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Financial Statecraft

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The Palgrave Handbook of Contemporary International Political Economy

Part of the book series: Palgrave Handbooks in IPE ((PHIPE))

Abstract

Financial statecraft traditionally means the use, by incumbent national governments, of foreign assistance and financial sanctions to influence other countries. Armijo’s contemporary definition also includes state efforts, both bilateral and in coalition, to leverage national monetary and financial capabilities for greater voice and authority in global governance, markets, and multilateral regulation. The US’ postwar dominance, resting on economic and military might, established a world order founded in Western, mostly liberal, leadership. Today, China’s rise reflects high domestic savings, investment, and growth, while its persistent balance of payments surplus pushes towards capital outflows. Incumbents in China, and other emerging powers, now will exercise financial statecraft in service of their global and regional visions.

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Notes

  1. 1.

    Thanks to Eric Werker for obliging me to clarify this point.

  2. 2.

    In 2009, South Africa was not yet a member of the BRICs.

  3. 3.

    The discussions in this section and the next draw on ideas developed in Armijo et al. (2017).

  4. 4.

    Although collective Western sanctions associated with Iran’s nuclear programme were lifted in 2015, US President Trump has frequently threatened to reimpose them, leading many foreign investors to continue to shun Iran. Haass (2017).

  5. 5.

    Chinese flight capital invested in Western countries is also huge, but doesn’t constitute Chinese FS, as these are not government-managed capital flows. The Asia Society estimated that China was the leading foreign real estate investor in the US, with a cumulative US$ 350 billion invested through 2015. Bullough (2017).

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Author information

Authors and Affiliations

  1. International Studies, Simon Fraser University, Vancouver, BC, Canada

    Leslie Elliott Armijo

Authors
  1. Leslie Elliott Armijo
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Editor information

Editors and Affiliations

  1. University of Ottawa, Ottawa, ON, Canada

    Timothy M. Shaw

  2. Bavarian School of Public Policy, Technical University of Munich, Munich, Germany

    Laura C. Mahrenbach

  3. Centre for African Studies, University of Mumbai, Mumbai, India

    Renu Modi

  4. School of Government and International Relations, Griffith University, Nathan, QLD, Australia

    Xu Yi-chong

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Armijo, L.E. (2019). Financial Statecraft. In: Shaw, T.M., Mahrenbach, L.C., Modi, R., Yi-chong, X. (eds) The Palgrave Handbook of Contemporary International Political Economy. Palgrave Handbooks in IPE. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-45443-0_2

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