Power and Politics After Financial Crises: Rethinking Foreign Opportunism in Emerging Markets

311 Pages·2008·70.541 MB·English

by  Justin Robertson (eds.)

Power and Politics After Financial Crises
lutemaliol/al Political Ecol/omy Series
General Editor: Timothy M. Shaw, Professor of Human Security &. Peacebuilding,
School of Peace &. Conflict Management, Royal Roads University, Victoria, BC, Canada
Titles include:
LUCian M. Ashworth and David Long (editors)
NEW PERSPECTIVES ON INTERNATIONAL FUNCTIONALISM
Robert W. Cox (editor)
THE NEW REALISM
Perspectives on Multilateralism and World Order
Frederick Deyo (editor)
GLOBAL CAPITAL, LOCAL LABOUR
Stephen Gill (editor)
GLOBALIZATION, DEMOCRATIZATION AND MULTILATERALISM
Bjorn Hettne, Andras Inotai and Osvaldo Sunkel (editors)
GLOBALISM AND THE NEW REGIONALISM
Christopher C. Meyerson
DOMESTIC POLITICS AND INTERNATIONAL RELATIO S IN US-JAPAN
TRADE POLICYMAKING
The GAIT Uruguay Round Agriculture Negotiations
Justin Robertson (editor)
POWER AND POLITICS AFTER FINANCIAL CRISES
Rethinking Foreign Opportunism in Emerging Markets
Michael G. Schechter (editor)
FUTURE MULTILATERALISM
The Political and Social Framework
INNOVATION IN MULTILATERALISM
Ben Thirkell-White
THE IMF AND THE POLITICS OF FINANCIAL GLOBALIZATION
From the Asian Crisis to a New International Financial Architecture?
Thomas G. Weiss (editor)
BEYOND UN SUBCONTRACTING
Task Sharing with Regional Security Arrangements and Service-Providing
NGO,
Robert Wolfe
FARM WARS
The Political Economy of Agriculture and the International Trade Regime
International Political Economy Series
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Series Standing Order ISBN 0-333--71110-6 paperback
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Power and Politics After
Financial Crises
Rethinking Foreign Opportunism in
Emerging Markets
Edited by
Justin Robertson
Assistant Professor, Department of Asian and illtematiollal Studies, City
University of HOllg Kong
palgrave
macmillan
* Editorial matter and selection © Justin Robertson 2008. Individual chapters
to thei r respective authors 2008
Softcover reprint of the hardcover 1st edition 2008 978·0-230-51697-7
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Contents
List of Tables and Figures ix
List of Acronyms xi
Preface xiii
Notes on Contributors xiv
1 Introduction: Key Theoretical Divides and Directions 1
Justin Robemon
The foreign-domestic faultline in studying crisis outcomes 2
Mixed patterns below the surface 4
Major theoretical divides and directions 6
A typology of analytic frameworks 19
Conclusion 27
Part I International Actors and Issue Areas
2 Financial Crises and US Treasury Policy: The Institutional
and Ideational Basis of American Capability 31
Andrew Baker
The strong American power thesis 32
The gaps and limitations of the strong American
power thesis 34
The institutional mandate and position of the US
Treasury Department 35
Ideology, knowledge and beliefs 40
Treasury-private sector relations 44
Resource scarcity 48
Conclusions 49
3 Crises as Catalysts for Foreign Bank Activity in
Emerging Markets 52
Robert Cull and Maria Soledad Martillez Peria
Introduction 52
Trends in foreign bank participation 53
Survey of the causes and implications of foreign
bank participation 58
Foreign bank participation and crises 65
Conclusions 79
v
vi Contents
4 Adaptable Agendas: Private Creditors and the Politics
of Debt in Emerging Markets 82
Giselle Datz
Restructuring sovereign debt: old process, new tools? 83
Adaptable agendas 88
Private interest and public success: the Argentine debt
restructuring, 2001-2006 91
Conclusion 98
5 The Political Economy of International Financial
Reform Since the Asian Crisis: The Case of
Corporate Governance 102
Andrew Rosser
Introduction 102
Understanding the NIFA 103
The case of corporate governance 107
Conclusion 121
Part II Country Studies
6 Argentina: State Capacity and Leverage in
External Negotiations 125
Maria Pia Riggirozzi
International and domestic factors affecting crisis
and crisis resolution 126
From strong neoliberal governance to state failure 128
Restoring state capacity 133
Augmenting state bargaining power with
international actors 137
A final note on state power, interests and governance 141
7 Brazil: Mixed Impact of Financial Crises on
Manufacturing and Financial Sectors 144
Mahmkh Doctor and Luiz Fernando de Pallia
Economic context and financial crises in Brazil 145
Foreign penetration in the banking sector 153
FOI in the manufacturing sector 159
Conclusion 165
Contents vii
8 Central Europe: Predatory Finance and the
Financialization of the New European Periphery 168
Or Raviv
Banking in the Austro-Hungarian empire 170
The polities of neoliberalism in Europe 173
Banking strategies in the European Union 176
Conclusions 185
9 Indonesia and Malaysia: The Persistence of a
Domestic Politico-Business Class 187
Ben Thirke/l-White
The crisis in context 188
Domestic opposition and the political economy
of post-crisis reform 197
Conclusions 208
10 Russia: Limiting the Impact of Crisis in a
Post-Communist Transitional Economy 212
Neil Robinson
Introduction 212
Soviet legacies, the national economy and Russia's
relative economic isolation 214
Russia's trans nationalized economy and the state: shifting
balances of power before and after 1998 218
Crisis and the future 224
Conclusion 228
11 Turkey: Risk-Conscious Foreign Firms and a Maturing
Domestic Banking Sector 230
Korsan Cevdet
Qualifying concepts 231
The Turkish case 233
Financial crises leading to economic collapse 235
Post-crisis developments 239
Interlocking EU and IMF reforms 241
How has the TBS fared? 242
Future risks and challenges 247
Conclusion 250
viii Conte"ts
12 Conclusion: Contesting the Return to State-Led
Economies 252
Justin Robertson
No closing to foreign investment 253
Incremental foreign business penetration 255
Argentina and Russia as exceptions? 258
Looking to the future 259
References 261
Index 286
List of Tables and Figures
Tables
1.1 Key theoretical choices: five pairings 6
3.1 Foreign bank partlcipation in developing countries,
1995-2002 55
3.2 Average budget to GOP before and after crises 66
3.3 Banking sector restrictions, 1995-2002: crises and
non-crises countries 66
3.4 Cross-country regressions for the % change in foreign
bank participation, 1995-2002 70
3.5 Regressions with country fixed effects for the
share of banking sector assets held by foreign banks 73
3.6 Regressions with country fixed effects: dependent
variable, credit to the private sector/GOP 77
3.7 Split-sample tests, regressions with country fixed effects,
dependent variable is credit to the private sector/GOP 79
7.1 Brazil: some macroeconomic data, 1991-2005 147
7.2 Brazil: federal domestic securities - percentage share index
(portfolio position) 150
7.3 Market share in Brazilian banking sector 157
7.4 Banks portfolio, % share 159
7.5 Internationalization of auto parts industry in Brazil 162
11.1 Turkey - FDI figures 243
11.2 Foreign ownership of banking sector 244
11.3 World's largest banks by market capitalization 244
11.4 Market share of foreign owned banks (total assets as a %) 245
11.5 Foreign acquisitions of Turkish Banks 246
Figures
3.1 Foreign bank participation across regions, 1995-2002 53
3.2 Foreign bank participation across regions following
banking crises 67
5.1 Scores for overall corporate governance quality 119
ix