Sovereign Investors: Between Global Financial Capitalism and State Capitalism

34 Pages Posted: 14 Aug 2018

See all articles by Caroline Nowacki

Caroline Nowacki

frog design

Ashby H. B. Monk

Stanford University - Global Projects Center

Date Written: July 30, 2018

Abstract

Sovereign investors are an emerging community of investment organizations, subject to the conflicting demands of international and domestic institutions. Existing research interprets them either as mirroring global financialization or preserving national interests. Both top-down global influences and bottom-up local pressures seem to co-exist, but it is unclear how these organizations manage the conflicts engendered. A path generation perspective applied to the whole community of sovereign investors allows us to capture this nuance. The availability of annual reports and websites published by sovereign investors represent a unique opportunity to analyze how this group responds to these multi-level pressures. Using machine learning to analyze the communication of 57 sovereign investors globally, we propose a new taxonomy of sovereign investors and show the emergence of two main institutional models: the “professional global investor”, supported by democracies and the OECD; and the “user of global finance for domestic development”, which correlates with authoritarian governments and the Middle East. Contrary to studies led contemporary to the global financial crisis, this paper mitigates conclusions that sovereign investors are all heavily influenced by the values and expectations of global financial capitalism. Instead, we show that values related to State Capitalism are gaining legitimacy and being advertised using media traditionally associated with global financial capitalism.

Keywords: path generation, state capitalism, global financial capitalism, institutional emergence, sovereign investors, sovereign wealth funds

Suggested Citation

Nowacki, Caroline and Monk, Ashby H. B., Sovereign Investors: Between Global Financial Capitalism and State Capitalism (July 30, 2018). Available at SSRN: https://ssrn.com/abstract=3222695 or http://dx.doi.org/10.2139/ssrn.3222695

Caroline Nowacki (Contact Author)

frog design ( email )

96 avenue Charles de Gaulle
Neuilly Sur Seine, 92200
France

Ashby H. B. Monk

Stanford University - Global Projects Center ( email )

United States

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