https://orcid.org/0000-0001-6175-906X
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ABSTRACT
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.
Acknowledgments
The author would like to thank Kevin Hewison and three anonymous reviewers for constructive comments during the review process. The author would also like to thank Ilias Alami, Ben Braun, Juergen Braunstein, Brett Christophers, Gordon Clark, and Imogen Liu for comments on previous drafts of this article.
Disclosure Statement
No potential conflict of interest was reported by the author.
Notes
1. It has become increasingly fashionable to refer to more explicit forms of state involvement and intervention as state capitalism. However, the literature is in disagreement as to what actually constitutes state capitalism. For example, some Marxian perspectives consider the state as necessary to capitalism such that all capitalism is inherently state capitalism. Efforts to make a typology of state capitalism, in a comparative capitalism frame for instance, cannot likewise agree on what variables indicate state capitalism or otherwise. Hence, using the concept of state capitalism does not offer sufficient analytical clarity (see Alami and Dixon Citation2020).
2. For a comprehensive list of funds, see Capapé (Citation2019).
3. The embrace of “developmentalism” by the elite is typically viewed as a key component of the developmental state, which Thurbon (Citation2016) refers to as a “developmental mindset.”
4. Shih made this claim a decade ago. With consolidation of power under Xi Jinping since 2013 it is unclear if China can still be considered a fragmented regime.
5. The Santiago Principles are available at IWG (Citation2008).
6. The appendix of Samruk-Kazyna (Citation2017) provides a case study of the Khazanah transformation programme, based on research conducted by the consultancy firm McKinsey.
7. Singapore’s other sovereign fund is GIC Private Limited, which was established in 1981 to manage the country’s rapidly growing foreign exchange reserves. GIC is primarily a globally diversified portfolio investor.
8. The country’s other sovereign wealth fund is the National Fund of the Republic of Kazakhstan, a natural resource revenue stabilisation and savings fund established in 2000 to reduce the government’s dependence on natural resource revenues, to shield the economy from external economic shocks and to accumulate savings for future generations. Its portfolio consists mainly of low-risk liquid foreign government bonds (such as US Treasuries). A portion is invested in higher risk assets via the National Investment Corporation, which is a subsidiary of the central bank.