has raised the spectre of strategic state influence in Europe, yet the transformative potential of state capital as a global phenomenon remains under-explored. This article sheds light on the dual imperatives of transnationalizing state capital wherein the movement of capital entails both profit maximization and the extra-profit interests of the state. State-capitalist entities such as sovereign wealth funds (SWFs) are both market-facing and politically driven, disrupting ideological norms surrounding the strictly safe-keeper role of the state in private capital accumulation. The authors draw on the case of the China Investment Corporation, China’s premier SWF, to argue that the transnationalization of state capital is a process deeply embedded in the liberal international order, and that it signals the metamorphosis of global capitalism in palimpsest-like ways. The global financial professions, namely investment banking, corporate law and management consulting along with other advisory services, have legitimated state capital by normalizing its political origins through technocratic, expert-driven practice to the effect that it is treated as no different from private capital in global capital networks. The article identifies three logics of practice by which professionals legitimate state capital: adoption, alliance and recreation of financial practices that have facilitated the embeddedness of state capital in global markets.
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Alami, I., and Dixon, A.D. (2021) Uneven and combined state capitalism. Environment and Planning A: Economy and Space.

This article contributes to the development of state capitalism as a reflexively critical project focusing on the morphology of present-day capitalism, and particularly on the changing role of the state. We bring analytical clarity to state capitalism studies by offering a rigorous definition of its object of investigation, and by demonstrating how the category state capitalism can be productively construed as a means of problematising the current aggregate expansion of the state’s role as promoter, supervisor and owner of capital across the world economy. Noting some of the geographical shortcomings of the field, we outline an alternative research agenda ‘uneven and combined state capitalist development’ which aims at spatialising the study of state capitalism and revitalising systemic explanations of the phenomenon. Rather than the negation of an abstract model of free-market capitalism, or the rise of a nationally scaled variant of capitalism, we posit contemporary state capitalism as a global process of restructuring of the capitalist state (including in its liberal form) underpinned by secular transformations in the materiality of surplus-value production, such as the consolidation of new international divisions of labour driven by automation and labour-saving technologies. The political mediation of these transformations results in the combined expansion of state-capital hybrids and of muscular forms of statism, which develop in inter-referential and cumulative forms across territory, producing further state capitalist modalities. This is a particularly potent dynamic in contemporary state capitalism, and its tendency to develop in a spiral that both shapes and is shaped by world capitalist development.
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Ilias Alami, Adam D Dixon, Ruben Gonzalez-Vicente, Milan Babic, Seung-Ook Lee, Ingrid A. Medby & Nana de Graaff (2021) Geopolitics and the ‘New’ State Capitalism, Geopolitics.

We may be witnessing the emergence of a new ‘state capitalist’ normal, a term this Forum proposes to problematise in its geopolitical dimensions. The growing prevalence of state-sponsored entities (encompassing state enterprises, policy banks, and sovereign wealth funds) as leading vehicles of economic activity is a defining feature of our times. This reassertion of state authority is altering configurations of state and corporate power across the world economy while generating a multiplicity of geopolitical tensions. This Forum reflects upon what it means, theoretically, methodologically, and politically, to articulate a geopolitics of contemporary state capitalism. It brings together interventions which draw on various theoretical approaches, including critical political geography, historical materialism, geographical political economy, and power structure research, in order to probe into the multiple spatialities at the core of contemporary state capitalism. The contributions aim to destabilise the assumptions and taken-for-granted ideas which have largely framed the debate thus far, including problematic binaries such as liberal/illiberal, state/market, commercial/geopolitical logics, and realist narratives of interstate power-maximising behaviour. Studying the (geo)political re-organisation of global capitalism requires moving beyond the castigation of a ‘rogue’ state capitalism as well as narratives of a clash between rival political-economic models, and disassembling the category state capitalism.
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Babić, M. (2021) The COVID-19 Pandemic and the Crisis of the Liberal International Order: Geopolitical Fissures and Pathways to Change. Global Perspectives 2(1), 24051. [Link to file]

The COVID-19 pandemic accelerates and exacerbates many preexisting tendencies in the global political economy. Consequently, the crisis of the liberal international order (LIO), which has been ongoing for several years, is also being affected by the pandemic. These effects are, however, not uniform: some aspects of the crisis of the LIO, as a multidimensional phenomenon, are under more pressure than others. In this article, I detail these varied effects with a specific focus on questions of geopolitics and hegemonic change. I argue that especially the societal level, where socioeconomic distortions and popular discontent are long-existing drivers of crisis, will be severely hit by the social and economic fallout of the pandemic. I conclude by suggesting a set of hypotheses regarding the effects of the COVID-19 pandemic on the crisis of the LIO that can be tested once more data becomes available.
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Alami, I., Dixon, A.D., E. Mawdsley (2021) State Capitalism and the New Global D/development RegimeAntipode

Official discourses of Development are being redefined. If the key geopolitical contexts shaping the post‐war Development project were decolonisation and the Cold War, the defining world‐historical transformations shaping the emerging vision of Development are the expansion of state capitalism and the rise of China. The IMF, the World Bank, the OECD, the G20, other multilaterals, and bilateral partners are increasingly taking stock of the rise of state capitalism, and acting as ideational vectors of this emerging regime. However, this new “state capitalist normal” is also portrayed as carrying risks. There is anxiety regarding the direction the political form of global capital accumulation is heading: with the unchecked proliferation of state capitalism possibly blunting competition, politicising economic relations, and intensifying geoeconomic tensions. This anxiety underwrites the current re‐articulation of Development, one which embraces the state as promoter, supervisor, and owner of capital; even as it critiques China’s use of similar instruments.
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Dixon, A.D., (2020) The Strategic Logics of State Investment Funds in Asia: Beyond FinancialisationJournal of Contemporary Asia.

Financialisation presents a constraint on state power. It also offers opportunities. State-led development, with the Asian experience at the forefront, is increasingly operationalised through different forms of state investment funds. Some of these funds have a strategic development mandate underwritten by a shareholder-value logic. While financialisation as a concept gives meaning to the embrace of the shareholder value model to explain the convergence of sovereign funds with operational practices and guiding norms of conventional financial market actors, it is insufficient in explaining how and why state investment funds differ from conventional financial actors and the underlying political dynamics that drive their emergence and evolution. To address this gap, this article advances three strategic logics: a developmental logic, a logic of regime maintenance, and a geo-political legitimacy logic. Reference to these logics provides a more nuanced understanding of state financialisation, avoiding a potentially narrow reading presented by the convergence dynamics inherent in the adoption of conventional financial practices. As such, this article contributes to emerging debates in political economy on the employment of financial logics in the pursuit of economic and political statecraft. The argument is developed empirically through an analysis of strategic investment funds in Singapore, Malaysia and Kazakhstan.
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Alami, I. and Dixon, A.D., (2020) The strange geographies of the ‘new’ state capitalismPolitical Geography.

The recent polymorphism of state intervention and attendant political geographies have been interpreted as a return of state capitalism. While commentators across the social sciences have offered competing characterizations of the new state capitalism, little attention has been dedicated to how narratives and geographical imaginaries of the new state capitalism operate as a form of geopolitical knowledge and practice. Drawing upon critical geopolitics, we make three main arguments. First, we examine the context of wider geopolitical and geo-economic shifts in which the social construction of the geo-category has happened. We contend that the emerging new spatiality of the global economy has prompted the need for new discursive frames and geopolitical lines of reasoning. Second, we argue that this need is fulfilled by the geo-category state capitalism, which acts as a powerful tool in categorizing and hierarchizing the spaces of world politics. It does so by reinstituting a simple narrative of competition between two easily identifiable protagonists – (Western) democratic free-market capitalism and its deviant ‘other’, (Eastern) authoritarian state capitalism – and by reactivating older geopolitical grand narratives. Third, the geo-category state capitalism discursively enables Western business and state actors to justify tougher policy stances in three areas: foreign policy; trade, technology, and investment regulation; and international development.
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Alami, I. and Dixon, A.D., (2020) State capitalism(s) redux? Theories, tensions, controversies, Competition & Change, 24(1), 70-94.

This article interrogates the notion of state capitalism, exploring the contributions and limits of the concept as a means of theorizing the more visible role of the state across the world capitalist economy. We critically synthesize the key arguments, outlining commonly cited properties and practices of state capitalism, in three bodies of literature: strategic management, comparative capitalism and global political economy. We find that the term not only lacks a unified definition, but actually refers to an extremely wide array of policy instruments, strategic objectives, institutional forms and networks, that involve the state to different degrees. For this proliferation of competing usages to be productive and not lead to analytical impasses, we argue that there is a need for a heightened level of reflexive scrutiny of state capitalism as a category of analysis. In that spirit, we identify three issues that the literature must further grapple with for the term to be analytically meaningful, that is, capable of rendering (state)capitalist diversity amenable to analysis and critique: (1) the ‘missing link’ of a theory of the capitalist state, (2) the time horizons of state capitalism, or the question of ‘periodization’, (3) territorial considerations or the question of ‘locating’ state capitalism.