Leviathan and Business in Ukraine: Opening the black-box of the business-state symbiosis
Tetiana Kostiuchenko | National University of Kyiv-Mohyla Academy | Ukraine
Ukrainian big business has preserved its influence in Ukraine’s politics despite the political turmoil of the democratic breakthroughs and reverse autocratic trends. Recent studies demonstrate that the core of Ukrainian oligarchs has remained stable and that their strategies to exert political influence have stayed on largely unchanged (e.g., Pleines 2016). Still, it does not mean that the model of business-state relations remained static. We argue that in reaction to political turbulence and changes in the institutional setting of Ukraine’s political regime, Ukrainian big business continuously adjusted its ties to the main political actors within the repeatedly revised polity and dynamic political processes. We suggest approaching business-state relations as a network of mutually beneficial symbiosis. By contrast, contemporary research approaches these relations in terms of power asymmetry. It is either state capture, when power asymmetry runs to the benefit of business elites at the expense of political elites, or state dominance, when business-state model is dominated by political elites. However and despite this rivalry, business and political elites also operate in a mutually beneficial symbiosis. Access to state institutions and political power enables business elites to secure their economic interests and make money, which they then use to broaden their political power. In turn, political elites profit from business funding of election campaigns and from ‘administrative rent’ and ‘kickbacks’(otkaty). A symbiosis of politics and business often involves more than just a simple connection of patronage. Besides lobbying, and bribing to influence politics, business elites aim at assimilating the political elite, while political elites often start their own businesses. The assimilation of business elites in politics and vice versa is a common phenomenon. Moreover, the approach of power asymmetry has its methodological weakness. The concept of power asymmetry cannot operationalize the scope of (i.e. identify the extent to which the incumbent/big business is subject to ‘capture’) and threshold between state and business capture (i.e. identify a measurement threshold where business capture ends and state capture starts, or vice versa). Using the method of social network analysis, we demonstrate how the political – formal and informal – ties of Ukrainian big business to the different branches of state power evolved and what models of state-business relations developed from president to president. The analysis covers the period of 1998-2017 and contains the comparison of the relational structures of political and business elites in Ukraine during 4 presidencies and 5 parliament terms from the angles of actors' common past (biographical ties) and common policy-making activities (co-authorship in draft-laws). We trace not only the visibility of various big business cliques within political institutions during last 20 years, but also track changes in business-state relations through influential persons, positions, groups and network structures. Therefore, we suggest the network explanation of the stability of business-state symbiosis in Ukraine as well as model its development for the future considering the internal and external factors
Collaborative ties between private companies and countries in water sector
Yasaman Sarabi | University of Greenwich | United Kingdom
The participation of private companies in providing water and sanitary services has varied throughout the years in different parts of the world. But, in all cases, such companies have formed collaborative ties with the local authorities while engaging in PPI (private participation in infrastructure) projects. Many studies in the literature have focused on case studies, investigating activities of a particular company in a specific region or country. However, the literature does not effectively provide a holistic view of the changing patterns of collaboration between private companies and various local authorities on a global level. This work attempts to investigate the factors affecting the formation of collaborative ties between private water companies and local authorities, and to provide a holistic picture of changes in the nature of such projects on a global level over the past 6 decades.
For the purpose of this study, the World Bank’s Private Participation in Infrastructure (PPI) Project Database has been used. This database includes information on PPI projects in the developing world (low and middle income countries), covering projects in the energy, telecommunications, transport, and water and sewerage sectors; this study has only made use of the data on the water and sewerage sector. Using this database, a panel dataset has been created with private companies and countries involved in each PPI projects as senders and receivers of ties, as well as a panel dataset including projects which have been carried out with more than two companies. Through the use of different models, this work attempts to explain the variance-covariance structure of a set of various variables describing the projects, as well as analysing how new alliances being formed between private companies and local authorities are dependent on the previous experience between the entities involved, the success of companies in fulfilling past projects, and similarities (economically and geographically) between companies’ countries of origin and the local authorities. Hence, the formations of new collaborative ties are investigated with regards to factors associated with embeddedness, centrality and homophily of entities in the network created from the data.
Assessing State Capitalism through cross-border ownership networks
Milan Babic | University of Amsterdam | Netherlands
The re-emergence of the concept of "State Capitalism" on a global scale represents one of the most controversially discussed features of the post-crisis global political economy. Although the concept suggests profound transformations of the global economy through the internationalization of state capital, the literature is mostly focused on case-studies of prominent examples or world regions (e.g. the BRICS or Southeast Asia). This obscures what role state capital occupies in the global economy. We argue that this represents a major shortcoming of existing research and contributes to the vagueness of the term “State Capitalism”.
The approach used in this paper tackles this gap. We discuss the characteristics of “State Capitalism” in the global economy by investigating the internationalization of state capital. This consists of two main aspects: First, we define the internationalization of state capital in general as the flow of state-controlled value into the global economy. This re-focuses the question back to the implications for the global level. Second, we trace this process with network techniques by analyzing the mentioned value flow from an ownership perspective. With this method, we provide a complete empirical basis instead of anecdotal or regionally biased evidence.
The internationalization of state capital can proceed through various forms such as Sovereign Wealth Funds or Development Banks. For the purpose of this paper, we focus on rising cross-border state ownership of companies as a way of operationalizing this internationalization of state capital. This captures an essential part of the overall phenomenon. From a comprehensive database of over 100 Million firms worldwide, we identify roughly 150.000 state-owned enterprises worldwide, which are state-owned by 50 or more percent. From this dataset, we extract the cross-border owned companies and create a network of ownership-ties across the globe. The identified set of countries that dominate the network by sending out the most ownership ties (France, Germany, Arabic Emirates, China, Russia, Qatar and UK) are then investigated separately: What are the dominant sectors that are occupied by cross-border state ownership? In which regions do the dominant countries invest? Can we distinguish patterns regarding these questions and what could be explanatory factors? And, finally: How can these findings be related to ongoing discussions about the re-emergence of the state as an owner in the global economy? We see already in the analysis of the dominant countries that the rise of state capital exceeds the limited focus on regions or groups like the BRICs and we expect to find more data-driven insights.
In sum, our approach combines the discussions about the vague notion of the idea of a “comeback” of the state since the last global crisis and the (network) methods to investigate this idea. The paper thus contributes to the ongoing discussion about State Capitalism in general and lays the groundwork for empirically informed further research on this topic.
China Goes West! Transnational networks of Chinese business elites and firms investing in Europe and the US
Nana De Graaff | VU University Amsterdam | Netherlands
Within the debate of China’s rise and its implications for the liberal order this research focuses on Chinese investments in Europe and the US, which have grown exponentially in the past decade. By focusing on Chinese business elites and firms at the forefront of China’s internationalisation trajectory that increasingly operate within - and cooperate with - the West, this study engages with the question to what extent China will adapt to the liberal rules of the game, confront or transform them? The paper will present novel data on Chinese global investments, with a focus on Europe and the US. Employing social network analysis and qualitative analysis on the basis of firm-data, biographical data and in-depth interviews, the study investigates how the changing networks of Chinese firms and business elites (2006-2016) are both linked to existing transnational business communities in the EU-US and, at the same time, are still linked to the domestic context, through ties with elite networks and state-business ties in China. The study therewith adds both to the debate within International Relations of how China’s growing influence will impact the liberal (US-dominated) order, and to the literature on modes, patterns and networks of transnational business elite formation.