Abstract Decolonization left the future of small, city-states uncertain. Without large domestic markets to turn to, some city-states developed financial industries. Comparing Kuwait and Singapore, I examine how these states developed their financial sectors after decades of colonial underdevelopment. While both states sought to develop international financial centers, Singapore was far more successful in doing so. Kuwait opened numerous merchant-owned, domestic commercial banks but with sluggish rates of growth, while Singapore saw the emergence of new state-run banks; the consolidation, modernization, and growth of privately owned banks; and the establishment of a rapidly growing global financial center. I identify three processes to explain this divergence: (1) the state’s ability to discipline merchant-capitalists; (2) the institutional legacies of colonialism and postcolonial maneuvering; and (3) the incorporation of transnational experts into ruling coalitions. By unearthing the mechanisms of financial development, this article contributes to sociologies of development, finance, expertise, and small states.
Rohan Advani (Wed,) studied this question.