As argued insightfully by Töpfer, the Global Financial Networks concept needs to be more politically sensitive, particularly if it is to capture the dynamics of Chinese capitalism and its role in the world at large. However, in doing so, we should not lose sight of the role of financial and business services, financial centres and offshore finance at the heart of the GFN framework. With the map of the financial world in a state of turmoil, the future of GFNs research looks exciting.
This paper analyses how different entrepreneurial actors respond to political uncertainty and changing institutional settings. Moreover, it discusses the impact of those actor-level responses on the resilience of entrepreneurial ecosystems (EEs), focusing on how they affect the diversity of and the connectivity among its actors. To address these questions, the paper examines how the decision of the United Kingdom to leave the European Union has influenced the financial technology (FinTech) industry in London, applying data collected from in-depth interviews, covering different groups of stakeholders in London's FinTech industry, such as angel investors, banks, legal advisers, lobby organizations and private companies. Our results show that political uncertainty and the prospect of institutional change can trigger actor-level responses, which have the potential to modify the diversity as well as the local and non-local connectivity of an EE. Moreover, we demonstrate that the nature of strategic responses of entrepreneurial actors varies significantly, depending on their firms' characteristics, such as age, size, product specialization and the structure of their egocentric networks. With regard to the latter, our results show that anchor firms play an important role in other firms' egocentric networks and have the power to shape their strategic responses.
We use data from 131 countries in the period 2000–14 to analyze the determinants of urban primacy, calculated as the share of the city with the largest gross domestic product (GDP) in a country in the total GDP of that country. While prior research has largely neglected the role of financial factors, we demonstrate that urban primacy is related positively to the size of financial activity. In addition, currency depreciation in relation to the US dollar is related to lower urban primacy, while gross capital outflows are related to higher urban primacy. We find that trade openness—a key indicator of globalization—also coincides with higher urban primacy, but this relationship is statistically and economically less significant than that between finance and urban primacy. Among other factors, we show that urban primacy is smaller in countries with a large population, high population density, a large agricultural sector, and a federal political structure, and particularly high in countries where primate cities have seaport functions. Our main results hold in both developed and developing countries. We discuss a wide range of mechanisms through which finance can affect urban primacy, including agglomeration economies, proximity to power, access to capital, financialization, and financial instability. In short, finance has a crucial impact on the geographic distribution of economic activity.
In 2016, the Global Sustainable Investment Alliance estimated the market for sustainable investments to have reached 22.89 trillion USD of assets under management. While financial institutions have embraced the idea of sustainable finance as a business opportunity, they have arguably done little, but to piggy-back on investors' demand. Today, it is not unusual for a single firm to retail fossil free investment funds and concomitantly offer commercial loans towards fracking, coal, and Arctic drilling. This paradox is underpinned by a major gap in the way sustainability has permeated primary and secondary markets which, we argue, calls for a serious rethinking of the sustainability transition in finance. This article proposes two contributions in this direction. First, we develop an original conceptualisation of finance as a socio-technical system to discuss the dynamics that both hinder and promote a transition from mainstream to sustainable finance. Second, we propose to study how investment banks integrate sustainability in their underwriting services. To do so, we filter through close to half a million of debt and equity underwriting deals (2005–2017) using the Government Pension Fund Global of Norway's list of 153 excluded companies. Our results suggest that investment banks do not shy away from underwriting companies that have been flagged for major environmental, social, and governance misconduct, neither do they restrain from underwriting companies providing contentious products, such as tobacco, coal, and nuclear weapons. Moving forward, we suggest ways to address this problem and call for further research on the responsibility and agency of finance and advanced business services firms in sustainability transitions
While foreign direct investment (FDI) is generally assumed to represent long-term investments within the real economy, approximately 30–50 percent of global FDI is accounted for by networks of offshore shell companies created by corporations and individuals for tax and other purposes. To date, there has been limited systematic research on the global structure of these networks. Here we address this gap by employing principal component analysis to decompose the global bilateral FDI anomaly matrix into its primary constituent subnetworks. We find that the global offshore FDI network is highly globalized, with a centralized core of jurisdictions in Northwest Europe and the Caribbean exercising a largely homogenous worldwide influence. To the extent that the network is internally differentiated, this appears to primarily reflect a historic layering of social and political relationships. We identify four primary offshore FDI subnetworks, bearing the imprint of four key processes and events: European, particularly UK colonialism, the post–WWII hegemonic alliance between the United States and Western Europe, the fall of Soviet communism, and the rise of Chinese capitalism. We also find evidence of qualitative, but not quantitative, variation in offshore FDI based on national rule of law and communist history.
Environmental, Social and Governance (ESG) rating agencies have been instrumental in mainstreaming sustainability in the investment industry. Traditionally, they have relied on company disclosure and human analysis to produce their ratings. More recently however, technological innovation in data scraping and Artificial Intelligence (AI) have undercut the traditional approach. Tech-driven Alternative ESG ratings are becoming increasingly influential yet remain critically underexplored in sustainable finance scholarship. Grounded within financial geography and using mixed methods, this paper fills this gap by comparing a set of Traditional ratings, sourced from MSCI ESG, with an Alternative AI-based set of ESG ratings sourced from Truvalue Labs. Our results expand upon recent research on ESG ratings by shedding new light on low commensurability between Traditional and Alternative ESG ratings. Specifically, we show that differences in ratings are driven by four main factors: differences in ESG theorisation based on key issue selection, differences in data sources analysed, differences in weighting structures for rating aggregation, and finally differences in controversy analysis. Our findings are contextualised using participatory observations collected during fieldwork at a leading asset manager in the City of London. Overall, we show that the advantages of Alternative ESG ratings include higher levels of standardisation, a transparent 'outside-in' perspective on ratings, a more democratic aggregation process, and rigorous real-time analytics. We argue that these characteristics reflect a geographic reconfiguration of ESG rating construction, expanding from financial agglomerations to technological and digital spaces of innovation. While Alternative ESG ratings make major promises on how technology can reform sustainable investing, we recognise that risks remain.
We propose a conceptual framework for the political-economic geography of foreign exchange trading, focusing on the causes and consequences of the relationship between the international currency system and international financial centres. The framework is used to analyse data for 1995-2013 demonstrating that while the trading activity has boomed, its structure by currency, with USD in the lead, has remained remarkably stable, and its concentration in the NYLON axis has grown. We show that Asian currencies and financial centres have made little progress in the foreign exchange market, and argue that any challenge of RMB to USD would require nothing short of an unprecedented geo-political and geo-economic transformation.
Although the investment-oriented development model for economic growth adopted by Chinese governments has generated spectacular results, the risks of debt-financed urbanization and economic development have recently become evident in mounting local debts that are undermining the financial system, triggering concerns with respect to local governments' indebtedness, financial stability and sovereign risk in China. In this paper, we portray the uneven spatial and temporal dynamics of local government debt in China, and examine the ways in which it is intertwined with institutional, political and economic factors. Our analysis shows that while global and national economic conditions have resulted in a dramatic increase of local government debt, particularly in the late 2000s and the early 2010s, the spatial variation of local debt accumulation in China could be partly explained by two institutional factors: land finance and inter-jurisdictional competition. We argue that the behavior of local governments may harm the long-term future of Chinese cities.
The degree of development and operability of the indicators for the Marine Strategy Framework Directive (MSFD) using Descriptor 1 (D1) Biological Diversity was assessed. To this end, an overview of the relevance and degree of operability of the underlying parameters across 20 European countries was compiled by analysing national directives, legislation, regulations, and publicly available reports. Marked differences were found between countries in the degree of ecological relevance as well as in the degree of implementation and operability of the parameters chosen to indicate biological diversity. The best scoring EU countries were France, Germany, Greece and Spain, while the worst scoring countries were Italy and Slovenia. No country achieved maximum scores for the implementation of MSFD D1. The non-EU countries Norway and Turkey score as highly as the top-scoring EU countries. On the positive side, the chosen parameters for D1 indicators were generally identified as being an ecologically relevant reflection of Biological Diversity. On the negative side however, less than half of the chosen parameters are currently operational. It appears that at a pan-European level, no consistent and harmonized approach currently exists for the description and assessment of marine biological diversity. The implementation of the MSFD Descriptor 1 for Europe as a whole can therefore at best be marked as moderately successful.
The degree of development and operability of the indicators for the Marine Strategy Framework Directive (MSFD) using Descriptor 1 (D1) Biological Diversity was assessed. To this end, an overview of the relevance and degree of operability of the underlying parameters across 20 European countries was compiled by analysing national directives, legislation, regulations, and publicly available reports. Marked differences were found between countries in the degree of ecological relevance as well as in the degree of implementation and operability of the parameters chosen to indicate biological diversity. The best scoring EU countries were France, Germany, Greece and Spain, while the worst scoring countries were Italy and Slovenia. No country achieved maximum scores for the implementation of MSFD D1. The non-EU countries Norway and Turkey score as highly as the top-scoring EU countries. On the positive side, the chosen parameters for D1 indicators were generally identified as being an ecologically relevant reflection of Biological Diversity. On the negative side however, less than half of the chosen parameters are currently operational. It appears that at a pan-European level, no consistent and harmonized approach currently exists for the description and assessment of marine biological diversity. The implementation of the MSFD Descriptor 1 for Europe as a whole can therefore at best be marked as moderately successful.
