The Institute of International Finance (IIF) is a key actor in global finance, mixing private-interest representation and market governance roles. Analyzing the historical development of the IIF offers important insights into the interaction between state and business and the resulting patterns of public and private governance. Based on archive sources and a unique set of interviews with elite policymakers spanning three decades, I argue that market structures, interest groups, and public policymaking processes stand in a recursive relationship. Secondly, I argue that interest groups take on private governance roles with the aim to remain the focal point of public policymakers vis-à-vis competing interest groups. This has important implications for the study of interest groups and global financial governance. The analysis of interest groups should be extended to the way they shape markets through private governance mechanisms and how that recursively feeds back into interest group advocacy and public policymaking processes to fully grasp lobbying dynamics. The study of global governance should include analysis of interest group competition within the opportunities and constraints emanating from public policymaking processes so as to understand the emergence of private patterns of governance and their interaction with public governance mechanisms.

One of the major political narratives in the build-up to the critical parliamentary election of 2010 in Hungary was related to the “government of bankers.” Pre-2010 governments earned this label by the opposition based on their supposed close relationship with banking interests and for purportedly formulating financial and tax policy according to the needs of major financial institutions. In this article, we examine the preference attainment of the Hungarian Banking Association, the pre-eminent interest group in banking, and that of OTP, the biggest bank in Hungary, in order to evaluate this popular claim. The article addresses this challenge by comparing the policy influence of Hungarian Banking Association and OTP in the government cycles ending and starting in 2010. We adopt a computer-assisted qualitative content analysis framework and juxtapose the policy positions of the interest group in their formal communications with actual legislation related to the same issues. Results show that the general preference attainment of the banking lobby on major policy issues decreased after 2010—nevertheless, seismic activity was already under way after 2006.

From the technical analyses of wide ranges of scholars to the public discourse backlashes against globalization, there is a huge volume of work historicizing, quantifying, and problematizing the complex role of multinational corporations (MNCs) in international trade. The body of literature is so large that most readers rely on disciplinary boundaries to narrow the catalog, causing them to miss out on important synergies across fields. By bringing the work of historians, lawyers, and political scientists working on MNCs and international trade into conversation, we offer an expanded perspective. Our collective contribution highlights the political dimensions of MNCs within the frameworks of global economic governance, in which corporations seek to influence trade policies amid rising protectionism and coordinate their activities within industry associations while regulators struggle to hold MNC parent companies accountable to international human rights violations across their value chains. Especially in this moment of re-evaluation — and possible de-globalization following the shock of COVID-19 — our multidisciplinary analysis explains how MNCs exerted political power over trade regimes in the past, by what means they seek to shape regulatory frameworks in the present, and what the possible futures might be for big business operations in a more or less global economy.

It has long been overlooked that factions of finance such as banks and insurers can have opposing policy interests. This paper is concerned with the preferences and strategies of private financial actors in the context of private prefunded pensions. To capture the “tug of war” among these actors, this paper identifies their different financial business models (insurance- and investment-orientation), political roles (financial incumbents and challengers), and levels at which infighting may occur (political and product-market level). For the German case, it shows that product-market competition among financial incumbents and challengers over retirement savings products only turned into competition politics during the 1990s, when shifting political winds provided an opening to insert path-shaping instruments in line with the program of finance capitalism. Financial actors’ preferences are not a derivative of economic or functional incentives, but socially embedded in that they are crucially shaped by interactions with their competitors and the political environment. The analysis disentangles the complex web of competition, cooperation, and ownership among factions of finance and discerns their genuine preferences from those strategically adjusted to context. This sheds doubt on functionalist explanations of (pension) financialization and enhances our understanding of how financial actors form and pursue their preferences.

The globalization of production is changing the political economy of trade policymaking: Traditional supporters of free trade (exporters seeking market access in foreign countries) are joined by new actors (companies needing intermediates from abroad for their production processes) in their lobbying efforts for trade liberalization. Multinational corporations (MNCs) play a crucial role in this new alliance due to their strong involvement in international trade and endowment with resources that can be used to lobby policymakers. We derive an argument from these premises that leads to the expectation of variation in trade policy outcomes across industries depending on their degree of integration in a global network of multinational corporations. Disaggregated data on the level of tariffs and speed of tariff cuts in preferential trade agreements, international mergers and acquisitions at the firm level, and MNC imports of intermediates by sector allow us to test the argument. The findings support our theoretical expectations. The paper sheds light on the processes and outcomes of trade policymaking in a globalized economy by further developing an existing argument about GVCs and trade policy outcomes as well as expanding on it by adding data on international corporate connections.

Rhetoric from both domestic and international policy actors equated foreign direct investment and robust business growth in Sierra Leone with an exit from fragility. To the contrary, the trajectory of private sector development experienced from 2002 to 2014 contributed to Sierra Leone's socio-political challenges, replicating in the contemporary period dynamics of grievance and exclusion that were root causes of the country's endemic instability and then civil war. This study challenges the practices and refines the ideas underlying the prevailing vision for business-led development in Sierra Leone and other fragile states. It links extensive documentation of the role of business in Sierra Leone with peacebuilding and statebuilding frameworks to present a novel perspective on the mechanisms of action of private sector development in contexts of persistent fragility. In doing so, it provides a foundation on which further theoretical propositions for the ordering of business-state relations in support of transitions from fragility to peaceful development can be developed and tested.

There has been considerable attention in recent years on the close linkages between business, ethics, and economic development and how businesses not only have responsibilities to their shareholders but also to wider society. The growing power and influence of emerging economies has resulted in increased scholarly interest in China on studying the domestic political commitments to corporate social responsibility strategies (CSR), and their potential contribution to promoting the country's ambitious Belt and Road Initiative and thereby achieving the Sustainable Development Goals (SDGs). This article explores the factors that influence CSR strategies and performance and examines whether we are witnessing the emergence of a new form of social responsibility among Chinese businesses that prioritizes sustainable development. In order to better understand how CSR strategies in China are being potentially reshaped and realigned with the SDGs, we examined the CSR reports and practices of selected Chinese companies both before and after the adoption of the SDGs at the United Nations in 2015. By focusing on the CSR-SDG linkages in China, our study contributes to a better understanding of state advocacy aimed at influencing corporate behavior on sustainable development.

Over the last decades, encouragement of business engagement with environmental and socio-economic development has gained prominence due to the perceived weakening of states and multilateral institutions against the forces of global capitalism. Different ways of encouraging changes in business behavior have been promoted, such as the formation of public/private partnerships, corporate social responsibility initiatives, and other forms of non-binding organizational arrangements. However, there is no real consensus on the desired role of business in development, what the best policies for global development are, or what “development” itself is and should be defined as. Indeed, precisely as a formal consensus has been reached on the broad agenda of the United Nations Sustainable Development Goals, a narrower agenda focusing on industrialization, modernization, and economic growth is promoted by new actors, many originating in the Global South. This special issue asks how the emergence of new actors and the adaptation by global institutions affect the ways in which business engages with development. This introductory article positions the issue's contributions into three discussions: exploring issues of global coherence and division on key debates; understanding how new actors are reshaping the public-private divide; and assessing how disconnects within discourse on business and development can amplify negative societal consequences in fragile settings of weak governance.

This article studies what I describe as “state-coordinated investment partnerships,” an investment modality central to the deployment of China's Belt and Road Initiative (BRI). These partnerships bring together state and business actors to export overcapacity and address infrastructural demands in underdeveloped markets. To do so, they require accumulation and sovereignty regimes that mirror, in contingent ways, similar social arrangements within China. The superposition of such regimes and the interests and social imaginaries of local actors produces forms of uneven and combined development and shapes the contours of the BRI's emerging developmental and geoeconomic footprints. The BRI exports also an elite development paradigm which promotes urbanization, connectivity and economic growth over participatory approaches. This paradigm projects a depoliticized version of China's present into the BRI's future to justify social and environmental dislocations, and shields Chinese firms from civil society scrutiny. My analysis rejects this elite perspective and favors a labor-centric approach that unearths the social foundations of the BRI. From this perspective, despite relevant differences in format, the BRI's quintessential investment modality is closely aligned to a contemporary global current of public-private partnerships endeavored to mobilize public resources and state power for the expansion of capitalist social relations.

After the global financial crisis of 2007–9, policymakers hailed macroprudential policy as the solution to financial markets’ boom-bust patterns. Financial regulations would have to operate countercyclically, increasing in stringency during a boom while becoming lenient in a bust. Simultaneously, the procyclical effects of pre-crisis rules would have to be eliminated. Actual reforms, however, do not live up to these high hopes. In addition to the countercyclical policy framework's limited scope and ambition, its open-endedness is particularly striking. As policymakers have not specified when supervisors should (de)activate what instruments and how firms should measure risk, there is an inbuilt indeterminacy at macroprudential policy's core. I argue that obstacles inherent to the nature of systemic risk are key to understanding this policy outcome. As the financial system is reflexive, adaptive, and complex, there are hard limits to supervisors’ ability to “read” the financial cycle. Furthermore, as macroprudential policy itself becomes “part of financial markets,” countercyclical interventions may have systemically significant unintended consequences. This article empirically shows how policymakers at the global and EU level, confronted with these measurement and mitigation problems, ultimately opted for a limited and open-ended policy framework.

This paper argues that the Big Four accountancy firms—PricewaterhouseCoopers, Deloitte, Ernst & Young, KPMG—operate as key political allies of the financial sector within financial regulatory battles. Leveraging the theoretical notion of “actor plurality” within the policymaking process, I demonstrate how, in the case of the European Union Financial Transaction Tax (FTT) initiative, accountancy professionals offered crucial support for the financial sector. They did so by disseminating key oppositional claims against the FTT proposal, developing tax mitigation and relocation strategies, preparing negative impact assessments, and advising on lobbying tactics. This allied stance of the Big Four is primarily a consequence of the ways in which their commercial priorities have been fundamentally transformed by the provision of consultancy services within the modern global economy. Moreover, the paper shows how accountancy experts are deeply embedded within a network of professional relationships that fosters substantive policy alignment between the Big Four and prominent financial lobbying groups. By highlighting the overlooked role of the major accountancy firms within post crisis regulatory reform, the study illuminates the unequal power relations that permeate financialized societies and contributes to a deeper understanding of how financial preferences continue to prevail within the policymaking process.

Business has been involved in cooperation with multilateral organizations through public-private partnerships (PPPs) since the late 1990s. With their adoption of the sustainable development goals (SDGs), multilateral institutions increasingly consider partnerships as a means to achieve their goals given their own limited implementation capacity. However, the global economic order has changed significantly since the first expansion of PPPs, particularly due to growing participation by non-western states and companies. This article asks how this shift has changed the eagerness to form partnerships, as well as their qualitative content. It analyzes the 3964 partnerships in the SDG partnership registry, focusing on the subset of them that includes business partners. We divide these into five groups: local implementation, resource mobilization, advocacy, policy, and operational partnerships. We study PPPs involving companies from different varieties of capitalism—private, market based forms, and state-led forms of capitalism. We find that PPPs are still dominated by companies and other actors from Western countries. Moreover, business participate more in U.S.- and Canadian-led partnerships than others. We also find strong differences regarding what category of PPPs that companies from different backgrounds engage in, and discuss the linkages between varieties of capitalism and PPP participation.

Since 2008, a massive shift has occurred from active toward passive investment strategies. The passive index fund industry is dominated by BlackRock, Vanguard, and State Street, which we call the “Big Three.” We comprehensively map the ownership of the Big Three in the United States and find that together they constitute the largest shareholder in 88 percent of the S&P 500 firms. In contrast to active funds, the Big Three hold relatively illiquid and permanent ownership positions. This has led to opposing views on incentives and possibilities to actively exert shareholder power. Some argue passive investors have little shareholder power because they cannot “exit,” while others point out this gives them stronger incentives to actively influence corporations. Through an analysis of proxy vote records we find that the Big Three do utilize coordinated voting strategies and hence follow a centralized corporate governance strategy. However, they generally vote with management, except at director (re-)elections. Moreover, the Big Three may exert “hidden power” through two channels: First, via private engagements with management of invested companies; and second, because company executives could be prone to internalizing the objectives of the Big Three. We discuss how this development entails new forms of financial risk.