The financialisation–offshoring nexus and the capital accumulation of US non-financial firms

Auvray, Tristan; Rabinovich, Joel

doi:10.1093/cje/bey058

Cited by 38 publications

(31 citation statements)

References 76 publications

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“…Rather than reinvesting these profits in core activities, they were used to pay higher dividends, buy back shares to drive up stock prices, and pursue mergers and acquisitions. This argument is confirmed econometrically by Durand and Gueuder (2016) and Auvray and Rabinovich (2017) who show that US firms' offshoring decisions were related to the slowdown in gross fixed capital formation.…”

Section: Internationalization Of Productionmentioning

confidence: 66%

Subordinate Financialization in Emerging Capitalist Economies

Bonizzi¹,

Kaltenbrunner²,

Powell³

2020

The Routledge International Handbook of Financialization

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In the explosion of literature on financialization, there is a much smaller but growing interest in what the phenomenon means for emerging capitalist economies (ECEs). We hold that for agents located in ECEs, the encounter with financialization is from a subordinate position: first, in relation to global production, ECE firms occupy subordinate locations in global production networks, providing cheap labor and raw, or at best, intermediate inputs; Second, in relation to global finance, ECEs are structurally subordinated to ACEs, that is, both trade and the most liquid capital markets are denominated in the currency of ACEs. Subordination in production means firms based in ECEs are able to capture less of the value created than firms higher in the hierarchy and must pay more to hedge macroeconomic risk. In circulation, strategies may emerge in ACEs wherein increased household indebtedness and/or asset market inflation maintain aggregate demand. In finance, ECEs' subordinate position in relation to money and capital markets means that capital inflows are predominantly short-term, seeking financial yields rather than assuming productive risk. The results are continued volatility, external vulnerability and subordination to the currencies of the ACEs, which themselves serve to further deepen domestic financialization. We conclude that, while by no means pre-destined, financialization as experienced in ECEs may serve to further cement their subordinate position in the global structure.

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Section: Internationalization Of Productionmentioning

confidence: 66%

Subordinate Financialization in Emerging Capitalist Economies

Bonizzi¹,

Kaltenbrunner²,

Powell³

2020

The Routledge International Handbook of Financialization

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“…Secondly, if financial income is | 765 RABINOVICH not a relevant source of income, then future investigations should aim to find other ways by which NFCs are able to maintain, at the same time, strategies of downsizing and distribution to shareholders, that is, the paradox of profits without investment. Examples of these other paths are the financialization-offshoring nexus (Auvray & Rabinovich, 2019) and market power and technological changes (Durand & Gueuder, 2018;Rikap, 2018).…”

Section: Discussionmentioning

confidence: 99%

“…The latter is, evidently, the closest to the financial turn of accumulation hypothesis. Results on this channel are mixed: while Hecht (, p. 32) and find no statistically significant effect of financial income on U.S. NFCs’ real investment decisions, Stockhammer (, p. 735) and Orhangazi (, p. 880) do find negative statistically significant effect in some specifications. Conversely, Davis () finds a positive and significant effect of financial assets, for all firms, and financial profitability, for big firms.…”

Section: Moving To Financementioning

confidence: 94%

The financialization of the non‐financial corporation. A critique to the financial turn of accumulation hypothesis

Rabinovich

2019

Metroeconomica

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One aspect in which non‐financial corporations (NFCs) are said to be financialized is that they have been increasingly engaged in financial accumulation from which they derive a growing proportion of financial income. This is what we call the financial turn of accumulation hypothesis. In this article, we show that the evidence used to sustain it, in the U.S. setting, has to be reconsidered. Our findings show that, contrary to the financial turn of accumulation hypothesis, financial income averages 2.5% of NFCs’ total income since the 1980s, oscillating since the beginnings of the 1990s until 2005 and then declining. In terms of assets, some of the alleged financial assets might actually reflect other activities in which NFCs have been increasingly engaged, such as tax avoidance, internationalization of production, activities refocusing and M&As.

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“…US firms in particular have had high levels of profit and cash flow in the past 15 to 20 years associated with a disproportionately large payout to shareholders in the form of dividends and share buybacks and sluggish investment (Gruber & Kamin, 2015;Gutiérrez & Philippon, 2016;Lee, Shin, & Stulz, 2016). This dimension of financialization has been linked in the US to GVC participation to the extent that large oligopoly firms manage to expand their profits as they capture value through cheaper imports (Auvray & Rabinovich, 2017;W. Milberg & Winkler, 2009;William Milberg, 2008).…”

Section: Financialization and Stagnation Tendencies With Intellectualmentioning

confidence: 99%

Intellectual monopoly in global value chains

Durand

Milberg

2019

Review of International Political Economy

197

139

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More than two decades of scholarship on global value chains (GVCs) has reshaped our understanding of the global economy while tracking the international fragmentation of productive process and its socioeconomic consequences. In this paper we focus on the effort by lead firms to capture market power in the provision of and production of intangible assets. The analysis builds on Pagano's (2014) notion of "intellectual monopoly", where government protections of intellectual property have the effect of locking in the monopoly power from intangible asset creation. We extend it to the presence of scale economies and network externalities associated with the production of intangible assets.

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The financialisation–offshoring nexus and the capital accumulation of US non-financial firms

Cited by 38 publications

References 76 publications

Subordinate Financialization in Emerging Capitalist Economies

Subordinate Financialization in Emerging Capitalist Economies

The financialization of the non‐financial corporation. A critique to the financial turn of accumulation hypothesis

Intellectual monopoly in global value chains

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