Overseas State Outsiders as New Sources of Patient Capital: Government Policies to Welcome Sovereign Wealth Fund Investment in France and Germany
Socio-Economic Review, (Forthcoming)
29 Pages Posted: 8 Jul 2016 Last revised: 22 Aug 2016
Date Written: July 5, 2016
The strong debates in the varieties of capitalism literature as to whether financial liberalisation and internationalisation undermine ‘insider’ corporate governance systems based on patient capital in coordinated and state-led market economies have focused on ‘impatient’ overseas private capital. However, cross-border state investment has also grown. We examine government policies towards a different type of overseas investment- state equity purchases by Sovereign Wealth Funds. We argue that policy makers in insider’ corporate governance systems can see such investment as an attractive international source of patient capital that can offset declines in traditional sources of patient capital. We compare two polities -- Germany and France -- and show that policy makers actively welcome and seek SWF investment, driven by coalitions of ‘insiders’ composed of the managements of large industrial firms and governments who seek passive patient capital and beneficial relationships with overseas investors. Thus, overseas state investors can provide new sources of patient capital.
Keywords: sovereign wealth fund, corporate governance, patient capital, cross-border investments, varieties of capitalism
JEL Classification: Politics
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