Politics or markets? The determinants of cross‐border financial integration in the NAFTA and the EU

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Notes

Heather McKeen‐Edwards et al., Department of Political Science, Kenneth Taylor Hall, Room 527, McMaster University, Hamilton, Ontario L8S 4M4, Canada.

Market capitalisation is still less important in Europe than in North America, although it varies between the European states. In 2001, it ranged from 14 per cent of GDP in Austria to 163 per cent in Finland, but the EU average was still significantly less than the 140 per cent of GDP in the USA and the corporate debt share of GDP was 11 per cent in 2001, compared to 27 per cent in the USA. See Organisation for Economic Cooperation and Development. OECD Economic Surveys: Euro Area (OECD, 2002), pp. 85–7.

John Zysman, Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change (Cornell University Press, 1983).

Luxembourg is not included because of data unavailability. Calculated from data provided in Asli Demirguc‐Kunt & Ross Levine, Bank‐based and market‐based financial systems: cross‐country comparisons, unpublished paper presented at World Bank conference Financial Structure and Economic Development, 10–11 February 2000, available at www.worldbank.org/research/projects/finstructure/papers_22000.htm

Calculated from data provided in Demirguc‐Kunt & Levine, ‘Bank‐based and market‐based financial systems’; and World Bank, World Development Report 1999/2000 (World Bank, 2000). The measure of financial markets is the claims of deposit money banks and other financial institutions on the private sector, plus market capitalisation. Luxembourg is not included because of data unavailability.

Calculated from World Development Report 1999/2000 data for 1998. Luxembourg and Denmark are not included because of data unavailability.

Based on data from ‘Bank Atlas’, Euromoney, June 2001. The US‐based banks are Citigroup, Bank of America, JP Morgan Chase, Wells Fargo and Bank One. The European Union‐based banks are HSBC Holdings, Royal Bank of Scotland, Banco Santander Central Hispano, Groupe Credit Agricole and Deutsche Bank.

Stephen Gill, Power and Resistance in the New World Order (Palgrave, 2003), pp. 131–5; and Richard B. McKenzie & Dwight R. Lee, Quicksilver Capital: How the Rapid Movement of Wealth Has Changed the World (Free Press, 1991).

David A. Lake, ‘Leadership, Hegemony, and the International Economy: Naked Emperor or Tattered Monarch with Potential?’, International Studies Quarterly, Vol. 37, No. 4 (1993), pp. 459–89.

Eric Helleiner, ‘Explaining the Globalization of Financial Markets: Bringing States Back In’, Review of International Political Economy, Vol. 2, No. 2 (1995), pp. 315–42; Louis W. Pauly, Opening Financial Markets: Banking Politics on the Pacific Rim (Cornell University Press, 1988); and Ethan B. Kapstein, Governing the Global Economy: International Finance and the State (Harvard University Press, 1994).

For an interesting comparison of the EU and NAFTA that focuses on a different theme, intercontinental convergence, see William D. Coleman & Geoffrey R.D. Underhill, ‘Globalization, regionalism, and the regulation of securities markets’, in: William D. Coleman & Geoffrey R.D. Underhill (eds), Regionalism and Global Economic Integration (Routledge, 1998), pp. 223–48. They develop a theme similar to ours in noting: ‘The EU process should, however, be distinguished from the globalization process. The EU's programme was a deliberate exercise of political will to carry the financial integration of domestic markets to more radical lengths’ (p. 225).

The USA accounts for 89 per cent of the combined GDP of NAFTA countries, while Germany accounts for 26 per cent of the GDP of the EU.

Andreas Hasenclever, Peter Mayer & Volker Rittberger, Theories of International Regimes (Cambridge University Press, 1997), pp. 113–24. For a similar argument, see Daniel Drache, ‘Trade blocs: the beauty or the beast in the theory?’, in: Richard Stubbs & Geoffrey R.D. Underhill (eds), Political Economy and the Changing Global Order, 2nd edn (Oxford University Press, 2000), pp. 184–97.

John Gerard Ruggie (ed.), Multilateralism Matters: The Theory and Praxis of an Institutional Form (Columbia University Press, 1993).

Calculated from World Bank statistics.

Figures for 1999 in Canadian dollars. See Corporations Returns Act, Statistics Canada CANSIM II, Table 179–0004.

See Corporations Return Act, 1998, Foreign Control in the Canadian Economy, Parliamentary Report of the Minister of Industry, Statistics Canada data.

See Statistics Canada (E‐stat/CANSIM II) Table 176–0013—Chartered banks, total claims and liabilities booked worldwide vis‐à‐vis non‐residents and Table 176–0045—Chartered banks, regional distribution of assets and liabilities, at end of period, Canada, provinces and international.

OECD, Report on Mexico, 2002, pp. 94 and 112; and Paul Day, ‘And now?’, Business Mexico, September 2001, p. 30.

‘Scotiabank Pays US$465 million for 36 per cent more of Mexican Inverlat Bank’, Canadian Press NewsWire, Toronto, 29 April 2003; and Jennifer Galloway, ‘The foreigners take over’, LatinFinance, September 2002, p. 56.

US FDI data, available at http://www.bea.doc.gov

TSX Review, April 2003.

Tony Porter, ‘NAFTA, North American financial integration and regulatory cooperation in banking and securities’, in: Geoffrey R.D. Underhill (ed.), The New World Order in International Finance (Macmillan, 1997), p. 178.

See the NASAA website for further discussion and for adopted model rules at http://www.nasaa.org/nasaa/scripts/fu_display_list.asp?ptid=82

Figures exclude Portugal. See Gabriele Galati & Kostas Tsatsaronis, The Impact of the Euro on Europe's Financial Markets, BIS Working Papers, No. 100, July 2001, Monetary and Economic Department, p. 10.

Tommaso Padoa‐Schioppa, ‘Remarks made at the roundtable: mid‐term review of progress towards European financial integration’, Brussels, 22 February 2002, p. 3, available at http://www.ecb.int

OECD, OECD Economic Surveys: Euro Area, p. 80.

Only completed or pending deals announcement date volumes for fiscal year of April 1999 through March 2000. See Bank for International Settlements, ‘Chapter VII: the euro and the European financial architecture’, BIS 70th Annual Report (BIS, 2000).

OECD, OECD Economic Surveys: Euro Area, p. 82.

Ibid.

Bieling also explains the development of European integration as different from that of ‘unavoidable adaptation’. See Hans‐Jurgen Bieling, ‘Social Forces in the Making of the New European Economy: The Case of Financial Market Integration’, New Political Economy, Vol. 8, No. 2 (2003), pp. 203–24.

European Commission, Financial Services: Meeting the Barcelona Priorities & Looking Ahead: Implementation, Seventh Report (European Commission, 2002).

For further discussion and analysis of this, see Beate Kohler‐Koch, ‘Organized interests in European integration: the evolution of a new type of governance?’, in: Helen Wallace & Alasdair R. Young (eds), Participation and Policy‐Making in the European Union (Clarendon Press, 1997), pp. 42–68; and Justin Greenwood & Mark Aspinwall (eds), Collective Action in the European Union: Interests and the New Politics of Associability (Routledge, 1998).

European Financial Reporting Advisory Group, What we do, available at http://www.efrag.org

European Committee for Banking Standards, Annual Report 2001 (European Committee for Banking Standards, 2001).

For some discussion of private actor consultation with the EU in the financial services sector, see Pieter Bouwen, ‘A comparative study of business lobbying in the European Parliament, the European Commission and the Council of Ministers’, Max‐Planck‐Institut für Gesellschaftsforschung Discussion Paper 02/7, Max Planck Institute for the Study of Societies, Cologne, November 2002; and Jeffrey Knight, Sonia Mazey & Jeremy Richardson, ‘Groups and the process of European integration: the work of the Federation of Stock Exchanges in the European Community’, in: Sonia Mazey & Jeremy Richardson (eds), Lobbying in the European Community (Oxford University Press, 1993), pp. 163–76.

Suzanne Lütz, ‘The Revival of the Nation‐State? Stock Exchange Regulation in an Era of Globalized Financial Markets’, Journal of European Public Policy, Vol. 5, No. 1 (March 1998), pp. 153–68.

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Notes on contributors

Heather McKeen‐Edwards

Heather McKeen‐Edwards et al., Department of Political Science, Kenneth Taylor Hall, Room 527, McMaster University, Hamilton, Ontario L8S 4M4, Canada.