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really remarkable shift by @vestager/ @EUcommission regarding state-backed takeovers in Europe. As with many things, the virus-response is accelerating existing trends. This is the new #geoeconomic reality we live in. Short thread: https://www.ft.com/content/e14f24c7-e47a-4c22-8cf3-f629da62b0a7">https://www.ft.com/content/e... 1/
state-owned/state-directed capital has been playing a larger role in the global economy in the last 20 years. What Vestager et al. observe is thus true: we can see it e.g. in the impressively rising share of state capitalist FDI outflows since 2000 2/
lots of that is surely driven by China, but there are also many other states rising as global owners. This is especially the case if we look at the "transnational" aspect, i.e. foreign takeovers or cross-border investment by state-owned firms: https://www.tandfonline.com/doi/full/10.1080/09692290.2019.1665084">https://www.tandfonline.com/doi/full/... 3/
Europe is a particular target for foreign state investment, especially for its more strategic types (i.e. takeovers or acquisitions of majority-stakes in firms). 4/
as recently as last year, there were basically 2 camps in the EU response to rising state capitalist competition aiming at EU firms: the German/French governments (led by German Econ. minister Altmaier) and Vestager (the Commission or rather DG Competition) 5/
the former embraced a more activist strategy to fend off external competition - including creating national funds to counter takeovers, building national/"European" champions, increasing state ownership in key industries etc. https://www.ft.com/content/e78e8452-2944-11e9-a5ab-ff8ef2b976c7">https://www.ft.com/content/e... 6/
the latter backed a more passive approach of stricter regulation and better screening of potential acquirers. But last December, the attention already shifted towards explicitly focusing on state-backed companies: https://www.ft.com/content/452d2c7a-1f0e-11ea-92da-f0c92e957a96">https://www.ft.com/content/4... 7/
today& #39;s statement indicates that the two positions might come together after all. How this will play out in the following months is open, but it might be a hint at what v.d. Leyen& #39;s "geopolitical" Commission could look like. https://www.project-syndicate.org/commentary/von-der-leyen-geopolitical-european-commission-by-mark-leonard-2019-11?barrier=accesspaylog">https://www.project-syndicate.org/commentar... 8/
finally, all of this is not caused, but accelerated by the current crisis. Protectionist sentiments have been rising in the global economy since a few years, just as FDI inflows have been declining steadily since 2015: https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2460">https://unctad.org/en/pages/... 9/
the other side is of course how the EU depicts and communicates these new geoeconomic/geopolitical realities. @IliasAlami wrote a very good piece on the categories and narratives accompanying the rise of state capitalism: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3457979">https://papers.ssrn.com/sol3/pape... 10/
