1. Transcript. The Rise of State. Capitalism. Ian Bremmer, President, Eurasia Group. Discussant: James Crabtree. State-directed capitalism is not a new idea: witness the East India Company. In the s most state-owned companies were little more than government departments in emerging markets; the assumption was that, as the economy matured, the government would close or privatise them. China's state-owned enterprises have received the most coverage of any such companies around the world, but they are hardly alone. In fact.


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Overseeing the governance of high-tech firms requires a fundamentally different skill set than managing joint ventures with foreign partners, a craft that SOEs and SWFs have recently perfected. Yet even with the know-how in place, the governance of high-tech companies such as Facebook and The rise of state capitalism can pose additional challenges, because both tech company founders and sovereign investors tend to prefer a high level of operational control.

Beyond the matter of control, the acquisition of technology companies also requires SOEs and SWFs to take a different approach to risk the rise of state capitalism, owing to the unstable nature of valuations in this sector.

In this regard, emerging-market sovereign investors have much to learn from China, where SOEs have been actively acquiring technology firms worldwide.

Even if many emerging-market sovereign funds would prefer to remain quiet, nonvoting investors with the rise of state capitalism stakes in foreign companies, the tech-sector acquisition spree that is currently underway demands that they gain a better understanding of their rights as shareholders.

It also requires that they equip their teams with more investment expertise and coordinate closely with other domestic investors so that their acquisitions can have a multiplier effect on their respective national economies.

With private-equity activity having declined in the Middle East and indeed elsewhere in recent years, owing to the fallout from the Abraaj Capital saga, SOEs and SWFs in the rise of state capitalism region will likely continue to establish their own private equity vehicles.

The Rise Of State-Controlled Capitalism : NPR

Through sovereign investments in high-tech firms, policymakers can produce positive multiplier effects, including on the capital markets the rise of state capitalism were previously developed through privatization.

For example, SOEs may be able to list private-equity funds that they establish, while grooming domestic high-tech firms in which they invest for potential listings of their own.

This would benefit the local equity markets as much as — or perhaps even more than — the listing of the SOEs themselves, given that exchanges now include specific listing segments geared toward luring innovative firms.

In any case, to focus solely on the privatization of large SOEs is to give a false impression of the direction of state capitalism in emerging markets. The percentage market value of this latter the rise of state capitalism of companies dropped from 70 percent to 50 percent over those four years; the value of the BRIC-based companies rose from 4 percent to 16 percent.

The corporate failures and government bailouts of — accelerated the trend.

The Rise Of State-Controlled Capitalism

Following the meltdown and takeover of many large U. In other words, privately owned Western multinationals are in no danger of replacing the nation-state as the primary actor in international politics and global markets, because the state now owns and operates some of their largest competitors.

Over the past decade, the governments of several developing countries have worked to ensure that valuable national assets remain in state hands and that governments maintain enough leverage within their domestic economies to safeguard their survival.

In some cases, they've used state-owned energy companies to amass wealth or to secure access to the rise of state capitalism long-term supplies the rise of state capitalism oil and gas that their still-vulnerable economies will need to fuel further growth.

They have created wealth funds from pools of excess capital and have begun to make strategic investments beyond their borders.


Inthis trend toward greater state power reached a tipping point. During the financial crisis and global recession, an the rise of state capitalism market meltdown that provided globalization with its first true stress test, political officials in both the rise of state capitalism developed and the developing worlds seized responsibility for decisions that are usually left to market forces—and on a scale not seen in decades.

Governments around the world responded to the implosion of major financial institutions and key economic sectors with massive doses of state spending meant to kick-start growth and, in some cases, to bail out companies considered "too big to fail.

The rise of state capitalism | The Japan Times

They did all this because they believed it was necessary—and because no one else could do it. During the financial crisis and its aftermath, this dynamic generated a massive shift in financial decision-making power from New York to Washington.

The trend was also apparent within cities where finance and politics coincide—London, Paris, Berlin, Tokyo, and The rise of state capitalism. This is an enormously important change.


In emerging market countries, political factors still matter at least as much as economic fundamentals for the performance of markets. That's a the rise of state capitalism way of understanding the intersection of politics and economics within China, Russia, India, Brazil, Turkey, Mexico, and many other increasingly influential international players.

The financial crisis pushed America, Britain, and Japan in that same direction—and a global audience increasingly skeptical of free-market capitalism's ability to generate sustainable, long-term prosperity is watching closely.


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