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White Knights from the Gulf: Sovereign Wealth Fund Investment and the Evolution of German Industrial Finance

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  • Daniel Haberly

Abstract

The period leading up to and following the global financial crisis has been characterized by rising global financial diversity and multipolarity, a process underscored by the growth of so-called sovereign wealth funds (SWFs). To date there has not been any systematic examination of the interactions between this rising global financial diversity and national economic institutional diversity. Here I apply an institutional “comparative capitalisms” perspective to the analysis of Gulf Cooperation Council (GCC) SWF investment in German industry since the onset of the global financial crisis. The evidence demonstrates that a growing number of German industrial firms—particularly the major automotive firms at the heart of German industry—have recruited long-term GCC SWF investment as an adaptive response to the stresses of financial restructuring, most importantly the appearance of hostile takeovers as a feature of the German corporate governance landscape. These patterns lend partial support to “varieties of capitalism” (VOC) arguments that institutional complementarity and comparative institutional advantage are likely to produce path dependent trajectories of national institutional evolution. They also lend partial support to critiques of VOC, emphasizing, on the one hand, the importance of the Polanyian “double movement” of market expansion and containment and, on the other, the transnational foundations of national institutional diversity. I conclude that to fully explain these patterns, both VOC theories of institutional complementarity and comparative advantage, and Polanyian theories of the double movement, must be grounded in a “generalized Darwinian” analysis of population-level selection dynamics.

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  • Daniel Haberly, 2014. "White Knights from the Gulf: Sovereign Wealth Fund Investment and the Evolution of German Industrial Finance," Economic Geography, Taylor & Francis Journals, vol. 90(3), pages 293-320, July.
  • Handle: RePEc:taf:recgxx:v:90:y:2014:i:3:p:293-320
    DOI: 10.1111/ecge.12047
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    Cited by:

    1. Braunstein, Jürgen, 2017. "Understanding the politics of bailout policies in non-Western countries: The use of sovereign wealth funds," LSE Research Online Documents on Economics 68472, London School of Economics and Political Science, LSE Library.
    2. Jayashankar, Priyanka & Ashta, Arvind & Rasmussen, Mark, 2015. "Slow money in an age of fiduciary capitalism," Ecological Economics, Elsevier, vol. 116(C), pages 322-329.
    3. Alvaro Cuervo-Cazurra & Anna Grosman & William L. Megginson, 2023. "A review of the internationalization of state-owned firms and sovereign wealth funds: Governments’ nonbusiness objectives and discreet power," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(1), pages 78-106, February.
    4. Babic, Milan & Dixon, Adam & Fichtner, Jan, 2021. "Varieties of state capital: What does foreign state-led investment do in a globalized world?," OSF Preprints tm82g, Center for Open Science.
    5. Daniel Haberly & Dariusz Wójcik, 2015. "Regional Blocks and Imperial Legacies: Mapping the Global Offshore FDI Network," Economic Geography, Clark University, vol. 91(3), pages 251-280, July.
    6. Alvaro Cuervo-Cazurra & Anna Grosman & Geoffrey T. Wood, 2023. "Cross-country variations in sovereign wealth funds’ transparency," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 306-329, September.

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