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The financialisation–offshoring nexus and the capital accumulation of US non-financial firms

Author

Listed:
  • Tristan Auvray

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Joel Rabinovich

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

Abstract

The financialisation of nonfinancial corporations has drawn the attention of many scholars who have identified two main channels through which financialisation occurs: a higher proportion of financial assets compared to nonfinancial ones and a higher amount of resources diverted to financial markets. A consequence of this process is a decrease in investment. Parallel to financialisation, many nonfinancial corporations have also engaged in an internationalisation of their productive activities, organizing them under global value chains. Though offshoring may also explain the decrease in the level of investment of nonfinancial firms, the intersections between the literature on financialisation and the literature on global value chain remain surprisingly underdeveloped. This paper contributes to fill this gap using panel regressions for U.S. nonfinancial corporations between 1995 and 2011. We find evidence that both offshoring and financialisation are determinants to the decrease in investment and that financialisation occurs mainly amongst firms belonging to sectors prone to offshoring.

Suggested Citation

  • Tristan Auvray & Joel Rabinovich, 2019. "The financialisation–offshoring nexus and the capital accumulation of US non-financial firms," Post-Print hal-02064453, HAL.
    • Handle: RePEc:hal:journl:hal-02064453
    DOI: 10.1093/cje/bey058
    Note: View the original document on HAL open archive server: https://hal.science/hal-02064453
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    Citations

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    Cited by:

    1. Joel Rabinovich & Niall Reddy, 2024. "Corporate Financialization: A Conceptual Clarification and Critical Review of the Literature," Working Papers PKWP2402, Post Keynesian Economics Society (PKES).
    2. Cédric Durand & Wiliiam Milberg, 2020. "Intellectual monopoly in global value chains," Review of International Political Economy, Taylor & Francis Journals, vol. 27(2), pages 404-429, March.
    3. Ryan Woodgate, 2023. "Offshoring via vertical FDI in a long-run Kaleckian Model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 46(1), pages 32-64, January.
    4. repec:osf:socarx:2zy5h_v1 is not listed on IDEAS
    5. Joel Rabinovich & Rodrigo Perez Artica, 2020. "Cash holdings and the financialisation of Latin American nonfinancial corporations," Working Papers hal-02474321, HAL.
    6. Yair Kaldor, 2022. "Financialization and Fictitious Capital: The Rise of Financial Securities as a Form of Private Property," Review of Radical Political Economics, Union for Radical Political Economics, vol. 54(2), pages 239-254, June.
    7. Woocheol Lee, 2022. "Domestic Share of Value-Added and the Development of Production Capabilities of Local Firms within Global Value Chains," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(2), pages 81-99.
    8. Joel Rabinovich, 2017. "The financialisation of the nonfinancial corporation. A critique to the financial rentieralization hypothesis," CEPN Working Papers 2017-22, Centre d'Economie de l'Université de Paris Nord.
    9. Tristan Auvray & Cédric Durand & Joel Rabinovich & Cecilia Rikap, 2021. "Corporate financialization’s conservation and transformation: from Mark I to Mark II," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 431-457, December.
    10. repec:hal:cepnwp:hal-02474321 is not listed on IDEAS
    11. repec:hal:cepnwp:hal-03079425 is not listed on IDEAS
    12. Peter Nitsche-Whitfield, 2022. "A labour–nature alliance for a social-ecological transformation," Transfer: European Review of Labour and Research, , vol. 28(3), pages 383-387, August.
    13. repec:osf:socarx:2zy5h_v2 is not listed on IDEAS
    14. Rabinovich, Joel, 2023. "Tangible and intangible investments and sales growth of US firms," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 200-212.
    15. Adam Leaver & Keir Martin, 2021. "‘Dams and flows’: boundary formation and dislocation in the financialised firm," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 403-429, December.
    16. repec:hal:cepnwp:hal-01691435 is not listed on IDEAS
    17. Tristan Auvray & Cédric Durand & Joel Rabinovich & Cecilia Rikap, 2020. "Financialization's conservation and transformation: from Mark I to Mark II," Working Papers hal-03079425, HAL.
    18. Shimano, Norihito, 2025. "How do financialization trends differ between parent companies and corporate groups : Evidence from Japanese manufacturing corporations," MPRA Paper 124683, University Library of Munich, Germany.
    19. repec:hal:cepnwp:hal-01850438 is not listed on IDEAS
    20. Sophie van Huellen & Fuad Mohammed Abubakar, 2021. "Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 227-252, April.
    21. Reddy, Niall, 2024. "“Downsize And Distribute” Or “Merge And Monopolize”? A Critique Of Corporate Financialization Theories," SocArXiv 2zy5h, Center for Open Science.
    22. Daniele Tori & Özlem Onaran, 2022. "Financialisation and firm-level investment in developing and emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(4), pages 891-919.
    23. Cahen-Fourot, Louison, 2020. "Contemporary capitalisms and their social relation to the environment," Ecological Economics, Elsevier, vol. 172(C).
    24. Niall Reddy & Joel Rabinovich, 2022. "Debunking the short-termist thesis in financialization studies: Evidence from US non-financial corporations 1998 – 2018," Working Papers PKWP2227, Post Keynesian Economics Society (PKES).

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    Keywords

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    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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