Financial Statecraft: No Longer Limited to the Incumbent Powers (SWP 62)

Traditional analyses of financial statecraft typically assume the term refers to major powers exercising influence over weaker states by such means as foreign aid blandishments or banking system sanctions. Newer scholarship highlights the subtler political influence advanced capitalist democracies also wield through their centrality to global monetary and financial markets and governance networks. Not surprisingly, rising powers are keen to expand the venues through which they too can support their larger foreign policy visions through tapping into state levers of control over cross-border currency, credit, and investment flows, as well as tilting international regulatory reforms toward their preferences. The article concludes with a comparison of United States’ and China’s financial statecraft capabilities and recent actions. &nbsp

Global Finance Meets Neorealism: Concepts and a Dataset (SWP 59)

How might one conceptualize the international political dimensions of money and finance? As the world moves from a post-Cold War “unipolar moment” toward the greater uncertainty associated with multipolarity – or bipolarity/multipolarity – the zero-sum aspects of economic resources may take on heightened significance in national calculations. The paper proposes five national financial characteristics that sovereign governments sometimes wield as power capabilities: the country’s (1) position as an international creditor, (2) home financial market attractiveness, (3) currency strength, (4) international debtor presence, and (5) leverage in global financial governance. A new dataset on the global monetary and financial powers of states (GMFPS), covering 180 countries and 27 indicators from 1995 to 2013, constructs indices for four state financial power concepts, and also provides an updated overall material capabilities index. After profiling the US, Britain, Germany, Japan, and China, we suggest a recurring, although not inevitable, financial life cycle of major powers. &nbsp

The Persistent Problem: Inequality, Difference, and the Challenge of Development

This report highlights the complex, multidimensional nature of inequality in the era of globalization. It documents that despite the impressive strides by nations like China and India, absolute inequality between the richest and poorest countries is greater than ever before in history. It demonstrates that the rise of China and India creates a new dimension to the persistent problem of inequality