Foreign states in domestic markets: sovereign wealth funds and the West

After capital controls relaxed in the 1970s, cross-border financial flows began to increase. By the 1990s, the world was flattening, markets were liberalizing and policy-makers could no longer close their domestic markets to foreign firms. The influence of multinational corporations was growing and the state was expected to recede. However, an emerging field, known as ‘new statism’, argued that this capital mobility did not actually diminish the state's role—it merely changed it. States continued to steer private capital flows, selectively opening their markets to foreign investors. Over time, foreign investment has come not only from private investors, but also from other states. Yet when new statist and international business literature examines these official investors, the emphasis is on the diplomatic or financial motivations of the state acquiring assets. Few studies examine how a state seeks to attract investment from other states, or how it directs foreign state investment within its domestic markets. To fill this gap, Mark Thatcher and Tim Vlandas develop the concept of ‘internationalized statism’ in Foreign states in domestic markets. They evaluate the degree to which France, Germany, the United Kingdom and the United States shape their domestic economic policies in response to potential investment from Middle Eastern and Asian sovereign wealth funds (SWFs) (p. 12). The authors’ thorough analysis will certainly impress political economy scholars, even if their findings are unsurprising.