Kicking away the financial ladder? German development banking under economic globalisation

Naqvi, Natalya; Henow, Anne; Chang, Ha‐Joon

doi:10.1080/09692290.2018.1480515

Cited by 45 publications

(26 citation statements)

References 58 publications

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“…The KfW, which has long focused on promoting German exports, has also expanded its role in NFC finance along with the intensification of the German export model (Naqvi, Henow, and Chang 2018). Until the 1980s, the KfW's assets and total lending commitments ranged between 0.5 per cent and 1 per cent of GDP.…”

Section: Bank Lending To Non-financial Corporations: Shrinking Slice mentioning

confidence: 99%

Strong Firms, Weak Banks: The Financial Consequences of Germany’s Export-Led Growth Model

Braun¹

2019

German Politics

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The financial foundation of Germany's manufacturing success, according to the comparative capitalism literature, is an ample supply of long-term capital, provided to firms by a three-pillar banking system and 'patient' domestic shareholders. This premise also informs the recent literature on growth models, which documents a shift towards a purely export-led growth model in Germany since the 1990s. We challenge this common assumption of continuity in the German financial system. Export-led growth, characterised by aggregate wage suppression and high corporate profits, has allowed non-financial corporations to increasingly finance investment out of retained earnings, thus lowering their dependence on external finance. This paper documents this trend and shows that business lending by banks has increasingly been constrained on the demand side, reducing the powerand relevanceof banks vis-à-vis German industry. The case study suggests a need for students of growth models to pay greater attention to the dynamic interaction between institutional sectors in general, and between the financial and the non-financial sectors in particular.

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Section: Bank Lending To Non-financial Corporations: Shrinking Slice mentioning

confidence: 99%

Strong Firms, Weak Banks: The Financial Consequences of Germany’s Export-Led Growth Model

Braun¹

2019

German Politics

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“…Existing literature on globalization and state autonomy predicts that reversal of liberalization reform is only possible for industrialized core economies that make the rules of the international economic system (Naqvi, Henow, & Chang, 2018), and to a lesser extent for large emerging markets that have the resources to assert themselves in global financial governance (Woods, 2006). The Bolivian case is puzzling when compared to the handful of other previously liberalized developing countries that have also seen a recent increase in financial activism, because these are either key emerging markets like Brazil and Korea, or countries that are so isolated from the international system like Ethiopia, that we would expect them to face less constraints.…”

Section: Renationalization Of Finance In Boliviamentioning

confidence: 99%

Renationalizing finance for development: policy space and public economic control in Bolivia

Naqvi

2019

Review of International Political Economy

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After years of placing faith in the markets, we are seeing a revival of interest in statist economic policy across the world, particularly with regards to finance. How much policy space do previously liberalized developing countries still have to renationalize their financial sectors by exerting direct control over the process of credit allocation, despite the constraints posed by economic globalization? Under what conditions do they actually use this policy space? Bolivia is an especially important case because it is one of the few peripheral countries that implemented strongly interventionist financial reform in the 2010s. Using Bolivia as a least likely case, I argue that two factors, increased availability of external financing sources, and domestic popular mobilization, create favorable conditions for developmentalist financial reform because these make it possible to reduce external conditionalities and overcome opposition by the domestic financial sector. Popular mobilizations paved the way for reform by bringing developmentalist policymakers to power and exerting pressure on them to 1. Maximize policy space by diversifying into newly available alternative sources of foreign borrowing to reduce external conditionalities, and 2. Mitigate the importance of disinvestment threats by domestic economic elites by incrementally increasing public ownership and control of the economy.

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“…Both developing and advanced countries have adopted industrial policies with zeal in the past decade. During the process of reviving the economy after the global financial crisis, the influence of the 'hidden developmental states' of advanced countries became more apparent and explicit, first through stimulus packages, followed by various growth and innovation strategies under the banner of 'green growth', 'smart cities', and 'Industry 4.0' (Block 2008;Evenett and Fritz 2018a;Mazzucato 2013;Meckling and Nahm 2018;Naqvi et al 2018;Steenblik 2009;Weiss 2010). This trend not only legitimized the use of industrial policies to a certain extent but also pressured developing countries' governments to strengthen activism to stimulate economic catch-up with advanced countries that were trying to stride further ahead.…”

Section: Manufacturing Competitiveness Gap and Return Of Industrial Pmentioning

confidence: 99%

De-industrialization, re-industrialization, and the resurgence of state capitalism: The case of Indonesia

Kim¹,

Sumner²

2019

WIDER Working Paper

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.Abstract: Discussions on the developing world's industrial policies have largely neglected the role of state-owned entities. This paper argues that the resurgence of state capitalism has been, in part, the response of developing countries to the recent pattern of structural transformation involving weak manufacturing. Using the case of Indonesia, this paper demonstrates that many middleincome countries have large and diverse state-owned entities in their development policy toolbox and have begun to experiment with these tools in order to change the pace and characteristics of structural transformation. Considering these trends, there is a need to reconsider or 'normalize' the debate on the positive role that state-owned entities can play in stimulating structural transformation and on the institutional and policy design that can foster that role.

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Kicking away the financial ladder? German development banking under economic globalisation

Cited by 45 publications

References 58 publications

Strong Firms, Weak Banks: The Financial Consequences of Germany’s Export-Led Growth Model

Strong Firms, Weak Banks: The Financial Consequences of Germany’s Export-Led Growth Model

Renationalizing finance for development: policy space and public economic control in Bolivia

De-industrialization, re-industrialization, and the resurgence of state capitalism: The case of Indonesia

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