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1. Financialisation Reinforced: The Enduring Legacy of the Covid Pandemic

Author:
Photis Lysandrou and Taimaz Ranjbaran
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
This paper examines the impact of the covid pandemic on the financialisation process, here viewed as the growing domination of the world’s financial securities markets over the world’s material output base. Two major arguments are advanced. The first is that the pandemic has reinforced the functionality of financial market scale, which is that its continuing growth signifies nothing other than that governments and corporations on the one hand and pension funds and other asset managers on the other are colonising the future to cope with the rising financial pressures of the present. The second argument is that the pandemic has also accentuated one of the more notable dysfunctional aspects of the continuing growth of financial market scale, which is the reinforcement of a core-periphery divide between the advanced and emerging market economies that occupy the global financial system. The paper concludes with some policy implications of the analysis that includes the call for a global wealth tax.
Topic:
Economics, COVID-19, Securities, and Financialisation
Political Geography:
Global Focus

2. The Spatialisation of the Future

Author:
Photis Lysandrou
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
This paper argues that the growth of the securities markets signifies the spatialisation of the future. The possibility of this spatialisation is explained in terms of Marx’s commodity principle: it is because that principle has been expanded to encompass financial securities that the future now exists as a socially constructed space that parallels physical space. The necessity for this spatialisation is explained in terms of the financial pressures on the world’s major public and private organisations: security-issuing governments and corporations need to use the future to escape financing constraints in the present just as security-buying institutional investors need to use the future to meet financial commitments in the present. As the precondition for the continuing growth in scale of the securities markets is compliance with the rules of commodity exchange, and as the ‘liberal market economy’ variety of capitalism is the only one in which this condition is unreservedly met, it follows that a key by-product of the increasing need to colonise the future to take the overspill of the pressures of the present will be an increasing convergence on this variety of capitalism.
Topic:
Capitalism, Economy, Commodities, Securities, Karl Marx, and Spatiality
Political Geography:
Global Focus

3. Portfolio Diversification and the Cross-Sectional Distribution of Foreign Investment

Author:
Alexandra Tabova
Publication Date:
11-2013
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper I explore the role of portfolio diversification in explaining the distribution of foreign investment across countries. I capture the portfolio diversification motive by a measure of country-specific riskiness, "covariance risk", which I construct as how countries' growth rates covary with the stochastic discount factor of a representative international investor. My key new empirical finding is a strong and significant correlation between this new measure of country riskiness and foreign investment allocations. Less risky countries, i.e. countries whose growth rates are more highly correlated with the investor's stochastic discount factor, receive larger investment shares than more risky countries. I interpret this result as evidence that investors do take into account diversification opportunities, not only for portfolio investment decisions, but also for foreign direct investment decisions. My empirical results confirm the theoretical predictions of standard portfolio allocation models.
Topic:
Foreign Direct Investment, Investment, Risk, Fiscal Policy, Securities, and Stock Markets
Political Geography:
Global Focus