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Theorizing the Financial Statecraft of Emerging Powers

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  • Leslie Elliott Armijo
  • Saori N. Katada

Abstract

'Financial statecraft', or the intentional use of credit, investment and currency levers by the incumbent governments of creditor - and sometimes debtor - states for both international economic and political advantage, has a long history, ranging from money doctors to currency wars. A neorealist, zero-sum framing of international monetary relations is not inevitable, yet casts a persistent shadow especially during periods of prospective interstate power transitions when previously peripheral countries find themselves with unexpected new capabilities. This article seeks to understand and theorise the financial statecraft of emerging economies, moving beyond the traditional understanding that closely identifies the concept with financial sanctions imposed by a strong state on a weaker state. We propose that the aims of financial statecraft may be either 'defensive' or 'offensive'. Financial statecraft may be targeted either 'bilaterally' or 'systemically'. Finally such statecraft may employ instruments that are either 'financial' or 'monetary'. As emerging market economies have moved up in the ranks in the interstate distribution of capabilities, they have also expanded their financial statecraft strategies from narrowly defensive and bilateral to those involving offensive tactics and targeted at the global and systemic level. Historical and contemporary examples illustrate the analysis.

Suggested Citation

  • Leslie Elliott Armijo & Saori N. Katada, 2015. "Theorizing the Financial Statecraft of Emerging Powers," New Political Economy, Taylor & Francis Journals, vol. 20(1), pages 42-62, February.
    • Handle: RePEc:taf:cnpexx:v:20:y:2015:i:1:p:42-62
    DOI: 10.1080/13563467.2013.866082
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    Cited by:

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    2. Chengwei Xu & Guanie Lim, 2024. "Global Britain, Belt and Road Initiative, and New Southbound Policy: Which One Matters to Southeast Asia?," GRIPS Discussion Papers 24-05, National Graduate Institute for Policy Studies.
    3. Zucker Marques, Marina, 2021. "Financial statecraft and transaction costs: The case of renminbi internationalization," Discussion Papers 2021/9, Free University Berlin, School of Business & Economics.
    4. C. Randall Henning, 2019. "Regime Complexity and the Institutions of Crisis and Development Finance," Development and Change, International Institute of Social Studies, vol. 50(1), pages 24-45, January.
    5. Daniel McDowell, 2019. "The (Ineffective) Financial Statecraft of China's Bilateral Swap Agreements," Development and Change, International Institute of Social Studies, vol. 50(1), pages 122-143, January.
    6. Andreas Antoniades, 2017. "The New Resilience of Emerging and Developing Countries: Systemic Interlocking, Currency Swaps and Geoeconomics," Global Policy, London School of Economics and Political Science, vol. 8(2), pages 170-180, May.

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